Barclays reveals how North West manufacturers are impacted by supply chain issues

North West manufacturers have around £2 billion worth of goods awaiting completion in warehouses amid supply chain issues, according to a new report by Barclays.

The study, ‘Chain reaction’, by Barclays Corporate Banking has explored the impact of supply chain issues on manufacturing businesses nationwide with over 10 employees. Their survey found two thirds (67%) of North West businesses are currently holding items in their warehouses awaiting completion because raw materials, ingredients or component parts have not yet been delivered from suppliers. On average, this ‘unfinished business’ is worth over £735,000 to each company impacted.

After continued disruption first from the pandemic, due to Brexit, and now the ongoing invasion of Ukraine, 78% of North West manufacturers say they are still facing supply issues. 68% have also reported that customers are having to wait longer for products.

Despite the challenges being faced, Barclays identified how the region’s manufacturing sector was innovating in response. Most commonly, North West businesses are moving their UK suppliers closer to their production plants (46%) and increasing their storage capacity (41%) to prepare for the fact raw materials are taking longer to source. Meanwhile, one third (33%) are “near shoring” to move their supply chains closer to home and 33% have “friend shored” to work with suppliers in countries that have a strong trading relationship with the UK.

To maintain cashflow and liquidity, nearly half (46%) of North West manufacturing firms are accessing additional bank funding and more than four in ten (42%) are selling off assets. 40% are optimising their working capital cycles, while 36% are turning to shareholder loans to raise funds.

Such measures are leaving the industry confident in the medium-term. Seven in ten North West manufacturers think supply chain challenges will improve over the next six months, and 88% are confident about growth next year, Barclays found.

Lee Collinson, Head of Manufacturing, Transport and Logistics for Barclays Corporate Banking, said:

“The British manufacturing sector has faced a perfect storm of challenges this year, with rising costs, the war in Ukraine, labour shortages and ongoing Covid lockdowns in China hitting supply chains hard. As a result, billions of pounds worth of goods are trapped in warehouses unfinished, and this may hit industry turnover in the early part of next year.

“However, manufacturing firms have done what they do best and engineered new solutions to limit the impact of the issues they face. As a result, many businesses will enter the new year with a degree of cautious optimism and confidence.”

The full report into how supply chain issues are affecting manufacturers in the North-west and across the UK is available to read on the Barclays website.