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UK manufacturers say six-month furlough extension is vital

20 July, 2020

Britain’s manufacturers are calling on the Government to extend the Job Retention Scheme for strategic industry sectors by six months to avoid losing highly skilled job losses in manufacturing on a scale not seen since the 1980s. It argues that these sectors are of critical importance to the long-term health of the UK economy and their protection is an investment in the country’s industrial future.

The call by Make UK to extend the furlough scheme comes on the back of its latest Manufacturing Monitor survey which reveals that the number of companies planning to make redundancies in the next six months has risen from 25% eight weeks ago, to 53%, despite a gradual improvement in sales and orders.

Almost a third of companies (32.3%) are planning to make 11–25% of their employees redundant, with just under 8% planning to make between 25-50% of their workforces redundant.

The proportion of companies expecting a return to normal trading to take 12 months or longer has risen from just under a third in Make UK’s previous survey, to 42%, while just 15% of companies report that they are now operating at full capacity. Almost a fifth (18.8%) are operating at 25-50% of capacity, with just under a third (31.8%) at 50-75%.

Make UK wants the Government to extend the furlough scheme by six months, specifically for the automotive and aerospace sectors. In addition to being major direct employers, these high-value sectors have long supply chains employing large numbers of people.

According to Make UK forecasts, the automotive sector will lose 34% of its gross value added this year while “other transport” – mainly aerospace – will be 15% lower.

Make UK stresses that measures for these sectors would be similar to those taken by Germany, France and Italy.

For example, to date, the French Government has provided support, including loans, worth €15bn to the aerospace sector and €8bn to the automotive sector, while there is speculation that Italy will soon announce a car scrappage scheme worth €1bn as well as a further €10bn to support furlough schemes across the economy. Germany has a €3,000 subsidy scheme for new electric cars and has announced a €50bn package for research and innovation in new technologies such as fuel cells and hydrogen.

Make UK has also reiterated its call to set up a National Skills Taskforce involving the trades unions and other key stakeholders to ensure key skills are retained and redeployed within manufacturing.

“There is no disguising the fact these redundancy plans make for very painful reading,” says Make UK’s CEO, Stephen Phipson. “As well as the distressing personal impact on livelihoods across the UK, industry cannot afford to lose these high-value skills, which will be essential to rebuilding our economy and investing in the industries of the future.

“At present, the prospect of a V-shaped recovery for industry seems remote,” he continues. “Therefore, if we are to mitigate the worst impact of potential job losses Government must extend the furlough scheme for key strategic sectors to provide them with vital breathing space.

“In addition, Government should consider measures similar to those introduced by competitors to boost demand in the aerospace and automotive industries in particular,” Phipson adds. “These sectors are vital to the future of industry and are at the forefront of developing new technologies which will be essential to the success of our economy.”

Make UK’s latest survey covered 170 companies between 7–14 July. The organisation says it represents 20,000 companies of all sizes, from start-ups to multinationals, across engineering, manufacturing, technology and the wider industrial sector. It directly represents more than 5,000 businesses who are members of Make UK.

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