Biggest challenge facing South West businesses is shortage of staff

One of the biggest challenges businesses in the South West is the struggle to find staff – according to a recent survey.

Business West’s recent survey of businesses found that while over half rate their current business resilience as good or excellent, over three quarters are reporting difficulties with finding suitable staff. This figure is up two percentage points since last quarter.

The results come as the most recent ONS Labour Market figures showed that there are still over 1.2 million vacancies across the UK.

Over 300 businesses from across the South West took part in the survey, with the results revealing that business confidence in both the UK economy and the prospects of their own business are both higher than last quarter.

Confidence in the national economy has increased dramatically to 20 per cent, from an all-time low of six per cent in the final quarter of last year.

The proportion expressing confidence about their own business prospects is up to 52 per cent.

Peter Marchbank, managing director of Rotary Precision Instruments, a manufacturing company based in Bath, said: “We have increased activity in the USA, launching new products which appeal to a wider market.  We’re also improving our operations to increase productivity.”

Sean Morgan, operations and commercial director at Kellaway Building Supplies, a construction company based in Bristol, said: “With rising costs and labour shortages we are looking at smarter more efficient areas to operate.

“This includes looking at easier ways to onboard new recruits alongside day – to – day operations and trading platforms and making jobs easier to navigate to deliver better outcomes.  We are also looking at new routes to market, social media platforms and bespoke advertising programmes.”

John Catchpole, founder and chief executive of Hugeaura, a visual software company based in Wilton in Wiltshire, said: “Our plan is to create a new product using our technology inside, reaching new popular genres with existing product. We want to continue the big swing towards investment in cloud services, and scale that into more cloud products.”

While inflation may have peaked, with 45 per cent of respondents expecting to put their prices up in the next three months, eight percentage points down since last quarter, price levels continue to rise, with 54 per cent of respondents reporting that they intend to increase their prices in the next three months.

More than two thirds of businesses said they were under pressure to increase prices because of labour costs, and this is the leading source of inflation. This is comprised of salaries to attract new staff as well as attempts to retain the existing workforce.

Peter Allen, general manager of Catalent Pharma Solutions, a manufacturing company based in Swindon, said:  “We cannot absorb inflation so price rises will need to be passed onto our customers. Labour cost increases to keep pace with market rates and cost of living increases will also have to be passed through.

“While we’re looking to expand manufacturing and new product development capacity through inward investment, high calibre individuals to help deliver new projects are difficult to recruit.

“There is definitely a shortage of labour post-Brexit as we were very reliant historically on having foreign nationals joining us.”

Deborah Flint, managing director of Cinderhill Farm, a food producer based in Gloucestershire, said: “To cover an increase in salaries to meet the new Living Wage Foundation salary level and associated knock-on increases to all other staff, we are likely to have to increase our prices.”

Despite continued challenges, and while net UK sales and orders continue to be negative, they are much closer to ‘break even’ than they were in the final quarter of last year. The proportion of businesses reporting falling sales has decreased compared to the end of last year.

Matt Griffith, director of policy at Business West, said: “Despite the continuing challenges facing businesses, it is encouraging to see a rise in positive sentiment amongst firms.

“While the top concerns for businesses during the quarter were general economic conditions, inflation, and general business uncertainty, these are all down since last quarter.

“However it is still a tough environment for businesses, with cuts to the energy support scheme leaving many firms uncertain about what the next 12 months will bring and the tight labour market continuing to hinder firms’ growth.”