H&E North uncovers the impact of the recent supply chain disruption blighting the events industry and asks how we can build our resilience to withstand the pressures ahead.
In recent months, supply chain disruption has resulted in delayed deliveries and increased prices for venues, hospitality businesses and event organisers. From gaps on menus, to technological shortages, the hospitality and events supply sector is feeling the pressure to fulfil orders, with event organisers increasingly anxious to deliver on busy winter diaries.
While the causes of this disruption are complex, the single most significant issue is staff shortages, with Brexit, COVID and wider economic conditions all playing their part. At a recent Institute for Government event, Chief Executive Ian Wright, of the Food and Drink Federation, highlighted the UK food supply chain faced half a million staff shortages, representing 12.5% of the total workforce.
The haulage sector, vital for the transport of both components and finished goods across event chains, is particularly badly affected, with industry bodies estimating a shortage of over 100,000 drivers. A lack of drivers left fuel deliveries suspended through much of September, forcing some petrol stations to close, causing disruption to events unable to facilitate the transport of goods and delegates.
Another factor is resulting from Brexit with tough new rules for UK firms to recruit from the EU. Once free movement of people ended following the Brexit transition period, the government introduced a new points-based immigration system, where EU nationals had to meet conditions such as salary thresholds and language skills to acquire a work visa. Sectors vital to the events industry, such as hospitality, food manufacture and haulage have historically employed high numbers of EU nationals and have found it increasingly challenging to replace these workers.
Figures from the Office for National Statistics show that the number of EU nationals employed in the UK fell by 5% from the end of 2019 to the end of June 2021. In response, the government increased the number of visas available to seasonal agricultural workers and is also offering temporary visas to 5,000 fuel tanker and food lorry drivers. However, they are only open to small numbers of people, and it is still unclear how far temporary visa schemes will appeal to EU nationals.
Louisa Watson, HBAA venue sector advisor and Director of Marketing at Wyboston Lakes Resort is one of many industry voices calling for a relaxation of restrictions: “We all want it to be ‘business as usual’ and we are going in the right direction to get the sector back up and running and vibrant in its approach. Severe staff shortages and difficulties with recruitment are at the root of the challenges that venues are facing, and HBAA has recently been outspoken in supporting campaigns for the temporary relaxation of post-Brexit visa regulations to help provide a short-term solution.”
Yet speaking during the October Conservative Party Conference, Prime Minister Boris Johnson maintained that businesses cannot “reach for the lever called uncontrolled immigration” to recruit EU staff at low wages. The argument being that UK businesses should invest in domestic workers to reduce reliance on an overseas workforce, which many feel reduces incentive for firms to improve pay and working conditions.
Brexit paperwork has also presented suppliers with further bureaucratic headaches, with new checks adding costs, complexity and delays to event supply chains, while COVID has placed additional pressure on supply lines globally. As a result, commodity and transport costs are rising for suppliers, and are understandably being passed on through higher prices to event clients, (to the extent that firms are reporting seven-fold rises in shipping costs). While changes in the level of demand for certain products – for instance computer and AV equipment with the boom in home working and virtual events – are also driving shortages and subsequently prices of key components. A prime example is the lack of microchips, with the virus having temporarily shut down key Asian ports and factories, making it tougher for manufacturers to meet soaring global demand.
In a recent survey of leading UK business groups, The Office for National Statistics shows that EU trade has plummeted since the end of the Brexit transition period, with the hospitality sector particularly badly affected. Small firms have been disproportionately hit, with some choosing to not trade with the EU in any capacity, with the looming introduction of a range of new checks on goods moving across the border. However the government has chosen to further delay these, citing concerns about trader readiness in light of the pandemic, while also indefinitely postponing the introduction of checks on goods moving from Great Britain to Northern Ireland. While these delays may potentially ease pressure in the short term, they provide little certainty for the future.
To counter the rising prices and delays of overseas goods, the industry has been forced to build its resilience by establishing local supply lines. With the decline in UK manufacturing, it can be a challenge to buy British, but making the effort can pay dividends. From reducing the air miles of your produce and equipment to play your part in the campaign towards net zero events, to supporting local jobs and contributing to your regional economy, it’s a positive step towards showing your brand cares.
The winter months could also bring a rise in virus case numbers, resulting in more staff absences through illness or self-isolation, subsequently posing further disruption to supply chains. Following the summer pingdemic, many hospitality firms have embarked on a recruitment drive, growing personnel to increase their resilience to future absences.
Events industry bodies have long been campaigning for recruitment issues to be addressed, as HBAA Executive Director Juliet Price maintains: “HBAA has been highlighting for many years that the UK’s reputation for high quality service in the meetings and events sector was in danger unless the imminent shortage of trained staff was addressed. The perfect storm of Brexit, pandemic-induced redundancies, COVID related absenteeism, and a lack of income during previous lockdowns is creating a harsh reality for our industry.”
It is tough to predict if supply chain difficulties will worsen in the coming months. The hospitality sector has already raised concerns about how well the sector will cope with the additional demands of the busy Christmas period for events, and it remains to be seen if lasting damage has been caused to supply chains. Yet the ingenuity of our trusted industry suppliers who have remained steadfast in delivering essential services to our sector is surely to be commended. Those events firms who take vital steps to increase the resilience of their supply chains, may just help them weather the storm ahead.
