Manufacturers are facing an “unprecedented combination†of a post-Covid credit, cash and costs crunch, new research suggests.
Firms are facing demands of an economic recovery hampered by disrupted supply chains and mounting skills shortages, said Make º£½ÇÊÓƵ and tax consultants RSM.
They said their survey of more than 200 company finance directors indicated manufacturing was facing a “sharp inflationary spiral†which threatens to reach a level that would provide a tipping point for the business model of many.
Almost half of respondents said their cash position was worse than at any point since the pandemic began.
Make º£½ÇÊÓƵ urged the Government to consider payment holidays for loans that companies took out as a precautionary measure.
James Brougham, Senior Economist at Make º£½ÇÊÓƵ, said: “Industry is facing the perfect storm with a raft of rapidly escalating costs combined with significant levels of debt which many companies took on as a precautionary measure just to stay afloat.
“Given the inflationary spiral shows every sign of continuing to climb, many companies fear a tipping point that could make their business models unviable.â€
Mike Thornton, head of manufacturing at RSM added: “Manufacturers are facing a variety of headwinds from staff shortages, supply chain disruption, soaring energy prices and an increased debt burden post-Covid.
“This backdrop has elevated the risk profile for many º£½ÇÊÓƵ manufacturers. Considering the position today, rapidly implementing plans to address underperformance is going to be crucial to ensure manufacturers emerge post-pandemic in a strong viable position.â€
Two thirds of companies surveyed said a lack of cash has hampered their growth plans, while almost half had trouble fulfilling orders.â€
