First post Brexit survey reveals extent of challenges faced by NI Manufacturers
Northern Ireland businesses say GB suppliers’ unpreparedness and unwillingness to adopt the new Brexit regulations is the single largest trading issue they currently face. EU supplies and sales continue to be a challenge and more than three quarters say that the first three months following the transition period have had a negative impact on their businesses.
These are among the latest findings of the April 2021 Tughans Manufacturing NI Survey of Businesses in the Manufacturing Industry conducted by Perceptive Insight among 190 companies. The survey ran from April 2 – 23.
While the uncertainty engendered by Brexit is one factor, Covid, availability of raw materials and the cost of doing business have also been high on the risk list.
Manufacturing NI chief Stephen Kelly says the resilience and optimism of Northern Ireland firms are helping build confidence.
“While 77% said they have experienced a negative impact on their business since the Brexit transition period ended, a growing number are saying they are on top of issues. A sizeable number, 36%, believe the difficulties are likely to persists, however,” says Mr Kelly.
“What almost half of the business surveyed are telling us is that the NI Executive must identify and secure new opportunities to support them,” he says. “We have seen from the survey that 86% of firms have increased input costs on transportation and 66% want the government to cut employment related costs to support the sector.”
Although Covid-19 continues to affect manufacturing businesses, the survey reveals that the sector is showing signs of recovery compared to July 2020. 17% of those surveyed described their business as reducing or contracting compared to 42% previously. 48% are experiencing growth, compared to 23% previously.
Increased expenditure on raw materials has been experienced by 93% of manufacturers and 37% said disrupted supply chains are the biggest obstacle to their firms’ recovery.
As for the future, 45% of businesses expect that the sector will see growth in the next 12 months, compared to 15% that expect continued weakness. 48% believe their productivity will improve in 2021. However, 44% expect their profit margins to deteriorate in 2021 relative to the previous 12 months, although 35% expect to see improvement.
James Donnelly, Head of Corporate at Tughans, says that despite the challenges of Covid and Brexit, there is a good sense of optimism at present.
“Despite everything, many of our clients in the manufacturing sector have reported a relatively strong performance in the last year,” says Mr Donnelly. “There is positivity with many expecting growth and this is reflected in clients’ future plans in relation to recruitment, investment and transactions.”
Northern Ireland’s top three manufacturing sectors include machinery and equipment; rubber, plastic and other non-metallic mineral products; and wood, paper and printing.