MANUFACTURING firms in Yorkshire and Humber urgently need extra support from the Government if they are to recover after furloughing staff following the impact of Covid-19, a new report claims.

The latest Manufacturing Barometer, the largest survey of SME manufacturers in England, highlighted that 83 per cent of firms in the region took the decision to furlough staff and almost a third (31 per cent) have already made redundancies as they look to get through the economic shock of the pandemic.

Worryingly, this figure is set to remain the same as the job retention scheme tapers off, with 28 per cent indicating further job losses between now and the end of the year.

Conducted by SWMAS (South West Manufacturing Advisory Service) and the Manufacturing Growth Programme (MGP), the report showed that 37 per cent of companies had accessed Coronavirus Business Interruption Loans, whilst nearly half have taken advantage of Bounce Back loans.

A total of 15 per cent of management teams have already taken additional financial steps to protect their businesses, including personal loans and re-mortgaging commercial or residential properties.

Martin Coats, Managing Director at MGP, said: “Nearly two thirds of manufacturers have told us that they are either just surviving or recovering and this, along with the other data, tells us that there is an urgent need for further business support, which the Government could help with.

“Industry is very resilient, but it is very difficult to plan for sales stopping overnight across numerous sectors and then you’ve got the added complications of supply chain interruptions and trying to organise factories that are Covid-19 secure.

The furlough scheme has protected thousands of jobs, but the Government may have to consider additional support until sales and revenues are more consistent or start to reflect levels seen prior to the pandemic

“VAT payment holidays would be welcomed by 63 per cent of companies, with nearly two fifths suggesting business and financial support to find new customers is required.”

The Manufacturing Barometer, which questioned 55 SME manufacturers in Yorkshire and Humber, gave an insight into current trading conditions, with 68 per cent reporting a decrease in sales over the last six months and roughly two thirds (64 per cent) indicating a reduction in capital spend.

There were some grounds for optimism when compared with the results of the previous report though and the first early signs of companies feeling more confident about their future prospects.

A total of 35 per cent of companies are predicting an increase in sales over the next six months (11 per cent in the last Barometer), with a similar number expecting a rise in profits going forward.

Mr Coats added: “Manufacturers have tried to use the slowdown in activity as effectively as they can.

“Many have focused on process improvement to boost efficiency (47 per cent), identifying new customers and suppliers (51) and, encouragingly, more than two fifths (44) have chosen to upskill their workers.

“There are still everyday issues they are trying to come to terms with. 87 per cent have had to review cashflow forecasts, 35 per cent have seen production put on hold due to no fault of their own and 42 per cent have had to contend with customers extending payment terms.”

He concluded: “These are all difficult situations and require specialist business support and access to grants/financial help to overcome.

“That’s why we’re urging the Government to look at ways where they can extend the assistance available to our sector, especially with 22 per cent of manufacturers suggesting that Covid-19 has disrupted their planning for Brexit.”