If only we’d known at the beginning of 2020 that our biggest challenge of the year wasn’t to come from IR35 or the fallout from Brexit and the ongoing fear of no trade deal with the EU. The market disruption caused by the COVID-19 crisis was unexpected and unanticipated – but we have rolled with the punches and we’re ready for the long road to recovery ahead.
2020 started with a post-election bounce and a decision to ‘get Brexit done’…
The December 2019 election saw a renewed optimism as a decision was finally reached on Brexit, giving companies the stability they needed to plan ahead, leading to an increased need for interim managers – we saw an increase of over 12% compared to January/February 2019.
Like many industries, Manufacturing saw a sharp decline in March as we started to understand that a crisis lay ahead. Aerospace was the canary in the coal mine, with industrial markets quickly following suit. Only FMCG and medical markets seemed to be weathering the storm as we saw a spike in short term demand, driven by increased pressure on the NHS and panic buying across the country.
… but nobody saw lockdown coming
With much of the world in lockdown throughout April, May and early June, companies had to make tough decisions, with only the most business critical projects being maintained throughout this period.
New demand came from FMCG – particularly in HR and finance support – and within Defence which continued to see a strong demand for interim managers on the commercial side. We continued to help our clients solve their leadership and transformation challenges from home.
Fig 1. Breakdown of assignments across manufacturing and engineering throughout 2020
We saw green shoots in the summer…
With the easing of restrictions over summer came green shoots throughout the market. We started to see enquiries for interim operations directors and COOs within aerospace and automotive for the first time in nearly five months.
By September, with schools reopening and limited travel possible, it seemed important decisions were again being made. What was encouraging was that this was industry wide – not just limited to one or two sectors – and it was not tied to just one or two functions. By the end of September, the whole industry seemed to be undergoing a broad recovery.
… and now we’re on the road to recovery
The signs of recovery we started to see in August have continued through the remainder of the year, despite a second national lockdown in November. As we head out of a year most of us would sooner forget, the market is showing strong signs of recovery with high demand for interim managers across the manufacturing industry.
With manufacturing GDP down 8% on pre-covid levels (compared to a drop of nearly 30% between February and April), it’s still turbulent times ahead. The industry is showing remarkable resilience and we’re hearing success stories from our clients and seeing the demand return for interim managers across the industry.
Fig 2. Breakdown of assignments by manufacturing and engineering market throughout 2020
There’s growth ahead
We’re seeing increased activity from a number of private equity houses – similar to what we saw in the wake of the global financial crisis just ten years ago. As deal activity increases, demand for interim executives typically follows.
Global consultancy, especially around restructuring, appears to be sold out in the UK and the US. Clearly the crisis has led to a number of PLCs to look into the mirror and accept that changes need to be made. Whilst these firms have a wealth of talent among their own networks, we’re also seeing them strengthen their ranks with interim managers.
And with the furlough and other job protection schemes ultimately coming to an end at some point in 2021, some companies are going to experience significant challenges. The smart players – especially in the SME space – are already realising that the time is now to utilise an interim executive to prepare for the storm ahead.
We’re now looking ahead into 2021 with increased positivity and enthusiasm. Despite the inevitable bite of Brexit, and most leading analysts believing that a full recovery won’t be possible until 2022 – despite the arrival of a vaccine – the good news for our interim community is that the worst has now passed.