Supply chain delays leave £2bn worth of goods in limbo at Yorkshire firms, Barclays research reveals

The ‘Chain Reaction’ study, based on market research conducted by Censuswide among senior executives of 631 UK-based manufacturing businesses, found that 66 per cent of Yorkshire and Humber businesses are currently holding items in their warehouses awaiting completion because raw materials, ingredients or component parts have not yet been delivered from suppliers.

On average, this ‘unfinished business’ is worth over £900,000 to each company impacted.

Nationally, products in the steel and metals sector are most severely affected, with £9bn worth of goods incomplete – equivalent to almost a fifth (19 per cent) of the sub-sector’s annual turnover across the UK.

The most affected consumer goods sector is food and drink, with delays in sourcing ingredients causing a £3bn backlog. A high value of plastic products (£2.6bn) and electronics (£2bn) are also awaiting completion.

Two-thirds (66%) of Yorkshire and the Humber firms interviewed say they are still facing supply issues, which have been excerbated by the pandemic, the invasion of Ukraine and Brexit.

More than eight in ten (86 per cent) of Yorkshire and the Humber manufacturers say their customers are having to wait longer for products, with 30 per cent describing the hold-ups as ‘significant’.

To offset rising costs such as energy and transportation, over half (60 per cent) of manufacturers are planning price increases for their own products, of 31 per cent on average.

Regional firms have been increasing storage capacity, increasing the number of suppliers they use and taken steps to move key suppliers closer to production plants.

More positively, 74 per cent of Yorkshire firms think supply chain challenges will improve over the next six months with 90 per cent confident about growth next year.

Lee Collinson, Head of Manufacturing, Transport and Logistics for Barclays Corporate Banking, said: “The British manufacturing sector has faced a perfect storm of challenges this year, with rising costs, the war in Ukraine, labour shortages and ongoing Covid lockdowns in China hitting supply chains hard. As a result, billions of pounds worth of goods are trapped in warehouses unfinished, and this may hit industry turnover in the early part of next year.

“However, manufacturing firms have done what they do best and engineered new solutions to limit the impact of the issues they face. As a result, many businesses will enter the new year with a degree of cautious optimism and confidence.”