UK manufacturers stockpiling and switching suppliers ahead of Brexit

  • A new report suggests that UK small and medium sized manufacturers are stockpiling ahead of Brexit and may switch as much as 18% of their EU suppliers to the UK.

    The latest UK SME Manufacturing Barometer quarterly report has been released by business management consultancy SWMAS and its partner Economic Growth Solutions, and the results don't look good. This survey of around 320 UK small to medium sized manufacturers shows significant changes in business trajectories over the next quarter due Britain's impending exit from the EU.

    The new report shows that UK manufacturers are taking on uncertain financial risks, stockpiling materials from existing suppliers ahead of Brexit and switching to often more expensive UK-based suppliers to allow them to continue operating after Brexit. Turnover, profit, recruitment, and investment in new equipment are all markedly down this quarter as businesses divert resources to prepare for Brexit.

    Future projections and expectations for the next six months are significantly reduced compared to last year's optimistic report. The number of surveyed companies expecting sales turnover to increase is down 17% on last year's report, and the number expecting an increase in profits are down 14%. New investment is taking a hit too, with an 11% drop in companies planning to invest in new machinery or premises and a 5% drop in firms expecting to increase staff numbers.

    This quarter's Manufacturing Barometer report also found that 69% of manufacturers reported using cash reserves to stockpile raw materials and components ahead of Brexit as a high priority, and that 27% were considering relocating suppliers from the EU to another country within the next 12 months. The report indicates that as many as 18% of those considering switching EU suppliers said that they could seek replacement suppliers in the UK.

    Source: Press Release, SWMAS Report

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