Before Covid-19 shutdown hit, UK subcontract market in Q1 2020 was up 70 per cent on Q4 2019

The Contract Manufacturing Index (CMI) for the first quarter of 2020 showed that, prior to the Covid-19 lockdown, the UK subcontract manufacturing market was recovering strongly from a poor second half of 2019.

The index stood at 112, compared to the baseline figure of 100, which represents the average value of the subcontract market between 2014 and 2018.

This was a rise of 70 per cent compared to the final quarter of 2019, when the index had been at its lowest level since it was first published. However, it still hadn’t recovered all of last years’ losses, closing 30 per cent down on the first quarter of 2019.

Both machining and fabricating were strongly up on the previous quarter – by 93 per cent and 86 per cent respectively – while other processes, including moulding and electronic assembly, were pretty much the same, with just a three per cent increase.

Machining accounted for 43 per cent of the value of subcontract work and fabrication accounted for 45 per cent of the market, with other processes contributing 12 per cent.

As in the previous quarter, the strongest markets remained Oil/Chemical/Energy and Construction. Construction Equipment moved down to fifth place and Industrial Machinery and Automotive replaced Medical/Scientific and Defence/Military in the top five.

The CMI is produced by sourcing specialist Qimtek and reflects the total purchasing budget for outsourced manufacturing of companies looking to place business in any given month. This represents a sample of over 4,000 companies who could be placing business that together have a purchasing budget of more than £3.4bn and a supplier base of over 7,000 companies with a verified turnover in excess of £25bn.

Commenting on the figures, Qimtek owner Karl Wigart said: “It really did look as if the UK subcontract market was back on a growth track before the Covid-19 lockdown hit. There was a slight decline over the three months, possibly because the shutdown in China was disrupting supply chains and reshoring had yet to make an impression, but overall, the outlook was good.

“As for the year ahead, we can only hope that this underlying strength manages to survive the current emergency. I am certain that supply chains will look very different in the future and hope that UK manufacturers will be in a position to benefit from that.”