By Kristy Dorsey
Almost half of UK manufacturers say their plans for securing supply chains post-Brexit have been damaged by the Covid pandemic.
New research from insurance broker Lockton found that 46 per cent of 500 manufacturers questioned said their preparations have been negatively affected by Covid-19. With just six weeks left before the end of the transition period, one quarter stated they had not yet made appropriate supply chain arrangements.
The findings also show that smaller businesses are more exposed, with 30% stating they have not put necessary provisions in place, versus 19% of larger companies.
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Lockton managing partner Debbie Day said it has “clearly” been a difficult year for manufacturers as they have had to adapt to the disruption from the pandemic while also overcoming the challenges from the uncertainties around the EU withdrawal.
“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 behind where they need to be,” she added.
Of those surveyed, 39% said they had not taken any action to mitigate their foreign exchange risk, while a further 36% are not prepared to manage the risk of increased product calls. More than a third have failed to prepare for supply chain delays, risks to administration costs and processes, or the re-negotiation of long-term contractual commitments.
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Significant challenges are also expected beyond the deadline, with many anticipating further costs during the next six months.
More than half of businesses think they will need to continue to find alternative supply chain options in the first year after Brexit, and 50% believe they will have to keep localising their supply chain during this period. Of those questioned, 45% anticipate having to increase their prices for consumers during 2021.
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