UK Edition
Had it not been for the quick thinking of its top brass, pillow and duvet maker Lancashire Textiles would have toppled by now.
The factory, which employs 35 staff in the Lancashire town of Burnley, saw orders dry up after its key customers, typically mail-order businesses, were forced to cancel orders because of the outbreak.
To keep the business going, it switched to manufacturing face masks and wipe-clean pillows. The move is paying off.
But others, such as Burley, which makes wood-burning stoves in the Rutland county town of Oakham, have had to close their factories “for a few weeks – our high-street retailers had to close, therefore we have no orders and can’t deliver”.
Many of the UK’s 8,000 manufacturers, which employ about 120,000 staff, are facing the same predicament.
In the past fortnight they have had orders cancelled – exacerbated by Boris Johnson, the Prime Minister, demanding the vast majority of retailers that do not sell food or medicine close their doors.
To keep a lid on costs, as money barely trickles in, many well-known names on the high street have now said they do not want to acquire new stock.
Retail stalwart Primark was one of the first to do so, sending shock waves through the sector. It works with just over 1,000 factories in 30 countries, of which 16 are in the UK.
Peacocks, the retailer owned by billionaire Philip Day, has also cancelled orders, along with H&M and Marks & Spencer. In some instances, factories were even told not to accept raw materials from their suppliers.
John Pearce, chief executive of Made in Britain, says: “About half of our 1,200 members supply directly into retail channels, making all sorts of essential products here in the UK, from textiles to building materials to food.
“The interdependent nature of the supply and demand network means they are all affected in some way by consumer sales drop-off.”
The most exposed are clothing and shoes makers with millions staying at home, less inclined to buy new wares. Fashion sales this year are expected to be down by £11bn – equal to a fifth of UK fashion spend – compared with 2019.
This has already led to the likes of formalwear retailer Moss Bros and fashion chain River Island to close their websites, followed by Next, which initially said it would be business as usual online. The latter works with 49 suppliers in the UK alone.
But the brunt of the pandemic on the retail sector will be felt by Asian manufacturers. Over the years, lured by cheap labour costs, brands have shifted production to the Far East.
Bangladesh is now the world’s second-largest clothing exporter behind China. Orders worth more than £2bn have been cancelled in Bangladesh, while future ones are on hold.
This raises questions about the country’s ability to keep 4m garment workers employed. If they go bust, many retailers face further disruption when they reopen, bereft of stock.
Making shirts, T-shirts, jackets and trousers accounted for almost 85pc of Bangladesh’s exports, worth $40bn last year. Of those, more than 60pc were sent to fashion chains in Europe.
Industry sources, however, say that the world’s fashion giants, including some from the UK, are privately working on a plan to support factories in the short term.
A similar intervention took place in 2013 after the Rana Plaza disaster, when a factory on the outskirts of Dhaka, Bangladesh, collapsed and killed more than 1,100 workers.
Soon after, two agreements were put in place to improve working conditions, signed by 200 major brands.
There is some relief ahead for China – the first country to be hit by coronavirus. Although orders were diverted en masse from China amid the national lockdown towards countries including Malaysia and Turkey, its factories are now resuming production, and doing so relatively swiftly.
The uncertainty might push businesses at home and abroad to sell more of their wares directly to consumers, and rely less on other retailers. Some may even sell merchandise that big brands do not want on marketplaces such as Amazon or eBay.
Lancashire Textiles is already selling the biggest chunk of its products through its website.
On the food side, a string of suppliers to restaurants and canteens have changed tack. They have been sitting on extra produce after all non-essential hospitality sites also had to shut.
Bradford-based Delifresh, which typically works with restaurants, hotels and bars, set up an “emergency online grocery store” for home deliveries to consumers.
Made in Britain’s Pearce said: “One of the benefits, however, of a smaller, nimble UK workforce is their ability to change direction.
“We have noticed many companies moving into direct online-only sales, to carry on where the retailers that were forced to close left off.”