ROUND-UP APRIL 2020
InDepth 47.8
Fast facts: March PMI fi gures
March’s fi gure
was the lowest
in three months
51.7
The previous
month saw
growth
28 years
Vendor lead times fell
to the lowest level in
the survey’s history
Manufacturing PMI fi gures
plummet on COVID-19 fears
The outbreak of COVID-19
and subsequent mitigation
eff orts across the world led
to a substantial contraction of UK
manufacturing production during March.
Output fell to the greatest extent since
July 2012 following a similarly severe
reduction in intakes of new business. The
impact was also felt in the labour market
and through supply chains. Transport
delays and shortages of raw materials led
to the steepest increase in vendor lead
times in the 28-year history of the survey,
further disrupting production.
The seasonally adjusted IHS Markit/
CIPS Purchasing Managers’ Index (PMI)
fell to a three-month low of 47.8 in
March, down from 51.7 in February and
the fl ash estimate of 48.0.
The latest decrease in total new order
intakes refl ected reduced demand from
both domestic and overseas markets.
New export business declined to the
greatest extent since July 2012, as the
outbreak of COVID-19 led to lower
demand from across the global economy.
There were also reports of project delays,
cancellations and transportation issues.
Employment fell for the eleventh time
in the past 12 months in March, and at
the fastest rate since July 2009. Where
job losses were reported, these were
linked to lower levels of production and
new orders, in many cases due to the
outbreak of COVID-19. Redundancies,
workforce restructuring, natural wastage
and only replacing essential positions all
contributed to lower staff headcounts.
Restrictions in place around the
world in response to the pandemic had
Melanie Kocheva/stock.adobe.com
a noticeable impact on supply chains
during March. Vendor delivery times
lengthened to the greatest extent in the
history of the survey amid reports of
input shortages, transport disruption and
delays in receiving goods from overseas.
International shipping and border delays
were also mentioned.
“The latest survey numbers
underscore how the global outbreak of
COVID-19 is causing huge disruptions to
production, demand and supply chains
at UK manufacturers,” said Rob Dobson,
director at IHS Markit. “The eff ects
were felt across most of manufacturing,
with output falling sharply in all major
sectors except food production and
pharmaceuticals. The transport sector,
which includes already-beleaguered carmakers,
suff ered the steepest downturn.”
Seamus Nevin, chief economist at
Make UK, said: “At the start of this year
manufacturing companies reported
unprecedented optimism about
investment and trade but that had all
been swept away by current events.
With estimates suggesting up to a fi fth
of smaller fi rms could go out of business
in the next few months, Coronavirus has
highlighted the need to maintain and
develop our domestic manufacturing
base. The Chancellor has rightly
intervened to help but even still costs are
going up. A 6.2% increase in the national
living wage came into eff ect this morning
1 April. With expectations of further
restrictions and economic disruption to
come Business optimism is that a record
low and may continue to worsen in the
months ahead.”
Jingye completes
British Steel purchase
Over 3,000 jobs have been saved after
Chinese steelmaker, Jingye Group,
completed the acquisition of British
Steel’s British and Dutch operations,
including the steelworks at Scunthorpe
and UK mills at Teesside Beam Mill and
Skinningrove, as well as subsidiary
businesses FN Steel in the Netherlands
and TSP Engineering in Cumbria.
Jingye has pledged to invest £1.2
billion to place the business on a more
competitive and sustainable footing,
aiming to return the company to
industry comparable margins within five
years. Plans to achieve this include the
development of an Electric Arc Furnace
in Teesside, investment in the rolling
mills and the construction of a new
250MW power plant to serve the
Scunthorpe site, which is expected to
be around a third more ecient than
that it replaces.
“This is a momentous day for our
business, and I’d like to thank everyone
for their dedication during a challenging
year,” said British Steel CEO, Ron Deelen.
“I’m confident we’ll seize the incredible
opportunity Jingye have given us to
build on 150 years of heritage, and
further cement British Steel’s reputation
as a manufacturer of world class steel.”
“The sale of British Steel represents an
important vote of confidence in the UK’s
steel industry,” added Business Secretary,
Alok Sharma. “It also marks the start of a
new era for those regions that have built
their livelihoods around industrial steel
production.
“I would like to pay tribute to
everyone who has been involved in
getting this deal over the line, in
particular to British Steel’s workforce for
whom I recognise the uncertainty will
have been challenging.
“I also want to reassure British Steel
employees who may be facing
redundancy that we are mobilising all
available resources to give immediate
on the ground support and advice to
those aected.”
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