Subcontractors worry over skills and supply chain delays as order books grow

UK subcontract manufacturers are recording strong post-pandemic order levels yet remain concerned around the ongoing impact of supply chain disruption and shortage of skilled operators, according to a new report.

According to a survey of across the UK subcontract manufacturing industry, commissioned by MSC Industrial Supply Co. UK, 58% of subcontractors have limited or no capacity to take on further work, while a further 28% are operating at +50% capacity.

The report, ‘The Subcon Report: What next for the backbone of British industry?’, says a combination of inflationary pressures, disruptive supply chains and a challenging employment market all risk impacting the sector’s potential to capitalise on healthy order books.

Some 44% of subcontractors have diversified into new markets over the past two years, while four in five also plan to invest in new equipment over the next 12 months. Despite evident appetite for CapEx investment, engineering talent remains a major operational challenge for the sector, with 80% of those surveyed currently recruiting for at least one machine operator and only a third (34%) feeling they have sufficient in-house technical support.

Significant time is lost dealing with a volatile supply chain, with 77% of subcontractors spending up to four hours a week sourcing industrial supplies, and three quarters of those surveyed having to deal with as many as five different industrial suppliers. As a result, nearly a third of UK subcontract manufacturers (30%) feel their single biggest challenge is a lack of time to effectively manage their business.

James Howarth, Director of Operations – MSC Industrial Supply Co. UK, said: “The optimism and resilience of the UK subcontract manufacturing sector is incredibly encouraging to see. However, our report also reinforced the need for new ways of thinking around talent development and supply chain management.”

Mr Howarth said there are strategies subcontractors can adopt to help provide short and long-term support, such as consolidating their supply base, rationalising on and off-machine consumables, and partnering with organisations that go beyond transactional relationships.

Charlotte Horobin, Region Director – Midlands & East of England, at Make UK, said: “Subcontractors are a fundamental part of the manufacturing sector, providing vital support and technical expertise right across the UK. It’s clear they have the potential to grow further with demand being so strong but, in order to do so, they will need to invest to make the step change in capacity.”