Coronavirus reveals UK supply chain weaknesses

London

CORONAVIRUS-FRACTURED supply chains are providing a wake-up call to British business and leaders with just seven months to go before Brexit triggers the biggest shake-up of trading relationships in a generation.

Eighty-two per cent of small- and medium-sized manufacturers say that the pandemic has affected their supply chains. That's according to a survey of more than 600 English firms by the South West Manufacturing Advisory Service (SWMAS).

Meanwhile, the government has faced heavy criticism as it struggled to fly in emergency supplies from abroad while UK factories were shuttered and workers sat at home. Now, as Prime Minister Boris Johnson encourages the sector to return to work, some say the time is right to look at bringing more supply chains back onto British soil.

Reshoring has been a buzzword for a few years as populist politicians rail against globalisation gone a step too far. Mr Johnson included a pledge to encourage government bodies to buy British in his December re-election campaign, promising to ditch "absurdly complex" European Union (EU) rules on public procurement with their "pointless tendering requirements".

The pandemic is bringing the issue into sharper focus. Stories about plane loads of protective equipment for medical workers being delayed or having to be scrapped because it's substandard, and government calls for manufacturers to suddenly turn their skills to ventilator and hospital-gown production are likely to stick in the minds of both the public and leaders.

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"Covid-19 has brought home how reliant we have become on overseas supply of strategically critical components," said Martin Coats, managing director of the Manufacturing Growth Programme, which undertook the survey alongside SWMAS. "We must learn lessons from this and do everything we can to re-establish UK production of these parts and protect SME manufacturing now and in the future."

Blackman and White, a Maldon, Essex-based cutting-machine manufacturer, had to give up trying to produce free protective masks for UK's NHS (National Health Service) workers on its own equipment due to a lack of available suitable plastic materials, and has instead switched to hospital gowns.

"This has highlighted a lot of issues," said Eiko Ichikawa-White, a director at the company. "We were worried about supply chains being stressed anyway with Brexit. Now we're in a situation once again that poses the same threat."

The struggle by businesses to remain solvent through the pandemic comes as the UK's departure from the EU looms. Key talks about the future relationship are stumbling, with few signs of progress ahead of a deadline next month to decide if it's worth continuing. If Mr Johnson carries through his threat to walk away, Britain could end its transition period on Dec 31 without a free-trade deal, putting yet more pressure on firms and already strained supply chains.

For some, pre-existing worries about possible Brexit disruption have proved useful so far. Rowan Crozier, chief executive officer of metal-pressing firm Brandauer, said that his contingency planning for a no-deal departure from the EU meant that he had already secured access to multiple sources of the metals he relies on to manufacture tooling and components long before the health crisis began to disturb existing arrangements. Even so, the Birmingham-based company still faces critical shortages of items like hand sanitiser and protective equipment needed to keep staff safe, and Mr Crozier sees a "totally different" future for supply chains.

"As a country, there will be more focus put on de-risking supply chains, having shorter supply chains," he added. "There will be de-risking that goes on that means if you can't get stuff out of Asia, or wherever it's being made, there is an alternative as a backup. There is support the government could give to encourage that to happen, particularly whenever we do head toward our full departure from the European Union." BLOOMBERG