Experts offer manufacturers their advice on Ukraine crisis
21 March 2022
Manufacturing specialists have laid out their views on how UK industry is likely to be affected by the conflict in Ukraine, with companies urged to brace for ‘additional headwinds’.
Manufacturers’ organisation Make UK has published a two-part guide for manufacturers, detailing how to support Ukraine nationals and the likely affects of the war on issues such as energy costs, shipping and transport, input costs and potential future increases in business taxes.
Commenting on the crisis, Mike Thornton, Head of Manufacturing at accountancy firm RSM UK, said:
“As the Russia-Ukraine conflict unfolds, the primary concern of course is a humanitarian one, but it is also important to note that UK manufacturers should brace for some additional headwinds. The surge in energy prices is the most obvious for heavy industry. The pressure is already being felt with unleaded petrol prices reaching record highs.
“The conflict could also squeeze input pricing on certain products. Russia is a major exporter of natural resources including palladium, platinum, gold, oil, gas and aluminium which could put further tension on supply chains. The recent shortages of components, such as microchips, could continue and expand into other areas as sanctions and export restrictions limit supply that feed into the wider supply chain.
“Russia and Ukraine are dominant exporters of wheat and corn so food manufacturers could be acutely hit if the conflict continues. Supply could be disrupted which would push prices up further as capacity is reduced.
"In addition, the geopolitical tensions will also play out in the digital space as cyber criminals look to exploit periods of crisis and uncertainty. The manufacturing sector sits within the top three targets for cyberattacks in the UK, and as the cyber risk increases, so does the financial, operational and reputational risk for manufacturers.”
Another expert has warned that the war has already caused enough inflationary damage to last a year. Speaking to Supply Management, Katie Tamblin from data firm Achilles Information said:
“[Even] if for some reason the conflict were able to be resolved tomorrow, it would take up to 12 months for the ripple effects of these price increases and shortages to filter through supply chains. If the crisis goes on for another six months, then you still get these commodity price increases for six months, and you could expect another 12 months after that before things really resolve themselves. I would be very, very surprised if we see any kind of real relief on inflation this year.”
At the Hub we are deeply concerned about the situation in the Ukraine and the impact upon its people. Businesses can access a range of resources on our dedicated page, including webinars and guidance on trade, cyber security and supply chain management.
Manufacturers with concerns are also encouraged to contact our Manufacturing Team for advice and support.