As the country takes tentative steps towards re-opening, RHL is in contact with our clients across the technology and engineering sectors to understand how they are being affected by the Covid-19 pandemic. There are significant variations. In the energy sector they have been dramatically affected by the downturn in the global demand for oil leading to a 30 year low in the oil price. For the manufacturing sector future demand is still unclear, but they have had constraints in adapting to remote working, as most activity has to be site-based.
Research carried out by Richmond Events (https://www.linkedin.com/company/richmondevents/ - organisers of strategic business forums) gives some insight into how leaders of UK organisations are feeling and planning for the future. The research was carried out among 300 directors and senior managers of large UK companies across a range of sectors.
Not surprisingly, reading the research, there are high levels of concern across all sectors. More than 80% of respondents are worried about the short-term prospects of the UK economy, with only slightly fewer having concerns for the long-term. This general feeling of anxiety is not restricted to fears for their organisations – with as much, if not greater, concern being expressed for their personal financial security and the wellbeing of their families.
The research suggests that in the initial phase of the lockdown companies have tended to look inwards and focus on their own organisational issues relating to technology to support home working and employee welfare. External communication to customers, and even more so non-customers, has taken a back seat. This could prove to be short-sighted, but it is heartening therefore to see later in the research that 48% are aiming to increase their digital sales and marketing activities!
Financially things are expected to be difficult. More than 50% say budget cuts have already been made and almost another 30% say they are expected. Salaries are one particular area that seems to have taken a hit, with 30% reporting reductions already and a further 10% expected to come. A majority of respondents are also expecting to lose customers.
When it comes to staffing matters, respondents are almost evenly split: 52% of respondents expect to see changes against 48% who do not. As a positive, over 35% expect to see a headcount increase in IT and nearly 30% in supply chain.
More than 30% are expecting or have already seen redundancies, but these are likely to be delayed somewhat at more than 80% are using the government’s Coronavirus Job Retention Scheme. In addition, more than 50% are managing their cashflow by deferring VAT and Income Tax payments.
Although there is a high level of reported cut backs to projects and expenditure (52%), alongside these there is a recognition that positive and proactive change is necessary, with 50% looking to evolve their product offering and, as mentioned previously, 48% aiming to increase their online marketing activities.
Some changes will be positive and long-lasting. 70% of respondents claim to have identified new and more efficient ways of working and 42% to have developed closer relationships with clients. A healthy 39% also report increased demand for their products and services.
Despite the difficulties, businesses are not rushing to throw off the shackles of lockdown, only 33% report that they want a gradual but immediate opening up of business, with 31% preferring to extend the lockdown, and 27% preferring to wait and learn from other countries’ efforts.
No-one among the clients we speak to is claiming that their business will return to the same place as before lockdown, nor that things are going to improve very quickly. This view is backed up by the research. Expectations about getting back to normal are generally pessimistic – with social distancing in place for up to 6 months, and international travel disrupted for more than 6 months. Some 34% believe that the experience of adapting to remote working will have a large impact on their future operations, with a further 49% saying there will be a small impact.
In common with the businesses taking part in this research, we see large companies, such as those in the oil and gas markets, embarking on major cost-cutting exercises alongside acceleration of innovation. We see a greater focus on new technologies to exploit wind and natural gas and greater emphasis on tighter cost-control and more efficient project management.
From a recruitment perspective the energy sector has always demanded and attracted high skill levels, and this is expected to continue as the new markets and working practices become more developed.
In manufacturing changes to more automation are foreseen, giving the ability to externally control systems and maintain production. Unfortunately, some organisations will struggle to access these technologies because of the high upfront costs.
The message for candidates across all technology sectors is to be prepared to be flexible and adaptable, keeping in touch with new skills development demanded by the changing landscape of a post-Covid world.