Our latest Manufacturing and Engineering Survey is now open!

It’s a challenging time for the manufacturing sector and the wider world as the COVID-19 pandemic continues to impact our daily and working lives.

Earlier this year, we undertook a national sector health check survey asking manufacturing firms across the UK how they have managed through the crisis.

We are running a third Manufacturing & Engineering temperature check to help us compile the latest nationwide picture of the state of the sector. Your feedback will help our specialist advisers gauge where the sector is and what can be done to respond to current challenges.  

This mini survey focuses on the impact of COVID-19, Brexit, supply chain and other challenges for the sector and how firms are responding to industry changes.    

The survey should take no longer than 1 minute. It will be used used to compile benchmark data, which will help us better understand how the sector is responding to current challenges.  

The survey will be open until Friday 1st October 2021.

Take part now!

https://www.surveymonkey.co.uk/r/mhaTW21

If you have any queries about the survey or would like to know more about the services MHA members provide, please contact us at advice@taitwalker.co.uk.

Alastair Wilson’s comments on MHA’s manufacturing temperature check results in the North East

The latest MHA Temperature Check, which has been completed by manufacturers in the North East would suggest that, like for society as a whole, the impact of both the pandemic and Brexit are starting to ease.

The manufacturers in our region typically see the ongoing impact of the pandemic as a short to medium term issue (typically not more than 24 months and more often less than 12 months) and this ties to our conversations in the region where the manufacturing sector has on the whole had a relatively strong period in the autumn of 2020 and then the beginning of 2021.

On the whole we are seeing manufacturing leading the return to work as the first mover across the North East’s business sectors and manufacturers are typically starting to encourage “finance and administrative” teams back to the office where they would have been working from home previously. A key focus for many of our clients in the region now is ensuring that the measures that help to mitigate any residual risks from the pandemic are implemented quickly.

This is typically a focus on rolling out workplace testing programs, additional safe working practices and a focus upon welfare and health and safety. As more of the manufacturing workforce is vaccinated, so more of the workforce are gaining confidence about returning to the workplace. For many of the businesses in the region the current focus is moving back more to “normal”, the product being made or sold has typically reverted back to the core business models pre pandemic and production staff have typically returned to full strength or close to full strength. Businesses are now starting to also implement lessons learned in the pandemic in terms of working practices, or moving forward with opportunities that have arisen such as acquisitions. Like prior versions of the Temperature Check, the businesses in our region generally regarded the support for the sector from the Government through the pandemic as having been sufficient.

Equally, as business returns to a more normalised manner of working, so we are also seeing sales teams from within manufacturing businesses moving back to being “on the road” rather than relying on Teams or Zoom and site visits becoming more frequent. Investment programs for plant and machinery which had been put on hold have started to be put back into action and confidence is recovering as the lockdown in early 2021 has come to an end.

Manufacturers in our region are continuing to have issues with Brexit but as the logistics and freight providers (and customers) have become more used to the impacts of Brexit, so we are seeing that the overall impact is starting to feel less burdensome. However the overall trend towards businesses making structural changes to supply chains to minimise the impact of duties and administrative changes is continuing and we are seeing clients changing supply routes to avoid customs borders where possible.

Some of these changes will involve goods which otherwise would have been routed through the UK in the past now being routed around the UK and so this will unfortunately have an impact on jobs and investment in some cases. The changes from Brexit for the sector may become more “permanent” over time as businesses continue to seek ways to change their trading models to reduce the burden of Brexit so that they remain competitive.

What did our clients say?

Most current problems are caused by Brexit, this could have been delayed. The lack of clear and concise guidance from government in all areas has been a major problem.

Extended transit times. Additional time required by our supplier to complete paperwork. Loss of services (For example direct shipping to customers from our factory.) Customers in ROI looking for alternative supply routes cutting out UK Complications of returning units to EU for repair.

Contact us

For further information, please contact Alastair Wilson at alastair.wilson@taitwalker.co.uk.

Budget 2021: Overview of the key measures for North East manufacturers

As members of the Advanced Manufacturing Forum, the Engineering & Manufacturing Network and the North East Automotive Alliance, we work with a large number of manufacturers in the region and we understand how the changes in a Budget can have a very significant impact on the health of this sector, which is a key part of our regional economy.

We have summarised below our view on some of the key measures which will impact manufacturers and which were announced by the Chancellor in his 2021 Budget:

The changeImpact on manufacturersOur view
Increase in Corporation Tax rates to 25% with effect from 1 April 2023. Small companies rate of 19% retained for profits of less than £50,000 a year and a marginal rate of 26.5% for profit between £50,000 and £250,000.This will add to the cost base of many manufacturing companies in our region and it will reduce the cash available to invest after that date.

For many manufacturers, the small companies rate will be exceeded and so the tax rate of 25% may apply in full.
The increased corporation tax rate is disappointing and the change is a cliff edge rather than a phased approach. The increase in corporation tax is expected to be costing UK businesses approximately £17bn a year in additional corporate tax by 2026.

The manufacturing sector pays approximately 10% of the UK’s entire corporate tax each year and so this will be expected to be adding approximately £2bn a year to the manufacturing cost base by 2026.
The “super-deduction” for capital allowances. A temporary first year allowance rate of 130% will be in place from 1 April 2021 to 31 March 2023. Manufacturers who commit to spending on new, unused, assets such as production lines and other plant may be able to get a full tax deduction, including a 30% enhancement, for expenditure incurred prior to 31 March 2023. On one hand this “super-deduction” is a really encouraging policy as it encourages investment. However, capital allowances are effectively just an acceleration of relief and without the introduction of the superdeduction some manufacturers may have deferred non essential expenditure until they were able to get tax relief at 25% from 2023.

