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What Happened to Manufacturing in the UK Because of Brexit and Covid?            

Brexit, or the UK’s exit from the European Union, led to many small- and medium-sized enterprises (SMEs) struggling. The loss of easy access to both skilled employees and customers in the EU meant that some firms had no choice but to close. There is a large difference between regions due to Covid changing government policy on manufacturing. For example, Wales has seen more closures than other regions because of Covid public service cuts there. 

When SMEs were asked about which business factors influenced their decision over whether or not to relocate out of the UK after Brexit, nearly all responded with how they thought COVID would turn out. This showed that companies are putting off investing in equipment until they get a better idea of what the results of Covid are going to be. In comparison, 10 years ago, after the 2008 recession, business leaders were more interested in whether or not their customers could pay them back. This time around, CEOs’ primary concern was about COVID policy and how it would affect their businesses. 

The oil industry has recovered from this downturn much faster than other industries. Partly due to a rise in fuel prices since COVID came into effect, fewer service stations have sold diesel, petrol, and electric cars across the UK. The number of service stations selling electric vehicles has almost doubled in just 12 months, increasing from 1,200 sites to over 2,000+. “Until recently, you couldn’t fill up an electric car in parts of the South East, but now there are more than 100 stations across the region and more opening all the time.” 

Two large supermarket chains (Waitrose and Iceland) have reported a rise in their revenue since COVID-19. Iceland has even seen its grocery sales grow by 22% – far higher than most retailers. This is because people are beginning to notice the benefits of eating less meat and dairy. This extra money is also helping high streets recover from previous recessions and those caused by Covid so far. For example, even though nearly 1,500 stores have been affected by COVID so far, many other shops have seen a rise in profits of around 7%. 

This is thought to be partially due to people changing their shopping habits, with 75% of the population saying they are trying to eat more healthily. This means many small convenience stores have seen increased demand for things like fruit and vegetables. It is also easier than ever before for shoppers to find out if places selling particular goods are within walking distance or not in the current day and age. 

Though, food manufacturing companies seemed relatively unphased by COVID-19, with just 3% reporting less revenue in 2018 than the previous year. Mostly due to these companies keeping a close eye on their business with manufacturing software. This might change over time because food prices are expected to rise in the coming years, with factories having to fork out more money for fresh. 

It’s also worth mentioning that COVID-19 has increased the demand for workers across all industries. Many companies have reported that they are struggling to find people with the right qualifications, especially in skilled food manufacturing jobs. This may be because fewer 16-24-year-olds are entering apprenticeships compared to past generations. 

The head of education suggested this at the business group, CTI, Richard Silbert, who said: “We can’t carry on ignoring this problem or hoping it goes away. The evidence is clear that the number of young people taking up apprenticeships has fallen dramatically.” 

Although trade seems to be recovering slightly since April 2018, many transport firms remain cautious about whether Brexit will become a major issue in future years or not. For example, parcel delivery firms lost nearly £400 million in revenue between July and September 2018 alone. This is largely due to COVID-19, with many EU residents now residing at home until they understand what will happen next. 

This has also impacted the retail industry as well, especially large box stores like IKEA, which have seen a 16% fall in revenue since Covid started. This is thought to be because their customers are staying at home more often than before, meaning there isn’t as much footfall through their doors. 

Larger logistics companies maintained their workforce numbers during the first wave of Covid but only just – with most having already made redundancies by March 2019. For example, UPS would lose about 10% of their workforce in the UK through retirements, redundancies, and people leaving for other opportunities. 

Large companies like Amazon could weather this storm without too much trouble, though – only shedding 1% of their employees over the past year or so. This is because they already have several other offices across Europe that can pick up the slack if there are any issues with one country. For example, Amazon currently has eight fulfillment centers (warehouses) in Ireland alone. 

Large parts of the automotive industry also struggled during Covid, especially those based on car hire services like hiring out vehicles by the hour or day. This was mainly due to fewer Europeans visiting London than normal – even though tourist numbers remain high across Europe. 

Car hire companies have reported a drop of around 15% in revenue since Covid-19 began – with the biggest problem being hiring vehicles from airport terminals, train stations, and other key locations. This is because so many people have stayed at home until they know what will happen to them after Brexit. 

The automotive industry has lost about £1 billion due to COVID-19, which includes car parts for manufacturers and retail staff. For example, Jaguar Land Rover announced that it would be making 2,000 redundancies in May 2019 alone due to lagging sales across many world markets but especially Europe. 

However, businesses that do a lot of work with mainland Europe fared worse COVID-19 than those with a local focus. For example, half of all construction and services companies in the UK rely on EU workers for at least one-third of their workforce. This is because more than 100,000 of them were expected to leave by 2020 if Britain still wasn’t part of Europe. 

Construction and service businesses like catering and hospitality lost £1 billion after COVID-19 started, mainly due to abruptly canceling contracts by European companies who didn’t know what would happen next. 

Even if Brexit becomes a major issue in future years or not, it may actually be good news for some business sectors like healthcare and biotech. So far, these industries have benefited from increased demand for vaccines and medical supplies used to help treat symptoms caused by COVID-19. 

This is due to most businesses choosing to maintain their staff for as long as possible – which means that nearly one-third of front-line medical personnel have either seen a Covid patient or been exposed directly to the virus. 

Even though these business sectors have benefited from Covid, it is still too early to tell whether this is down to luck or be successful regardless of what happens with Brexit and COVID-19. 

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