Goods valued at over £1.2 billion are stuck Northern Ireland warehouses awaiting delivery of parts due to a logjam in the supply chain.
That is according to a report from Barclays Corporate Banking which revealed that the manufacturing process in the province in many sectors are being held up as they await key parts, ingredients or other materials. One in 10 business surveyed by the bank said they are holding unfinished product, with those in the metal and steel sectors most badly hit.
Supply chain issues have been an ongoing theme for the last three years, initially caused by a sharp slowdown to global manufacturing and logistics as a result of the Covid-19 pandemic and furthered by the Russian war against Ukraine. That has resulted in delays to production of everything from cars to pharmaceuticals while at the same time pushing up prices.
Manufacturers are having to adapt, the Chain Reaction survey said, with Northern Ireland businesses increasing their storage capacity to store both unfinished product and to hold larger stocks of parts or raw materials.
Interestingly, four in 10 are near shoring their supplier list to reduce delivery delays while others are increasing the number of different suppliers they work with.
As such, there is a need for companies to fund the change in approach with 44% of manufacturing companies surveyed accessing additional bank funding. Over one third are looking for a cash injection from private equity and more than a quarter are turning to shareholder loans to raise funds.
“The Northern Ireland 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,” John Mathers, Corporate Development Director at Barclays Corporate Banking in Northern Ireland, said. “As a result, over £1,2bn 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. Our survey highlights the continuing resilience of the sector in Northern Ireland with over 80% of companies feeling confident about growth next year.”
Meanwhile, latest government data shows Northern Ireland companies ramped up sales to Great Britain under the Northern Ireland Protocol, climbing 7% to £14.4 billion in 2021. That comes as total sales climbed by over 13% to £77.1 billion. Of the latter, £32.4% were made of sales to customers outside Northern Ireland.