Without the super-deduction expenditure prior to 2023 which qualified for the AIA would get tax relief at 19% but then the depreciation would be added back partly at 25% – so actually costing more for the business.

So the super-deduction is sensible but without it many businesses would have paused investment until the higher tax rates came into force.
Enhanced use of tax losses including an additional carry back of up to two years for company accounting periods ending in the period 1 April 2020 to 31 March 2022. This may benefit manufacturers who have incurred tax losses, where those tax losses haven’t been used on other ways (eg are not surrendered for R&D Tax Reliefs) may now be able to carry back the losses to periods where it may be possible to recover additional amounts of tax. It may facilitate the ability to recover tax from eg 2018 or 2017 periods whereas normally only the prior period (so eg 2019) is normally able to be accessed. This is welcome news on one hand as it may unlock additional tax from prior periods. However it is also encouraging businesses to utilise losses at 19% which otherwise may save tax in the future at 25% so there is a “cost” of using the losses in this way (it is not entirely a giveaway by the Chancellor).
Extension of furlough to end of September 2021The extension of furlough will help businesses to bring back their staffing capacity to pre-Covid levels in a controlled manner by (hopefully) enabling any temporary reduction in staffing to be managed via furlough but unwound over the summer. This is to be welcomed as it enables manufacturers to plan for the removal of lockdown and plan for what is hoped to be a fast recovery to normal economic activity Help to Grow – a £520m fund to support SME’s with training for their senior management and also digital technology useover the summer months.
Help to Grow – a £520m fund to support SME’s with training for their senior management and also digital technology useSMEs with up to 249 staff will be able to apply for funded training for key decision makers and also certain IT projects (including CRM and online sales). We would see this as a very sensible aspect of encouraging growth within SME businesses and which may help them to grow faster where they are able to compete more evenly with online businesses as a consequence.
Consultations into R&D Tax Reliefs and Enterprise Management Incentive schemesBoth R&D Tax Reliefs and EMI schemes are used extensively within the manufacturing sector in our region – so the outcomes of the consultations may impact a lot of businesses in our region.We will be feeding into both consultations to ensure that any amendments enhance the legitimate use of both R&D Tax Reliefs and EMI schemes to support the regions manufacturing sector.
What didn’t changeImpact on manufacturersOur view
The administrative burden of Brexit and cross border tradingMany manufacturers are struggling to deal with the ongoing red tape and administration which is continuing to hinder trading cross border (or trading with Northern Ireland). The Government need to step up their efforts to agree simplified arrangements with the EU in relation to trading both with the EU itself but also Northern Ireland.

Contact us

For further information, please contact Alastair Wilson at alastair.wilson@taitwalker.co.uk.

MHA Manufacturing & Engineering Temp Check: Round 2 is now open!

It’s a challenging time for the manufacturing sector and the wider world as the COVID-19 pandemic continues to impact our daily and working lives.

Last year, we undertook a national sector health check survey asking manufacturing firms across the UK how they have managed through the crisis.

We are running a second Manufacturing & Engineering temperature check to help us compile the latest nationwide picture of the state of the sector. Your feedback will help our specialist advisers gauge where the sector is and what can be done to respond to current challenges.  

This mini survey focuses on the impact of COVID-19 on the sector and how firms are responding to industry changes.    

The survey should take no longer than 1 minute. It will be used used to compile benchmark data, which will help us better understand how the sector is responding to current challenges.  

Complete the survey

Investment on Teesside

Andrew Moorby, our Managing Partner and Head of our Teesside office, welcomed the news that hundreds of jobs could be created in plans for the £150m Tees Valley steelworks project.

Tees Valley Mayor, Ben Houchen, has announced plans for a programme of demolition work across the Teeswork site. The £150m project, which will take place over the next five years, is expected to begin in March next year.

The news comes on the back of announcements in recent weeks of £17m Government investment in construction projects. Middlesbrough Station, a new Life Sciences Park at Central Park in Darlington creating 150 jobs and £4.1m to build new entrances, buildings, and facilities at the TeesWorks site.

Andrew said:

“Our firm can trace its roots in Teesside back some 60 years. Over that period there have been highs and lows and some false dawns but there certainly now seems to be a concerted effort to take the area forward and in doing so bring new industries to the area creating a more diverse and dynamic local economy.

Whilst the initial drive can come from local government, and, in particular the Combined Authority, we will all have a part to play if the area is to take full advantage of the opportunities put before us.

As a firm we are investing heavily to attract new talent and provide the bespoke training necessary in order to provide the specialist accounting advice needed by the new industries. We can help clients access grants and raise finance, take advantage of specialist tax reliefs and ensure that they are prepared now for whatever tomorrow will bring.”

He added:

“We advise a broad range of clients in the manufacturing and engineering sector and have built up a wealth of experience over the years. We help our clients with identifying opportunities for growth, diversifying into new sub-sectors and expanding internationally, so I am confident that the new Teesside projects will bring a wealth of opportunities to the sector.”

Our experience

Contact us

For further information please contact us at advice@taitwalker.co.uk.

MHA Manufacturing & Engineering Mini Survey

The MHA Manufacturing & Engineering specialist team works closely together to ensure our clients in the sector are supported during these challenging times.

We are running a Manufacturing & Engineering temperature check to help us compile a nationwide picture of the state of the sector. Your feedback will help our specialist advisers gauge where the sector is and what can be done to respond to current challenges.

This mini survey focuses on the impact of COVID-19 on the sector and how firms are responding to industry changes.

The survey should take no longer than 1 minute. It will be used used to compile benchmark data, which will help us better understand how the sector is responding to current challenges.

Take part in the survey

https://www.surveymonkey.co.uk/r/VCWDDD8