New report highlights supply chain issues for West Mids manufacturers
A new report out today (July 18) from Make UK, the manufacturers’ organisation, and accountancy and business advisory firm BDO shows that manufacturing remains central to the success of the West Midlands, with the sector accounting for 14.1% of the region’s economy, way above the national average of 10%.
According to the report, which analyses the overall status of industry in the region over the last twelve months, the West Midlands was initially behind other regions in recovering from the pandemic given the region’s dependence on the automotive sector, which accounts for a third of the region’s manufacturing output.
However, while order books have begun to recover strongly, output is lagging as a result of supply chain issues many companies have struggled to access vital raw materials and components such as semi-conductors. Until there is more certainty in supply it is unlikely manufacturers in the region will invest to expand capacity or increase recruitment substantially.
Three subsectors account for just under two thirds (60%) of regional manufacturing output. Transport, largely automotive, remains the biggest manufacturing sector in the region accounting for almost a third of output (30.6%), followed by metal products (17.4%) and then Machinery Equipment (9.2%).
The West Midlands also continues to be a strong export performer, accounting for 8% of total UK manufacturing exports. The EU is the region’s main export destination where its dependence remained at 46% (the UK average is 49%) followed by North America (22%) and Asia & Oceania (18%).
Charlotte Horobin, region director for Make UK in the Midlands, said: “Despite the current difficulties impacting the automotive sector manufacturing remains vital to the region in terms of innovation and proving high quality skilled jobs. Major challenges lie ahead, in particular the transition to an electric supply chain but the future looks bright for the sector. Given the importance of trade to the region Government can also help recovery and boost growth by taking steps to reset the trading relationship with the EU and, wherever possible, easing and simplifying trading to boost exports for SMEs in particular.”
Jon Gilpin, head of manufacturing at BDO in the Midlands, added: “Manufacturers across the region support hundreds of thousands of jobs and make a significant contribution to the local economy.
“The region’s high dependence on EU export markets shows that local businesses have done a good job in adapting to new post-Brexit rules, but ongoing Government support may well be required, particularly for firms at the smaller end of the spectrum.
“It’s vitally important for the region’s exporters that good trading relationships with our European neighbours are maintained to ensure that trade remains as frictionless as possible. We also hope to see further progress on free trade deals which could offer new and exciting opportunities for West Midlands businesses.”
