The regular survey of mid-sized manufacturers from accountancy and advisory firm, BDO also found that a third of manufacturers are stockpiling inventory in a bid to protect themselves from supply chain disruption.
In addition to supply chain challenges, businesses are once again battling with energy costs as international conflicts prompt European gas prices to soar ahead of winter. Almost three quarters (73%) of businesses overall are more concerned this year than last year about rising energy bills. This rises to 79% for manufacturers, a more energy intensive sector.
When asked how they plan to combat rising energy bills, half of manufacturers said they are planning to invest in energy efficiency measures such as technology or building insulation. Two thirds report they have or may need to pass on the additional costs to customers.
Richard Austin, Head of Manufacturing at BDO LLP, said:
“These are significant challenges in the run-up to winter – and across the important Christmas period. Supply chains have been causing significant challenges for manufacturers for a number of years, with major shocks including the COVID-19 pandemic and international conflicts, having a long-term impact.
“Stockpiling goods will be impacting cash flow and potentially revenue targets. This, coupled with the highest borrowing costs we’ve seen for years and sky-high energy bills mean the burden on manufacturers continues to grow.”
“These issues should not be overlooked by policy makers. Manufacturing is an integral sector in the wider UK economy and mustn’t get left behind.”