Overseas firms rerouting supply chains from UK factories

Will Green is news editor of Supply Management
1 May 2019

Overseas firms are rerouting supply chains away from the UK, according to the latest PMI.

Export orders for the manufacturing sector dropped at the second fastest pace in four-and-a-half years in April due to Brexit prevarication.

The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index fell to 53.1 in April, down on 55.1 in March and against the neutral reading of 50.

Brexit stockpiling of inputs and finished products has been the key theme for manufacturing in recent months, though the delay to the UK’s departure meant rates of increase in both stock measures eased.

Duncan Brock, group director at CIPS, said: “As Brexit prevarication continued, overseas clients took to action and found new supply chain routes away from the UK, resulting in the second-fastest drop in new export orders in four-and-a-half years.

“The mild rise in domestic orders was unable to meet this significant shortfall in business and with the extended Brexit deadline, the levels of stockpiling slowed as UK manufacturers turned their attention to building efficiencies instead.”

Average purchasing costs rose, mainly due to higher prices for commodities, energy, oil and raw materials. Output charges also rose.

Rob Dobson, director at IHS Markit, said: “Manufacturers’ outlook remained relatively upbeat, with over 50% forecasting their output will be higher in 12 months’ time. Companies plan to use new product launches, new technologies and improved marketing strategies to drive growth forward in the coming months.

“However, Brexit uncertainty continues to weigh on plans, as some firms remain concerned about future growth prospects and the likely impact on output and demand from the unwinding of inventory positions later in the year.”

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