Manufacturing has actually been one of the industries least affected by the Covid-19 Pandemic, as it was excluded from the government mandated lockdowns. By it’s very nature of physical production, it is not the type of work that could be carried out on a work-from-home basis, and it plays a very key part in the UK economy. The pandemic even increased business for certain types of manufacturers – in the production of personal protective equipment, medical supplies and air conditioning systems for example.
A report published in February 2021 by MAKEuk – the Manufacturers’ Organisation, found that 44% of manufacturers currently have no staff furloughed, 50% believe they will achieve full operating levels by the end of this year, and only 6.5% are still planning redundancies in 2021. At the time of the report, 25.4% of manufacturers surveyed were operating at their full pre-pandemic levels and a further 42.2% were operating at 75-99%.
However, it isn’t all a rosy picture. If you look at the sectors that have been most affected by the pandemic, you can usually find manufacturing somewhere in their makeup. For example, the top 5 most affected industries globally by September 2020, according to S&P Global Market Intelligence, were; airlines, oil & gas drilling, restaurants, vehicle parts & equipment and leisure facilities. These industries have been most affected due to lack of consumer demand – whether that be through mandated lockdowns or just lack of requirement. The lack of demand for these sectors will therefore have had a knock-on effect on the demand for manufacture of the assets that are used to provide these services. For example; airplanes, parts and equipment, oil & gas drilling equipment and tooling, vehicles, commercial catering equipment and furniture; manufacturers of which have all seen a downturn in trade during the pandemic.
The industry has also been massively affected by Brexit – with January 2021 seeing the biggest drop in manufacturing exports from the UK to the EU since 1997, according to the Office for National Statistics. This was a 40.7% drop, accompanied by a 28.8% drop in imports. However, by April, the export and import figures had returned to normal, with exports in May at their highest level since October 2019.
The assets that a manufacturing company may own are included but not limited to: plant and machinery, vehicles, stock, work in progress, contracts, furniture and equipment, research & development, trademarks, patents and branding, websites and social media accounts, customer databases and goodwill.
As the sector has not been as affected as others, the markets for plant and machinery and vehicles have not been flooded with surplus assets, as with hospitality and retail. Feedback from dealers is that there is considerable demand for second hand plant, machinery and commercial vehicles – partly due to a slowdown of manufacture and price increase of new counterparts.
We don’t expect manufacturing to be as prevalent as hospitality and retail in the insolvencies of 2022, but there will be companies that have not recovered from loss of trade, or those forced into insolvency procedures due to failure to repay bounce back loans, CBILS and deferred VAT.
We can provide asset and property management, valuation and disposal for all types of manufacturing businesses and properties. If we can be of assistance to you or any of your clients, please do not hesitate to get in touch on 01425 200366 or op@proudleyassociates.com
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