For industry, the pandemic isn’t over yet

‘So you think it’s all over? Ho ho ho!’ That’s the message from Satan’s dark laboratory (twinned with Wuhan’s) where the Omicron variant turns out to have been bubbling in its test tube while we dared to resume our normal lives during the autumn. But whether that ugly little globule ruins Christmas or proves to be largely a scare story, the pandemic’s disruption of business ain’t over yet either: supply chain hold-ups, labour shortages, cost spikes and debt pressures continue apace.

Here, for example, is news that the UK car industry produced fewer than 65,000 cars in October, down 41 per cent on the same month last year and its lowest October output since 1956. Production has declined for four consecutive months, partly thanks to the closure of Honda’s Swindon plant, but chiefly because of the global shortage of microchips which industry chiefs think could last well into 2022.

Likewise shipping logjams: Felixstowe, the UK’s biggest container port, was so congested in October that the Maersk line had to divert vessels for unloading elsewhere in Europe. Movement through Chinese ports is said to have eased, but Los Angeles has huge backlogs. Shipping costs on major routes remain sky-high, though forward rates have dropped, indicating the market expects freer flows of goods in six to 12 months’ time.

Not everything is as haywire as it was earlier in the year. Building timber and wood pulp for packaging are among materials whose prices have dipped as supply and demand return towards balance. But at the same time, the ending of government support schemes has revealed the extent to which balance sheets have been strained: Make UK, a trade body for UK manufacturers, resorted this week to the double cliché of the ‘perfect storm’ and the impending ‘tipping point’, leading to ‘an unprecedented combination of a post-Covid credit, cash and costs crunch’.