Rising Supplier Costs & The Reality of Garment Manufacturing Today
25-08-2022
From March 2020 to December 2021 trade had been adversely impacted by the pandemic with demand in the retail sector greatly diminished and although Government Aid, in its various forms, helped to keep companies afloat UK manufacturers were hoping for a period of growth to recuperate reserves spent in this period. Now in August 2022 cashflow remains a large concern for many.
Whilst demand rebounded initially the onset of conflict in Ukraine commencing February 2022 has led to high rises in the cost of gas and other supply chain issues.
The factors most effecting Fashion-Enter’s manufacturing division are:-
- Increase in the rate of National Insurance
On 6th April 2022 the Government increased the rate of National Insurance for both Companies and Employee’s by 1.25%, instantly increasing staffing costs. With the general public receiving less disposable income, demand in the retail sector has remained stagnant and companies in this sector have not seen any growth to counteract the increased salary cost.
- Light and Heat Increases
The conflict in Ukraine has caused steep increases for businesses and households in energy prices. Quotes from our Broker on gas and electricity prices for our units in London show costs increased 534%. We renewed fairly recently had we delayed, that increase is now 1000% and comparing September 2021 to September 2022 these costs have increased 1800%. These price increases are fast becoming unsustainable for many UK manufacturers.
- Supply Chain Issues
The factors above to operating costs are contributing to increases in raw materials from our suppliers and also increased importation costs.
The Government is well aware of these factors and need to act as soon as possible by reversing the increase in National Insurance and also by controlling and lowering the spiralling gas and power costs to businesses. Easier access to finance would help manufacturers recuperate spent reserves over this incredibly difficult two-year period.
Fashion-Enter Ltd (FEL) CEO Jenny Holloway comments: “In over 35-years of being in retail I’ve never known the trading environment to be so tough. Manufacturers are just caught in the middle; we’re expected to perform to every audit and be ethical in every respect but we don’t have the continuum of work for stability. I know retailers can’t give out work if they don’t have the sales but where does that leave the FS factories? There’s no stability to forecast or plan.
“We’re lucky as we started to diversify last year to non-fashion items and expand accounts but it’s still hard going. The vertical integration backwards into our collaborative partnership with Kornit Digital was a major positive strategic way forward too.
“As you can see by this honest costing review FEL is optimising all resources as well as keeping lean. I hope all manufacturers are really keeping the costs under control and being lean because we’re definitely anticipating a major return back to made in the UK in 2023.”
