Nearly all small UK manufacturers face costs headache

Nearly all small UK manufacturers face costs headache

© Reuters. A worker checks a TX4 at the end of the production line at the London Taxi Company in Coventry, central England, September 11, 2013. REUTERS/Darren Staples/Files

LONDON (Reuters) – Nearly all small British manufacturers are struggling with rising costs, according to a survey on Thursday that showed widespread worries over recruitment and logistics caused by the COVID-19 pandemic and Brexit.

Business support groups South West Manufacturing Advisory Service (SWMAS) and Manufacturing Growth Programme said rising supply chain prices had presented difficulties for 96% of respondents. Some 55% described the problem as “major”.

Global shipping problems, tight supplies of semiconductors and shortages of some goods such as motor vehicles have contributed to rising inflation in many countries.

Thursday’s survey suggested the problems were hurting margins among small manufacturers. The proportion expecting profits to rise in the next six month fell to 46% from 52% at the start of this year.

Around half of the firms surveyed said recruitment and transport problems were hindering growth for manufacturers who account for about 10% of British economic output.

“It appears we are seeing the first signs of supply chain struggles starting to hinder the upturn,” said Nick Golding, managing director of SWMAS.

“The challenges highlighted have been caused in part by government policies as a direct result of Brexit and the COVID-19 pandemic.”

Official data published on Wednesday showed signs of continued inflation pressure in prices paid and charged by factories. Output costs rose in annual terms by the most in nearly 10 years.

Thursday’s survey of 260 small and medium-sized British manufacturers was conducted last month.

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