The cost of living crisis hits manufacturing: What you need to know

Photo by Kateryna Babaieva

Output growth has come to an almost standstill pace in the manufacturing sector, with business optimism hitting a two-year low. In fact, it has reached the lowest point since May 2020, which was of course shortly after the pandemic had become a global issue and the future of all businesses was uncertain. As of June 2022, companies have indicated a reduced new export order intakes and a slower growth of domestic demand. The war in Ukraine, raw material shortages and the slowdown in China have all contributed to the reduction in new work received. So what do you need to do if your business in this area has been affected, or you think it’s likely to be? 

Reconsider your supply chain

The shortage of many materials due to the Russia/ Ukraine conflict, and difficulty importing and exporting to different countries due Brexit, combined with backlogs and delays from the pandemic have created the perfect storm for supply chains. It’s worth reconsidering your supply chain if you’re currently being affected or you think that you may be. Are you able to use more local companies rather than those from overseas? This might mean paying more money, but would ensure a more reliable supply chain. You would of course need to offset the cost so do your research to see if customers and clients would still be likely to keep buying your products if the price does go up. 

Conduct market research

Speaking of market research, this is an important one to consider right now. With inflation reaching record highs and a cost of living crisis in full swing (and about to get worse with winter fuel price increases) many people are cutting back on their spending. If your products are deemed as non essential then there’s a chance you could suffer with decreased sales and profits over the coming twelve months and beyond. Consider if there are ways you can adjust what you sell to ensure you can stay relevant and provide products that people are likely to keep buying. A small change to your design, or even where your marketing budget is being spent could make the difference between success and failure of your entire business during this time. 

Ensure your product is of a high standard

Finally, it goes without saying that everything you sell should be of a high standard. When you’re switching suppliers, raw materials and possibly even changing the design of what you sell, don’t overlook the most important thing- what you’re selling needs to be good quality. Don’t skip out on finishing steps like powder coating services, and remember that if your product or its function changes even slightly then you’ll want to rethink your marketing situation. 

The past few years have been a really difficult, volatile time for businesses and unfortunately it’s not getting better yet. So do what you can to remain relevant and provide products that your customers and clients want and need during these times.