Business

Manufacturers fear for their survival as survey paints 'gloomy picture'

One in eight manufacturers in the north say they fear for their futures
Gary McDonald Business Editor

ONE in eight manufacturers in Northern Ireland fear they won't survive until the end of this year, a survey of the industry has found.

And despite the widespread use of furloughing, three out of five firms are currently anticipating redundancies, with more than half likely to shed up to a third of their workforces.

The findings have emerged from a survey of 198 companies conducted by Manufacturing NI, aimed at getting a vital snapshot of the industry at this massively important time.

"In truth, this paints a gloomy picture for the sector as companies returned to work and got a stronger sense of where their markets are," the umbrella body's chief executive Stephen Kelly said.

The survey found that while most manufacturers have some staff back, 13 per cent are still to begin any form of production and of those back producing, one in three have less than half their employees back in work. Only a quarter of firms have almost a full complement of workers back.

The government's Job Retention Scheme has been widely used to avoid redundancy for now, with a fifth of firms reporting they had their entire workforce on furlough at some point.

Almost two thirds had more than three quarters of their staff on furlough, demonstrating production had largely stopped across the sector, and only 14 per cent of the respondents had no staff on furlough at all.

"The biggest reasons for furlough was a lack of work, wanting to keep their skills base intact to hopefully return to meet customer demand and to implement social distancing within the workplace," Mr Kelly said.

"But despite the widespread use of furloughing, three firms in five are currently anticipating redundancies, with more than half of firms anticipating having to shed up to one third of their workforce."

The amendment to the Job Retention Scheme announced by the Chancellor last Friday will initially help avoid redundancies, with just about half (49 per cent) believing the new 'flexi-furlough’ from July 1 will alter their need to make redundancies.

But only 18 per cent say that redundancies can be saved when the Chancellor brings in greater employer contributions such as national insurance and pension payments from August onwards.

Among the other findings, just 6 per cent of firms have seen an increase in turnover this quarter with 46 per cent seeing turnover at leave halve.

A quarter of respondents say they have received a grant or some financial support from government, but 73 per cent have not had any cash support. Only 8 per cent say they have received the £10,000 grant for micro manufacturing businesses.

The rest have relied on borrowing from directors or cash within their business, while one in four have had a CIBLS and 18 per cent relied on the VAT deferral scheme.

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