According to the manufacturing industry association EEF, access to skills is holding UK manufacturers back. With four out of five companies struggling to recruit, how can export-focused UK manufacturing stay competitive? The answers, says the organisation's skills policy adviser Verity O'Keefe, lie in collaboration and reskilling.
A challenging environment
GDP figures for the UK showed that manufacturing output contracted for the second consecutive quarter in 2015 and the EEF has been hearing from members that low crude oil prices are discouraging investment in the upstream industries. This, in turn, is reducing demand for equipment.
“Even if the oil price recovers soon, there's always a lag before demand for their products picks up,” warns EEF economist Zach Witton. “The other challenges are signs of weakening demand from emerging markets such as China, and a relatively strong pound against the Euro, which is making UK goods less cost competitive in important destinations for manufactured goods.”
UK manufacturing has some traditional strengths that companies can maximise to meet the challenges and make the most of the opportunities
Build on UK strengths
The bright spots are the consumer-facing sectors in the UK, such as cars and textiles. And another sector that's doing well at the moment is transport equipment, especially aerospace. With US economic growth slowly picking up, we'd also envisage an increase in demand, which is good news because the US is the top destination for our products.
“UK manufacturing has some traditional strengths that companies can maximise to meet the challenges and make the most of the opportunities,” says Witton.
Notable among these, he says, is productivity, which has been boosted by the sector's strong focus on exports. By having to become more competitive overseas, manufacturers tend to invest more in equipment and automation and to put greater effort into cost-saving.
Finding the right skills
It's hard, however, to be responsive and change as demand changes, without the right talent.
“Recruitment difficulties are across the board, but they're particularly acute for skilled trades, technicians and professional engineers,” says Verity O'Keefe.
There are two problems, she suggests - a mismatch between the skills needed and those being taught in the education system, and an image of the industry that puts off younger entrants.
“We've got quite an ageing workforce,” she says. “The average employee is around 54. While our members want to recruit apprentices and graduates, they simply can't find enough people interested in the sector.”
Collaboration to drive talent
Employers don't want just qualifications, but work experience and technical skills. Bigger companies are making that happen for themselves by working with colleges and universities - Siemens and Lincoln University, and Coventry and Unipart, for example.
“Small firms find it a lot more difficult to engage, though,” says O'Keefe. “That can be a problem of time or resources, but often it's just a lack of contacts and know-how around getting something moving.”
While addressing these challenges could improve matters for the future, there's a more pressing need for skilled people. O'Keefe suggests employers shouldn't concentrate only on new, entry-level recruits but on skills for those already in the workforce.
Training the workforce
“That will mean more flexibility in what courses look like,” she says. “A university may offer three- or four-year engineering courses when employers are sometimes in need of a more modular or part-time option for existing employees.”
And sometimes, manufacturers need to get creative in how they approach the problem, including collaborating through the supply chain.
“Some OEMs train more apprentices or graduates than they need and place those learners in the supply chain, for example,” says O'Keefe. “Some local enterprise partnerships are also bringing employers together with apprenticeship hubs that could help smaller companies.”
- Export focus can help manufacturers improve productivity as they seek to compete with wider competition
- Manufacturing is facing a skills gap due to an ageing workforce and a lack of interest in the sector
- Employers need to focus on upskilling their existing workforce as well finding new recruits