Return from lockdown: the dilemmas facing both Government and manufacturers

The UK Government is facing the unenviable task of balancing economic survival, jobs, and prosperity against the moral obligation of safeguarding the lives of the UK people.

It is widely recognised that the so called “silver bullet” of a vaccine, the only sure-fire way of beating the spread of COVID-19, is still some months away. Government is faced with a dilemma!

The Government has introduced wide ranging financial support to business, unprecedented in post war Britain. Unfortunately, this support will need to be repaid and needs a growing and vibrant economy to achieve maximum taxpayer revenue. If the economy remains in lock-down, Government will be forced to continue to support businesses with prospects of the quick and successful restart of the economy fast diminishing. How does the Government bridge the time gap of not having a vaccine and the requirement to restart the economy?

The UK Government has repeatedly stated that it will be “guided by the science”. Lifting the lock down will be determined by a reduction of cases and resultant deaths from COVID-19 and the fact that the NHS is in a position – from the availability of PPE, staff and vital equipment point of view – to deal with the crisis.

Unfortunately, the availability of PPE continues to be a problem with worldwide supply being increasingly limited and delivery uncertain. In addition, the implementation of testing, which is proving very successful in Germany and South Korea, is still some way short of 100,000 target tests per day in the UK.

There is increasing pressure from economic quarters that a phased restart of the economy should be considered with manufacturing, construction and logistics being the early starters as these are sectors that are most inappropriate to apply a “working from home” arrangement..

What should manufacturing business owners be considering before such a restart?

• At the fundamental level, does the market for the product exist at present or will there be a delay in marketability due to closure of the sector e.g. leisure, entertainment and aerospace are likely to reopen much later.
• Availability of raw materials from existing supply chain may not exist due to business failure or lock down. Raw materials may need sourcing elsewhere, or indeed be imported, which will potentially have import finance implications.
• Both of the above will have working capital financing implications resulting from a lengthening trade and working capital cycle. Banks and finance providers will need to be approached for bridging, requiring rolling forecasts and cash flow projections.
• Allaying employee concerns surrounding welfare and safety and health at work is key. Is social distancing feasible and being responsibly applied.
• Social distancing may require a reconfiguration of the factory which has planning and cost implications. These changes may well cause time and motion inefficiencies which has downward push on an already low productivity in the UK manufacturing environment.
• Skills shortages have resulted in older, more vulnerable staff being used in skilled positions who have a greater chance of contracting the virus – how will these staff members be protected?
• Younger staff members may have childcare constraints that will need consideration because UK schools have not reopened.
• Due to the high media exposure of the virus and the ability to pass the virus on, testing of staff members before they return to work and ongoing tests (such as temperature testing) carried out at the entrance to the facility may need to be implemented to ensure that factory workers are kept safe and are confident to return to work. Staff members could be asymptomatic and not know that they have the virus and therefore to prevent spreading of the virus testing is a vital constituent of the return to work regime.
• Break-out and hand washing facilities in many cases will need to be reconsidered by factory management to ensure hygiene and social distancing is adhered to.
• Consideration of when to return furloughed workers back to work as lengthy delays in their return will have a detrimental morale effect; whether on non-furloughed workers working full time or for the self-worth of furloughed staff.
• Reputational damage to the business caused by returning workers contracting the virus in the workplace and possible legal action taken by employees against the company. Legal advice may be sought to protect the company.

The above points are just some of the considerations that may be considered by manufacturing business owners and is by no means an exhaustive list. The clear message here is that careful thinking needs to be applied before reopening your factory. Thought should be given to  a wide range of business disciplines from health and safety, human resources and wellbeing on the one end to legal, financial and operational aspects on the other.

We at Kreston Reeves have coverage and experience across a range of disciplines and are here to help in these difficult and challenging times. We help and advise many manufacturing companies across the UK and abroad and therefore have a depth of insight into this challenged – but important – sector. Please feel free to contact me.