What the Coronavirus means for UK manufacturing: The pros & the cons

The impact of the Coronavirus is steadily being felt across the world, as the virus, recently named Covid-19 by the World Health Organisation, continues to spread further from its Wuhan roots.

The number of confirmed cases in mainland China, the epicentre of the virus, is continuing to climb by the day, and so too are the number of deaths. At the time of writing this article, the total number of deaths was at least 1,114 and the confirmed cases stood at more than 44,000.

Meanwhile, in the UK, the 9th case had just been confirmed and 83 people were in quarantine. From a global perspective, there are reportedly cases in 20 countries.

Wuhan, the region where the first case of Covid-19 was confirmed at the end of last year, is in lockdown, a highly necessary, but majorly disruptive move with widespread repercussions. For the region’s residents, this means they can’t go about their daily business as usual, and for the businesses and transport networks, normal services have all ground to an abrupt halt.

Global supply chain disruption

The impact is devastating, not just on the Chinese economy, but for manufacturers worldwide as supply chains are disrupted. There are reportedly 51,000 companies around the world that have at least one supplier within the affected regions of China.

Supply chains are slowing down, with Japanese car maker, Nissan, being forced to shut one of its factories for two days due to a shortage of parts from China. In the meantime, markets across the world are slipping as fears over the impact of the Coronavirus gather pace.

The ripple effect is significant and for the manufacturing companies waiting for deliveries of components, supply chain delays are inevitable. It also means projects of all sizes are being put at serious risk.

The shift from offshoring to reshoring

But for all the downsides, there is an upside, created by the fact many Original Equipment Manufacturers (OEMs) and tier 1 manufacturers are now having to look closer to home for their parts and components.

There are numerous examples now cropping up of large OEMs tapping back into the regional supply chain for machining assistance, as well as help with sourcing certain components that would usually have been delivered from outside the UK.

The shift in supply chain comes as a big boost for Birmingham-based engineering firm, Rochford Engineering, who are one of the companies that are experiencing the reshoring effect with customers coming back to them with work they had previously lost to China. To have effectively ‘won’ back the work in this way, is an extremely positive outcome for the family-run business.

However, there’s no guaranteeing:

· how long companies will depend on the UK’s regional manufacturing industry for and;

· if they will revert back to their original suppliers once the Coronavirus has reached its peak and supply chains start to resume normal service

The risks associated with this entire situation are unprecedented. Not just from a health perspective, but from the angle of business survival – for the companies that are struggling to keep their supply chains going and the regional SMEs that are being called upon to provide much-needed support.

How can manufacturers evaluate and manage this risk?

While we may be in the midst of feeling the force of the Coronavirus, there are several measures manufacturers of all sizes can take to help minimise the associated risks.

These include, financial risk assessments, which are essential for helping companies identify if their customers have the ability to pay them - and pay them on time – as well as determine if their customers are unlikely to become insolvent, which would leave them exposed on contracts.

There are also dedicated tools in place, such as our free diagnostic tool, that are specifically designed to help companies evaluate their procurement maturity. The pressure to increase productivity is immense, but so too are increasing utility and commodity costs that, of course, can’t be passed on to customers. Are you experiencing these bottlenecks? Where are the risks? And how are you protecting supplies to and from your business?

With the Coronavirus continuing to increase its grip on the worldwide population, the pressure on supply chains to keep moving will no doubt continue to be felt for the foreseeable future. However, there are proactive actions manufacturers can be taking now to make sure they don’t just keep up with the shift from offshoring and reshoring, but thrive, for however long the virus takes hold.

For more information or to discuss how we can help you rise above the risks associated with the current Coronavirus supply chain picture,

contact us on 0330 311 2601 or info@apsuk-ltd.com

or visit our services page to find out more

Effective procurement for your competitive advantage


0330 311 2601

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