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News | Published April 02 2020

EXCLUSIVE "Many companies have closed their doors" - leading manufacturers speak out on Covid-19

The UK's manufacturing sector is the ninth-largest in the world, employing 2.7 million people and accounting for 45 per cent of total British exports (totalling £275 billion).

Recent weeks have been something of a mixed bag for manufacturers. While the social distancing measures that have been brought in to combat Covid-19 arguably affect those businesses who employ on-site staff the most, the Ventilator Challenge UK consortium has brought firms together across all corners of British industry to help support the NHS.

The government alone have ordered some 41,000 ventilators from manufacturing and engineering firms who would not normally operate in such a market sector. But while some companies are undertaking new business from unforeseen avenues, others are struggling.

John Irwin, MD of international plastic manufacturing firm Denroy Plastics, told The Parliamentary Review that it had been a "very difficult time".

"Under normal circumstances, we would have around 120 people working in the factory," Irwin said. "We are currently operating with 35, and they are all manufacturing.

"Everyone else who can work from home is doing so, and we have many employees on furlough -- which has been a critical initiative."

Irwin also explained, however, that Denroy had been designated as a "critical supplier", helping to "support national infrastructure".

"We started with the assembly of the Hero Shield last week -- a visor for medical staff who are dealing with Covid-19 patients. The initiative is a result of a number of local companies coming together to rapidly create a critical product for our health workers. We are proud to be a part of this effort."

However, in spite of this new project, Irwin was not overly positive about the weeks and months to come for Denroy: "The outlook for the rest of the year probably won't be far off 50 per cent of what it would have been. The Denman brand has been particularly affected by reduced retail and professional sales."

Don Mitchell, director of steel fabrication firm DM Steelworks, echoed Irwin's sentiment, agreeing that these were "difficult times".

"I appreciate the government standing behind businesses to help their workers, but my current position is that I will probably have to pay some of my workers to stay at home.

"Many of our sites are closing and the others are considering it.

"My concern going forward is for the small construction companies and developers who may not survive a long lockdown of their sites and therefore will be unable to pay subcontractors and suppliers."

One such supplier, fume cupboard manufacturer Holliday Fielding Hocking, has already felt the impact of sites closing.

Managing Director Michael Holliday said that his particular sector had been "hit badly".

"The nature of our business means we can't operate a 'just in time' policy for materials -- and we have always kept our stocks high.

"But over the last couple of weeks most clients have closed sites to contractors and put projects on hold. That leaves us with stock we need to pay for but can't yet turn into cash."

When asked if the furlough scheme was something he had considered, Holliday said: "Many companies have closed their doors and opted to have employee wages picked up by the state.

"We are not in a position to do that. A significant proportion of our work involves keeping equipment working in laboratories and hospitals for researched and testing, so we need to retain staff on full pay if they are to continue doing so.

"We also feel that, as a company, we have a moral duty to our staff, and we don't wish them to experience any financial hardship. As such, we've put personal funds aside and hope we can ride this crisis out."

Chartered Director Dean Kavanagh of manufacturer QED Environmental Systems echoed Holliday's concerns over the lack of demand for many projects.

"The disruption and uncertainty caused by Covid-19 and the associated government actions have already had an impact on our business.

"The lessened demand as a result of lockdown procedures is just one of the issues we face; as well as that, we have supply challenges and employee concerns to contend with."

Kavanagh, who is also Chair of the Coventry and Warwickshire branch of the Institute of Directors, praised the government's response, but said that "clarity... generally around timings" would be of critical importance going forward.

"The response from the government has been extremely helpful, but my understanding is that some of the financial options are not easy to enrol into and this will be a cause for further concern for business leaders.

"Comments like those from the deputy chief medical officer on March 29 [where she advised measures could be in place for as long as six months] should be referenced to provide some clarity to business and the population more widely.

"We need to know more about the timings for this disruption and the extent of it, but I also recognise that this is a fluid, fast-moving situation and that it is not easy to respond."

For more information about each of these organisations, you can find their respective Parliamentary Review best practice articles as follows: Denroy Plastics, DM Steelworks, Holliday Fielding Hocking, QED Environmental Systems.


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Authored by

The Parliamentary Review

@theparlreview
April 02 2020

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