ECONOMIC alarm bells are sounding in the north’s rural communities that key aspects of the all-important manufacturing sector will be unable to restart if the coronavirus lockdown continues for too long.
Manufacturing NI, the voice for the industry here, warned that the action taken by the UK Government and the Executive to help protect firms and jobs to date, appears to be only delaying a major economic crash in the weeks ahead.
In a hard-hitting report produced after surveying 206 members, the industry body said: “What is clear is that we are fighting not only a public health emergency but an economic emergency too.”
According to the survey, 81 per cent of manufacturing firms have already put staff on furlough, with 60 per cent furloughing more than three-quarters of their workforce. A quarter of all firms are completely closed.
The companies who responded, were surveyed over Tuesday and Wednesday. Manufacturing NI said 83 per cent of respondents were businesses located in rural and provincial areas.
In the report, the body said: “If, as the Chancellor has made clear, the furlough scheme is to avoid redundancy for now, then we have to be deeply concerned that we will be unable to restart the sector if we leave the lock down for too long.
“With most manufacturing taking place outside of the cities, this must sound alarm bells for the economic health of provincial and rural communities in the months ahead.”
The results supported the conclusions of a Northern Ireland Chamber survey conducted a week earlier, which suggested that four-in-five employers were planning to furlough some or all of their workers within seven days.
The new survey also mirrors the deep concerns expressed by the NI Chamber over the crucial issue of cash flow.
Some 78 per cent of manufacturing firms are using cash from within their business to sustain employment and other costs.
A small number of firms even confirmed that they were using savings and/or pensions to fund the current period.
Invest NI boss Kevin Holland said yesterday that the economic quango had been notified of 500 businesses furloughing close to 30,000 employees.
Research also published this week by Ulster University’s Economic Policy Centre suggested that the north’s economy may shrink by as much as 10 per cent this year, with up to 250,000 workers eventually furloughed under the UK Government-based job retention scheme.
The online portal for the scheme is officially due to open on April 20. Manufacturing NI said that is critical that the UK Government stand over its commitment to support all firms who have followed the official advice since March 20 by guaranteeing 80 per cent of salaries for furloughed staff.
“To renege on this jeopardises the short and long term future of a huge part of the sector.”
The report also found that almost one-third of manufacturers had experienced difficulty in securing funds through the UK Government-backed Coronavirus Business Interruption Scheme (CBILS).
The UK Treasury last week announced reform of the scheme, after it emerged that less than one per cent of applicants had successfully secured funding.
Almost 85 per cent of businesses told Manufacturing NI that more that more financial support from Government is needed for the sector to sustain jobs.
The industry body said: “Our worry would be that there won’t be sufficient resources remaining in businesses or Government to mount and sustain a rebuilding exercise in the short and medium term.”
On a more positive note, 12 per cent of firms said they have repurposed or are working collaboratively to support the NHS and others to tackle the Covid-19 pandemic. Manufacturing NI said that extrapolated out from the sample, it suggests that as many as 600 firms in the north could have taken similar action.
