Almost half of manufacturers have admitted their preparations for the end of the EU Transition Period have been curtailed by COVID-19, with smaller businesses the most likely to be affected.
In a survey of 500 UK manufacturers conducted by insurance broker, Lockton, 46 per cent said they had suffered setbacks in their efforts to prepare for the 31 December deadline. A quarter admitted that they have failed to make appropriate arrangements altogether.
The findings show that smaller manufacturers have been the most exposed to setbacks. Nearly a third (30 per cent) of SMEs surveyed said they have failed to put the necessary provisions in place, compared to 19 per cent of large companies.
Common areas that have failed to receive sufficient attention include foreign exchange risk, product calls, supply chain delays, risks to administration costs and processes, and the renegotiation of long-term contracts and commitments.
The most common action that manufacturers have taken to prepare for life outside the UK has been to localise their supply chain. More than two fifths (42 per cent) of the companies surveyed said they have made some efforts to localise supply, with a further 20 per cent saying they have made every relevant step they need to in this area. A fifth of companies also said they have adapted their product offering to limit their use of international suppliers.
However, more than half of those surveyed (53 per cent) believe they will need to continue searching for alternative supply chain options into next year.
Debbie Day, Managing Partner at Lockton, said:
“This has clearly been a difficult year for manufacturers who have had to adapt to the significant disruption of the pandemic, whilst trying to overcome the challenges around the uncertainty of the EU withdrawal.
“Each aspect of the supply chain needs to be reconsidered and particularly what risks businesses have been exposed to, and to what extent. We’ve seen that many businesses are taking the necessary steps, in terms of securing alternative suppliers and putting in place the resources to work through the incoming tax and administrative changes, but a significant proportion are still behind where they need to be.
“However the final terms of Brexit are settled upon, it’s essential for businesses to undertake full supply chain risk assessment, so that they can fully understand their exposure and the cost implications.”