Warning of tough winter ahead for Black Country businesses

Ahead of the start of Conservative Party Conference in Manchester, Corin Crane, chief executive of the Black Country Chamber of Commerce, is calling on the Government for immediate solutions to the obstacles limiting economic growth, productivity, and prosperity for multiple manufacturers across the Black Country and wider West Midlands.

Mr Crane said: “Whilst businesses are fighting for post-Covid recovery, and trying to remain optimistic about future economic growth, both domestically and internationally, the interrupted flow of goods and services, heightened uncertainty, spiralling costs and delays are dampening this confidence.

"Following the creation of a briefing document we worked alongside fellow businesses leaders, agencies and support organisations across the region to highlight challenges and prospective solutions and we want the government to hear our message loud and clear.”

Mr Crane said the manufacturing sector in the West Midlands contributed 15 per cent to regional GVA and employed 11 per cent of the workforce – both above the national averages – but was heavily reliant on ‘just in time’ supply chains, whilst shipping additionally remains vital to businesses given the £23.8 billion worth of goods the region exported in the first quarter of 2021.

“Businesses face daily challenges with the increasing cost of raw material, particularly steel, aluminium, semi-conductors, polythene and cardboard, while shortages of raw materials entering the supply chain are particularly concerning for those in the steel sector and exacerbated by steel safeguarding measures and quotas.

“For our businesses importing and exporting across the world, they continue to face increased shipping costs, particularly to Asia and North America, there is mountains of paperwork and heavy bureaucracy which continues to harm exporting to the EU, coupled with VAT payment challenges, it’s hardly surprising that European businesses look less favourably to UK companies for purchases due to added complexity of importing and exporting and future trading uncertainty which is having a detrimental effect,” he explained.

Contributing factors include increased time delays and costs businesses now incur with the need to complete customs and VAT declarations post EU Exit.

In a survey carried out by West Midlands’ Chambers of Commerce, 40 per cent of respondents had experienced increased costs due to Brexit, rising to 76 per cent when just looking at manufacturers. In addition, no firms indicated that they have found importing or exporting easier post-Brexit.

Meanwhile the haulage industry continues to face mounting pressures with a severe shortage of qualified HGV drivers, their problems are being played out at the beginning of every news bulletin and as the sector grapples with its own challenges, recruitment and retaining drivers, the current, much publicised fuel delivery crisis, just emphasises the pressures the sector is under.

Also labour shortages are now an even bigger challenge across multiple sectors.

Mr Crane said: “Complicated by staff on furlough, who have now found other work outside of their original sector, with a high proportion of those furloughed from the EU having returned to EU countries to find work, the government’s kickstart scheme has been held up with applications in the pipeline awaiting approval and applicants not meeting minimum criteria.

“The end this week of the furlough scheme marks a closure to what is one of the most successful government business interventions in modern history. The scheme was implemented quickly by HMRC and was a critical factor of survival for businesses across the country. It has supported over 11.6 million and has accounted for 20% of the entire governmental budget for Covid – a cost of around £66bn.

“Whilst nearly everyone appreciates the scheme must end, it comes at such a difficult time for business and highlights the increasing range of critical issues facing many businesses this winter.

“These increased wage costs could prove fatal for many businesses who are already hit by cashflow problems and increasing costs to their bottom line.”

In the West Midlands alone there are currently over 170,000 unfilled vacancies – but despite this, the Black Country has higher than national and regional levels of unemployment for both young and older people with vacancies that cannot be filled.

“Too often local people don’t have the right skills,” said Mr Crane, “and the support to take up these positions, local businesses cannot continue without the right employees to help them recover.

“There is no quick fix to this and without urgent policy changes and more overseas workers in critical sectors it will be many years before areas like the West Midlands get back to pre-covid levels of growth.

“When furlough ended this week, there were 36,000 people still being supported by the scheme in the Black Country, so this end should represent the start of a set of skills and recruitment policies, but it is hard to see where this strategy is.

“We need to boost apprenticeships, we need to understand the barriers to getting people into work, we need to immediately relook at the Government’s skills levers for immigration and we need delegated powers at a West Midlands level to match skills policies with the highest areas of unfilled vacancies.

“Without immediate action, we may be facing the toughest economic winter yet.”