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12 December 2012 | Anna Reynolds
More than a quarter (28 per cent) of UK SMEs are looking to cut costs as the price of raw materials spirals, according to commercial insurer NIG.
The study of 500 businesses found larger companies with an annual turnover of £20 million are the hardest hit, with nearly half (46 per cent) actively looking to offset rising raw material costs by reducing spend in other areas of the business.
The research also revealed that 6 per cent of businesses - the equivalent of 109,000 firms - admitted rising prices mean they may not be adequately insured against damage or theft given the extra, unaccounted costs to replace stock.
Jonathan Greenwood, managing director at NIG, said in a statement: “UK businesses have worked extremely hard during the past five years, with many focusing on primary challenges such as maintaining growth and keeping customers happy. However, raw material increases have begun to impact on many firms and there is a clear need for UK businesses to consider how this might have affected their insurance requirements and cover.”
NIG recommended firms carry out risk assessments to identify potential issues and ensure premises and stock are protected from damage or theft.
The research highlighted variations across the country, with the north west the region where companies were worst affected by cost rises, as 52 per cent of firms try to find ways to address the problem. Over 40 per cent of manufacturers are considering reducing their costs, while 25 per cent of retailers are doing the same.
The industries covered in the survey, carried out by BDRC Continental, include construction, hotels and catering, manufacturing and retail.