Business Sector Updates
Food and Drink
Customers are cascading down through the system and foodbanks which are becoming more prevalent cannot keep pace with the demand for them. Accreditation to protect the supply chain is (including cyber checking) is being introduced. Supermarkets currently throw away more produce than there is food poverty.
Manufacturing and Retail
Unsurprisingly prices are a big issue with considerable rises being felt. High increases of freight, materials and currency fluctuations are all having an impact. Staffing issues to appear to be easing. Merchandising and costs are still a big issue so one mechanism is to try to ensure that value is added to products sold. Businesses in the sector are struggling and after sales support is becoming increasingly important in retaining sales. This is shown through a fall in calls but an increase in sales as customers are being given all relevant information before they buy.
Defence
The defence market is currently in chaos. The output for organisations procuring for the MoD and Police was very slow and it had been a bad year for the Defence industries. The Ukraine war has unsurprisingly taken a toll on the market. Companies were suffering the effects post Covid and a number of smaller businesses had downsized or closed completely. Calls were being taken from Government asking if procurement was possible. With the market being focussed around Ukraine this could save a number of companies on the sector. Price sensitivity was not currently an issue as the need to secure products was outweighing the considerations over price.
IT
In a cyber update it was reported that a large number of phishing brands have been reported. Microsoft and Meta have over 10,000 unique SQLs, guiding people to these sites. All of the major companies have been identified as being more at risk of impersonation. Apple have released a ‘lockdown’ mode which will include screening and Google Plan Protect is recommended for android devices as over 30,000 android apps contain malware.
Legal
The Government have brought in the National Securities and Investment Act which also applied to investments in UK companies from overseas. The Act includes areas such as Telecommunications, transport, AI and emergency services. Notifications and clearance are required from Government for transactions to take place. These can be either waved through if approved or have a deadline extended if a closer review is thought necessary. Property transactions when selling to overseas buyers now need to be notified to Companies House who are more aware of overseas market threats.
Insurance
Supply chain shortages and increased material and labour costs are putting up claims costs, therefore:
- Make sure you are insuring for an accurate amount
- Premiums continue to rise.
With more people and businesses feeling financial pressures, insurers are warning of increased likelihood of claims and are even warning of civil unrest. Cyber claims continuing to spiral.
Separately with regard to Ukraine, the Midlands Migrant Support Centre is now acting as a hub for Ukrainians coming into our region. Any businesses or individuals who need advice or support or who can offer advice and support should contact the MSSC https://mmsc.org.uk The Chamber is helping, including trying to find employment.
Scientific Manufacturing
Strong order book, supply chain issues still arising however are less impactful. Inbound and outbound freight costs are still a concern but not significantly higher than 2021. No major issues in the labour market and our employee attrition is stable. Investment in the Malvern site approved internally (improved and expanded warehouse). External planning approval still required albeit not expected to be an issue. Inflation is a watch item, may impact capital allocations in 2023 within our customer base.
Manufacturing and Retail
The market is currently buoyant and there is plenty of work out there. It has been difficult to get hold of substation contacts and lead times are increasing hugely. Specific supplies and certain costs have doubled in the past 12 months. With costs and waits increasing the knock on is that while orders are still coming in, the time taken to deliver projects is increasing. Great things are happening with electric vehicle charging. There is currently a shortage of charging points and they are now looking to build more of these. The size of the market is approximately 10% and new connections to electrical supplies is a big opportunity. Charging for electric vehicles is increasing via the use of ultra-rapid hubs at fuel forecourts, garden centres and service stations. Buses and coaches are now looking at electric fleets with a trend towards solar canopies and batteries allowing access to further away places.
Charity and Social Care
The sector is heavily regulated and annual accounts show a downturn. The key issue is rents which are set by a formula laid out by government. CPI rates will determine what rents can be charged for next year and then Housing Associations can add an additional 1% on top of that. CPI is currently 10% which makes proposing an 11% rent increase very difficult. Increases are hoped to be around 5-6% this year, and additionally relevant unions are gearing up for a debate over cost of living increases. Food poverty is a huge issue and a hardship fund has been launched this year. Applications for help were asked for and Community have been inundated with responses. Funding has been going into food banks and in trying to inspire community prospects, engaging with the Shared Prosperity Fund. They are trying to help people into training and looking for this to continue. Housing Associations are becoming the targets for cyber-attacks and as Community are about to launch a new customer portal, there may be additional weaknesses so they are very keen to learn more about cyber security.
Food and Drink
Hospitality is currently very busy but there are underlying issues, as there is a glass ceiling as to what customers are prepared to pay. So although busy, margins are very tight as businesses must absorb costs. Independent companies are now sourcing online suppliers rather than using traditional wholesalers. There is a noticeable increase in exports outside the EU among expat communities.
Agriculture is very busy and with energy and labour costs rising it may be hard to keep prices down as cost margins increase. There is expected to be a dip in these sectors when people need to turn on their home heating.
Food and Drink
Expressed a very similar situation in Worcestershire as in Herefordshire above. Brewing is down for traditional beer and cask beer usage is also down. Harder to export into Europe since Brexit. Craft beers and IPA are becoming more popular but this is not ideal for local hop growers. Costs are also rising and it is hard to commit to contracts made 2-3 years previously as they cannot be met. It has been a difficult season due to the hot summer but it is the same everywhere. Labour issues do now seem to be easing.
Transport & Logistics
Reported that the current situation was a ‘mixed bag’. There was little available warehouse space in Herefordshire and Worcestershire at present and there were a lot of acquisitions in the market with smaller family run businesses being bought. Equipment procurement issues had not really changed but driver recruitment issues had eased and there were currently no vacancies, although salaries had risen, now being approximately 15% higher than last year. Fuel costs had also eased slightly. The economy, volumes and recession were areas of concern with year on year volumes down 15% but with a recognition that the last two years had not been normal.
Education
There were issues with regards to face to face teaching and demands from government, although with no strategic rudder, that remote learning should not be taking place. There had been a growth in International students coming to the University with numbers over 1000 and more coming in. Worcester University is joining with more than half of the business schools across the UK in the ‘help to grow’ programme, which was still largely functioning online. It is worth highlighting that new businesses only pay 10% of the fee for using this scheme. Medical facilities growth at the University had been delayed and they would not now be taking new medical students until 2023.
Legal
Feels like repeating the same thing. Recruitment and retention are still the biggest issues within the sector. Mid-level recruitment (2-3 years qualified) is currently a struggle and people are reassessing their work life balance. The increased flexibility available due to Covid has opened up the market as employees can work from home in the counties for a London law firm. It is expected that there will be a further shift back towards more office-based working. Staff are reviewing the wider packages on offer and candidates are interviewing businesses rather than the other way round.
The Industry is very busy currently and backlogs continue in employment tribunals with delays of at least 2 years. These delays increase costs for clients due to more communication (about delays) required over the longer period.