FMM president Jacob Lee said the federation’s industry survey of 225 respondents, released today, found that 72% reported worsening operating conditions since early April.

Lee said raw material shortages were reaching critical levels, with 70% of respondents reporting worsening supply conditions since April.

“The most widely affected categories include resins and polymers, petrochemical feedstocks, industrial chemicals, metals and packaging materials. These are core production inputs with no ready substitute,” he said in a statement.

Lee said 87% of respondents reported higher freight costs compared with before Feb 28, while 86% said shipping delays had worsened due to vessel rerouting via the Cape of Good Hope.

Meanwhile, 68% of respondents were facing working capital or cash flow pressures, with some struggling to pay suppliers or fulfil orders.

Lee also noted that 28% of respondents had made or planned workforce adjustments, including reduced overtime, shortened working hours and hiring freezes, while 5% had announced or implemented retrenchments.

“These effects will not be felt immediately, but they will show up in productivity and industrial competitiveness over the next two to three years,” he said.

Lee urged Putrajaya to implement mitigating measures, including tax and duty exemptions on alternative-origin raw materials, relief on freight and insurance costs, expanded diesel quotas for hauliers and targeted employment retention support.

Other recommendations included postponing planned port tariff increases, fast-tracking regulatory approvals for alternative raw material sources and introducing targeted wage or employment retention support for affected manufacturing companies.

“The conflict is no longer affecting only freight rates and logistics costs. It is now reducing production, weakening order books, straining company finances and putting jobs at risk,” Lee said.