Supply chain woes continue for Midlands businesses - BDO

Domestic and global supply chain issues continue to hamper the growth of Midlands businesses, according to the latest report from accountancy and business advisory firm BDO LLP.

The bi-monthly Rethinking the Economy survey of 500 mid-market businesses has revealed that nearly half of regional companies (46 per cent) view supply chain disruption, such as delayed materials and a lack of supplies, as the biggest challenge over the next six months.

This ranks ahead of access to labour, including skills shortages and immigration (41 per cent), with more than a quarter citing rising interest rates and the cost of borrowing (28 per cent) as their number one concern.

The survey showed that the resurgence of COVID-19 in China, including ongoing lockdowns and a recent spike in cases, has caused renewed delays and made it harder for 39 per cent of businesses to access goods or materials.

While ongoing supply chain issues are having the biggest impact on regional companies, rising business and material costs, such as higher rents and soaring energy bills, are also proving to be a real cause for concern.

According to the Rethinking the Economy survey, a quarter of Midlands businesses said goods and raw materials have become more expensive, with the cost of importing and/ or transporting goods and materials increasing for 26 per cent of those surveyed.

However, businesses in the region are taking a number of steps to deal with supply chain pressures and rising costs, with 30 per cent admitting they intend to launch new products or services to diversify revenue streams.

Nearly a third of companies (30 per cent) will be forced to pause domestic expansion plans, as a result of supply chain issues, while 28 per cent of Midlands businesses will have to take on new debt or increasing overdraft facilities.

Kyla Bellingall (pictured), regional managing partner at BDO LLP in the Midlands, commented: “Supply chain pressures and the rising cost of doing business have been enduring themes for Midlands businesses for many months, as they battle with ongoing geo-political and economic issues.

“The next six months will prove hugely important as they attempt to mitigate these effects by ramping up productivity in their business.

“With access to labour also hampering many businesses, it 's unsurprising that many Midlands companies are going to great lengths to keep the wheels turning, whether that 's by investing in upskilling or retraining staff (34 per cent), or channelling funds into new software or digital capabilities (33 per cent). ”

“Mid-sized businesses are the UK 's economic engine and the heartbeat of our region. In the year ahead they must continue to show resilience and innovation in their approach to addressing important business issues, such as labour and productivity.

“However, they cannot do this in isolation. They must be given the right support to tackle ongoing challenges and help to drive both sustainable and responsible growth. ”