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Re-balancing the economy: Skills, the cornerstone of manufacturing performance

The manufacturing sector represents one of the best opportunities for the UK to rebalance the economy. In particular the advanced manufacturing sector has the potential to drive up levels of value-added in the economy, and make a substantial contribution to export growth.

According to the UK Commission for Employment and Skills (UKCES) and the manufacturer’s organisation (EEF) reports - the sector accounted for over half of all UK exports in 2009, and had the fourth highest technology balance of payments of OECD countries. It accounted for 12 per cent of gross value-added (GVA) - at £130bn - and employed approximately 2.6 million people in 2010.

The UK manufacturing sector as a whole contains several world leaders. The North East has one of the strongest automotive and engineering sectors, employing many thousands both directly and indirectly via the supply chain. The challenge for the manufacturing sector is to capture and retain a leading share of the high value added segment of the global market in manufacturing and key to achieving this is the investment in skills and development especially in and around the small and medium sized enterprises (SMEs).

SMEs account for 65 per cent of total manufacturing employment compared to 74 per cent across all sectors (Labour Force Survey, 2010). The challenge for SMEs is to acquire the strategic management skills which will allow them to prosper and grow. Often when SMEs, especially the smaller ones, begin to grow they need to introduce new organisational structures. For instance; senior managers may need to have broad based skills when a company is small but as it grows there is often a need to have more demarcation between management roles. In other words, specialists are required to fill particular functional roles in the organisation (marketing, finance, human resources, etc.).

The supply chains are becoming more like supply networks requiring higher levels of flexibility, agility and a broader spread of soft skills across the workforce. It is likely that in the future higher levels of employee responsibility, autonomy and managerial delegation will be required at all levels in the organisation. This is driving up skill levels in manufacturing. Data from the UKCES 2011 report shows a continuing drive for higher productivity. Better competitiveness and higher value added is built into occupational employment projections for the sector over the next 10 years, with an 11 per cent increase in managers, directors and senior engineers and a 14 per cent increase in professional and associate and technical jobs.

The evidence overall from various Government and sector specific reports shows that the number of people engaged in higher level occupations and who are relatively well qualified has been growing in the sector which reflects the increasingly complex nature of products and production processes. This is likely to continue over the long-term which will result in the sector becoming increasingly highly skilled. In particular for young people coming into the sector which has, and will continue to have, a strong demand for people with Science Technology Engineering and Mathematics (STEM) skills.

Current training and development is well supported by an extensive initial and continuing vocational education and training infrastructure with a substantial increase in the number of people being qualified each year in the subjects and skills upon which the manufacturing sector is dependent; mechanical, electrical, science, process manufacturing etc.

The skills supply issues therefore need to be seen in the context of the sector’s capacity to attract, and retain the people who have the skills it requires. Without doubt one of the most powerful messages to employers about the benefits of training is its association with business survival.

The Government has recognised the opportunities of advanced manufacturing and is backing the development of the North East Local Enterprise Partnership (NELEP) programme Skills Support For the Workforce (SSFW) delivered via Intraining and NCG. The programme which is supported by the Skills Funding Agency (SFA) and European Social Fund (ESF), is a fully funded solution to support SMEs to meet the skills needs of their workforce at a local level. Businesses are provided with access to a free business needs analysis and can then utilise the SSFW programme to meet their training requirements.

Get in touch with Intraining on 0330 123 1022, to discuss your manufacturing skills needs.

This was posted in Bdaily's Members' News section by Intraining .