Rutherford Cross’ John Ramsay shares his findings on the issues affecting CFOs in the manufacturing sector in Scotland and their optimism for recovery in 2021.
For the majority of businesses, 2020 was very much a year to forget, with many organisations resorting to survival mode to get through the ever-changing landscape of COVID 19. Continuing uncertainty around Brexit was also an issue for many businesses, and there are still considerable hurdles to be overcome around new procedures and legislation.
However, Deloitte’s latest CFO Survey, released at the start of January 2021, found 71% of the 90 Corporate CFOs interviewed were confident that revenue figures would rise over the course of 2021 – up from 29% from Q3 of 2020.
Working closely with CFOs in the manufacturing sector in Scotland, we were keen to drill further into this topic with CFOs working within the sector. Throughout January, the Rutherford Cross team spoke with a number of key clients within the sector to explore the year ahead, discussing the hurdles that may challenge growth targets and the ability of organisations to rise out of the COVID crisis.
Not the start to 2021 any of us were hoping for, lockdown 2.0 has thrown up another unwanted hurdle with organisations now having to consider their use of the furlough scheme. With operations limited in manufacturing there has been a need for some organisations to re-furlough some of their workforce.
Demand for products that soared in the first lockdown has also been affected. One manufacturing business which saw demand for its PPE products increase in the first lockdown has lost out second time around as the Government has improved its supply chain. Another client’s business that saw substantial growth in its industrial cleaning products during 2020 has been hit due to the schools being closed during this current lockdown with demand dropping significantly.
Several of our clients reported that they believe that the reopening of London will act as a key indicator of when operations, and orders, will go back to normal, and are ready to deliver when able to do so.
In short, feedback from our clients is that most have yet to see the immediate impact just less than a month into Brexit.
Finding new ways to operate with the EU is a challenge for many. One client noted their ability to divert orders through their Irish operation which they feel will be a strong outlet should securing work in Europe become a challenge as the year progresses.
The uncertainty and apprehension around the Brexit agreement has caused issues for others. One client experienced a huge surge in orders and stockpiling in December from customers prior to the UK leaving the EU which led to the need to increase the workforce to deal with demand. Unfortunately, this level of demand has subsided in January as a result of pre-ordering.
The as yet unknown impact of the new Brexit agreement on our supply chains is also a cause for concern. A major manufacturer in Scotland is expecting a shortage of some key raw materials later in the year due to additional paperwork now required.
Hiring Confidence in 2021
Overall confidence in hiring new staff is stronger than was reported by our manufacturing clients in Q2/Q3 of 2020. All are of the agreement that their Finance functions will be strengthened over the course of 2021 given the need for strong finance professionals during turbulent times.
Some of our clients are looking at opportunities to acquire and diversify their business offerings, which can result in the creation of new roles. Others have already done so, acquiring other organisations in strategic locations/markets in 2020.
All are of the view that they have the tools to deal with future disruption of COVID given what has been learned and implemented over the course of 2020.
Whilst businesses are still dealing with huge amounts of uncertainty and disruption, Rutherford Cross has seen a major demand for permanent and interim finance professionals since the end of Q2 2020. This has been due to a number of factors, one being the added workload on Finance departments across the majority of sectors with increased control of cashflow required and the volume of budgeting and reforecasting due to the everchanging external backdrop of COVID.
We are continuing to see a significant number of newly created roles and a real surge in demand for talent at the Senior end of the market.
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