Out-Law Analysis | 18 Aug 2015 | 11:00 am | 4 min. read
There is a danger that the lack of people with specialist skills could undermine UK manufacturers' opportunity to take advantage of technological advancements to innovate, whether in exploiting the rise of 3D printing, developing new connected and autonomous vehicles or harnessing the potential of stratified medicine in the field of life sciences.
A particular issue is the challenge many of the smaller manufacturers and suppliers to the industry face in attracting and retaining talent.
The issue affects the UK's biggest manufacturers – so-called 'primes' – as they need a strong and stable supply chain to support their efforts to exploit new technology and business opportunities.
The government must do more to address the issue, and should begin by driving interest in science, technology, engineering and maths (STEM) among students.
Career development in STEM
The skills shortage is a problem widely acknowledged across industry and increasingly by politicians.
A report published earlier this year by the CBI said manufacturers face a "growing skills crisis" (44-page / 1.37MB PDF). The CBI report rightly pointed out that it is "often lower-profile and smaller" businesses that "struggle to compete for the limited resource or set up their own training programmes". It also said that there are "increasing numbers of businesses reporting difficulties" in recruiting graduates and technicians skilled in STEM.
Similar views were also voiced in a review of the UK's advanced manufacturing sector and its supply chain which was published last year after being commissioned by the Labour party. In the report, Jaguar Land Rover executive director Mike Wright said the UK is "simply not educating enough young people in the right skills to an adequate level for advanced manufacturing and its supply chain".
Wright said the UK needs to encourage more businesses to run their own apprenticeship programmes and get workers in other industries to retrain for jobs in advanced manufacturing. He also said the UK needs to do a better job in retaining foreign students that obtain "manufacturing related degrees" from UK universities, and get more school pupils to study engineering and manufacturing subjects at university.
Some businesses and business leader have taken their own steps to address the skills problem facing UK manufacturing. Sir James Dyson, the vacuum entrepreneur, earlier this year gave a £12 million donation to Imperial College London to help them set up a new engineering design facility. He told the Financial Times that it is "commercial suicide" for the UK "not to be producing the amount of engineers that we need".
However, one recent policy decision taken by the UK government has the potential to help ease the skills problem.
Amidst the usual media attention on exam results across Britain earlier this month, the Universities and Colleges Admissions Service (UCAS) reported that a record number of students have been accepted on to university and college courses this year. The total number – 409,000 – is expected to rise further after the government lifted restrictions on the number of students universities can take on.
On the face of it the removal of student number restrictions should help more people gain the training and qualifications necessary to fill jobs in the manufacturing industry. However, the policy alone will not achieve this outcome.
More needs to be done to promote science, engineering and manufacturing as career options to school pupils to encourage them to pursue a career in those industries via higher education training or by looking for apprenticeships.
Successful careers that begin in apprenticeships or graduate training need to be championed to inspire the next generation of workforce to consider manufacturing and engineering roles in greater number.
How many young people, for example, will be aware that Juergen Maier, chief executive of Siemens UK, started his career with the company after coming through an engineering graduate programme run by Nottingham Trent University in 1986 that Siemens sponsored?
There are several areas of the UK which are recognised heartlands of the UK manufacturing industry. Two of the most prominent examples include the oil and gas industry in Aberdeen and the car manufacturing plants in the North East and Midlands in England.
In each case, major manufacturers, whether it is Jaguar Land Rover in Coventry, Rolls Royce in Derby, or BP in Aberdeen, are supported by a network of smaller manufacturers that supply them with the goods and services they need for production.
These 'clusters', as they are called, provide thousands of jobs and are vital to the UK economy. A competitive, thriving local supply chain is an imperative for any prime and, as the government noted in an action plan for strengthening UK manufacturing supply chains published in February, a number of major manufacturers already work with smaller companies in their supply chain to address the skills challenge those businesses face.
However, the downside to clusters is that there can be a skills drain from SME suppliers to primes. The largest manufacturers, able to offer the best training and opportunities and lucrative remuneration packages, are an inevitable draw for the most talented workers in the supply chain. This can create a false economy as suppliers can struggle to retain talent and deliver the level of goods and services primes demand of them.
The government has a role to play in encouraging the constant flow of new talent into the market to fill vacant positions and allow smaller suppliers to remain innovative.
For its part, the government already operates an employer ownership fund (EOF) that supports smaller suppliers in the automotive industry in their training of staff. In its action plan it said it "will consider strong cases for EOF supply chain based skills calls in other sectors" too.
UK manufacturers are functioning in a highly competitive global market. Having access to a highly skilled workforce is one of the main issues manufacturers will consider when deciding where to set up new production operations.
In Europe particularly, UK manufacturers face strong competition for business from Germany, with the country arguably leading the latest industrial revolution in manufacturing, known as 'industry 4.0'.
The government must step up its efforts to ensure that manufacturers looking to make a home in the UK can see there is a skilled workforce and supply chain waiting there that is able to help their business to grow.
Nicole Livesey is a corporate law expert at Pinsent Masons, the law firm behind Out-Law. She has particular experience of helping clients in the advanced manufacturing sector.