Manufacturing – the key to UK recovery

Manufacturing companies are showing the greatest resilience to the weak economy and have increased their usage of temporary agency workers by 80%, year on year.

Research by insolvency experts Begbies Traynor found a 17% fall in “post-Christmas financial distress’ in 2012, compared to last year.

The figures relate to those with “critical” issues such as facing county court judgments totalling £5,000 or a winding up order, or “significant” problems, with court actions pending or out-of-date accounts. Print and packaging firms stress fell by 73%, food and beverage producers’ by 37%, and other manufacturing businesses by 49% year on year.

de Poel’s data from e-tips®, which processes the timesheets and invoices of temporary agency staff in the sector, shows that the usage of temps has increased by 80% year on year – supporting the research from Begbies.

Announcements such as Nissan starting manufacture of a new model in the North East, creating 1,125 jobs in the sector are likely to have buoyed confidence too.

Preparing for the Agency Workers Regulations in the Manufacturing Industry

The Agency Workers Regulations (AWR) offer serious repercussions for manufacturing firms, as they rely heavily on temporary staff to cope with demand during peak periods.

The Telegraph reports: “The manufacturing sector is expected to be the hardest hit, as car makers and food manufacturers rely heavily on temps to cover peak periods in demand and can lay them off when orders slow. Giving temps equal rights after 12 weeks in a job spoils any flexibility that comes with hiring them in the first place.”

The AWR could remove the competitive advantage temporary staffing provides, removing the benefits of reduced costs.

Charles Williamson, Chief Economist at Markit, stated his prediction: “The rate of growth in manufacturing has cooled very significantly since earlier in the year.”

“I think that despite AWR [Agency Workers Regulations] legislation, companies will continue to have workers on short-term contracts and see how the next few months go.”

This exemplifies that temporary workers are indispensible in times of economic turbulence in the manufacturing sector and many employers will continue to hire temporary workers.