Over two-fifths of UK manufacturing firms (43%) have warned that they are considering cutting costs to counter the rising prices of raw materials, according to research from NIG, the commercial insurer1.
In an industry highly dependent on raw materials, the impact of rising costs can be significant: just over a fifth of those polled (21%) stated that they were thinking of changing business processes and/ or products, with nearly one in ten (9%) stating they may be forced to move to different or cheaper offices.
More than one in 20 (6%) manufacturers, equivalent to 28,000 firms, admitted that they have suffered from a theft of raw materials. One in five (20%) reported that they have suffered from a theft of not just raw materials but also items such as stock, cash and office equipment over the past 24 months.
Martin Hall, Director of Commercial Underwriting at NIG, said: "The UK manufacturing sector is facing a number of challenges and the rising cost of raw materials has become a key concern for many manufacturers and similar businesses.
"While many are taking steps to cater for these challenges, it is vital that businesses assess the risks they face and make sure they are not leaving themselves exposed to unnecessary risks and threats. If companies have changed processes, products or moved property, for instance, they need to let their insurance broker knows as this could impact their cover."
The research commissioned by NIG also found that, despite challenges such as the rising costs of raw materials and the impact of business thefts, 13% of manufacturers admit they have never had a risk assessment carried out on their business. This compares to 15% of construction companies, 19% of retail businesses and 3% of firms in the hotel and catering industry.
Martin Hall at NIG said: "I would urge businesses to pro-actively contact their broker to discuss a risk assessment and their cover in general. Insurance brokers can provide important advice and discuss practical steps that businesses can take to mitigate the risks they face. The aim of a risk assessment is to determine what measures, if any, are required to safeguard the health, safety and welfare of employees and other third parties, who may be exposed to risks arising from businesses or business activities. It should be seen as a fundamental part of standard business practice."
1 Research carried out by BDRC Continental between 6th-14th August 2012 on 500 UK businesses with an annual turnover over £50k. Total number of UK businesses within the scope of this research put at 1.73m by BDRC Continental.