Covid-19: “Government support has been spectacular”, Rakem Group COO says
Rakem Group’s chief operating officer Steve Bunker has paid tribute to the government for its support of businesses throughout the coronavirus pandemic so far, but stressed that such support must continue into the months after the UK lockdown is lifted.
In conversation with The Parliamentary Review, Bunker not only discussed his take on the government measures, but also the position that Rakem, a chemical manufacturer and distributor based in Bolton, Lancashire, finds itself in.
Bunker said: “Government support for business in all of this has been spectacular. The Job Retention Scheme will prove invaluable and the ability to defer VAT will ensure that the all-important cash flow for businesses is a little more into the positive.
“Our bank has been very supportive of us and is already working on increased conventional finance without the need to revert to the Coronavirus Business Interruption Scheme, at least for now”.
However, the overall position of the business has been “mixed”, according to Bunker.
He explained: “The distribution side has grown in some areas where we supply raw materials to manufacturers in the pharmaceutical and food industries. In other areas, however, it has dropped.
“We are expecting a sharp fall over April and May as we suspect that customers in the pharmaceutical and food industries purchased as much as they realistically could at the outset and will now probably just be looking to top up supplies.”
With regards to the manufacturing side of the business, Bunker explained that although the lockdown period started positively, the momentum has waned since individuals have been restricted in their capacity to leave home.
“We were motoring at the start of the lockdown”, Bunker explained. “Our customers who supply into the DIY sector anticipated a spike, but this did wane quite quickly since the government’s advice to only leave the home for ‘essentials’ really began to take hold and DIY became less important in the grand scheme of things”.
Going forward from here, Bunker believes that the key for business will not be when the UK government goes about lifting the lockdown, but also the manner in which lifting restrictions is implemented.
“Clearly, slackening the lockdown will have to be done carefully”, Bunker said. “This is not just in respect to everyone’s health, but opening business too quickly for certain sectors will need to be managed carefully.
“If there is a real spike in demand as we exit lockdown, this is where the funding of working capital will be critical. Businesses who have used too much of their reserves to keep going may suddenly have to find extra cash and this is where the next pressure of finding finance will be at its most critical.”
Bunker fears that businesses who are unable to meet demand due to a lack of working capital will encounter huge problems, which is where continued government support must come in.
“Businesses who are unable to meet demand due to a lack of working capital will struggle to get over hurdles. Ongoing government support and support from the banks will still be essential in the months after we exit lockdown”.