Next three months critical for Midlands manufacturing supply chain – Crowe

JLR’s lower tier suppliers face a difficult six months hanging on for cashflow to improve and new contracts to come through in April, according to manufacturing experts at national audit, tax, advisory and consulting firm Crowe.

Johnathan Dudley (pictured), head of Manufacturing and SME Corporates, said an analysis of the three combined surveys of JLR’s supply chain undertaken by the Greater Birmingham, Black Country and Coventry & Warwickshire Chambers told the same story.

“The government’s £1.5 billion commercial loan guarantee is starting to help Tier 1 suppliers to survive, but with no new orders placed down the supply chain in recent weeks, cash has dried up in the lower tiers”, Mr Dudley said.  

“Many businesses are now facing severe financial strain, clinging on with uncertain cashflow and no clear path to recovery.

“More support is needed to help SME suppliers get through the next three months, ensuring they’re still operating in the New Year, and positioned to benefit when the defence contracts start to filter down the supply chain next year.

“The JLR supply chain has a skillset and range of abilities that can support the government in delivering its Defence Industrial Strategy. There will be multiple opportunities to win contracts in the next round of defence spending, which begins in April next year.

“But first we have to get there.”

Mr Dudley is concerned that there is limited understanding in Whitehall of the real issues facing JLR’s lower tier suppliers.

“Businesses are ‘doing what they can’ to survive and this includes lay offs and redundancies just as the run into Christmas begins,” he added.

“The key has to be for the government to take action now to ensure that the supply chain is still there in the Spring, and even then, it will take time for MOD contract payments to filter down the supply chain and help to restore cashflow.

“Whitehall seems to think that the problem has gone away, but it clearly hasn’t. I am aware that local politicians are asking affected businesses and individuals to contact their own MPs to keep this issue front of mind.”

Any businesses affected by the JLR crisis can contact him on [email protected] or call 0121 543 1900.