BAE Systems

Britain must nurture technology skills factory bosses say

Britain’s manufacturers have emerged stronger from the recession, but aren’t so sanguine about the future, reports Lorna Sharpe

Leaders of UK manufacturing businesses are remarkably upbeat about the state of their sector, according to a new report, contradicting the perception that Britain no longer makes things. On the other hand, they bemoan the lack of clear, consistent, long-term policy from government, and they are seriously worried about looming skills shortages.‘An insight into modern manufacturing’ presents a snapshot of the industry and its concerns, based on the manufacturers’ own words and experiences. It finds a thriving sector, well-placed to grow, where businesses that survived the recession have learnt to be efficient and flexible, and to keep a sharp eye out for new markets. It also highlights the diversity of UK manufacturing, in terms of its activities, technology levels and business sizes. This is not a homogeneous sector amenable to ‘one size fits all’ policy-making.

The report was published on 7 May by Engineering the Future, an alliance of UK professional engineering institutions. It was produced jointly by the Royal Academy of Engineering, the IET and the Institution of Mechanical Engineers and derived from a set of interviews with 22 companies nominated by members of the All Party Parliamentary Manufacturing Group, distributed across Britain and varying in size and nature.

One key finding is that manufacturing has changed to reflect advances in the supply chain, markets, customer demand and engineering design. Data and product innovation now play major roles. Manufacturing is often capital-intensive and automated, with a highly skilled and educated workforce.

Successful businesses also recognise the importance of innovation in their products, their manufacturing processes and in the way they operate. For some, that means heavy investment in R&D, while others turn to partnerships or to collaboration with their supply chain to develop new markets or new products that they would not be able to supply alone.

Many companies survive and prosper by expanding overseas. Renishaw, for example, which makes industrial equipment for metrology and inspection, has grown its operations primarily through exports, which account for 94 per cent of its business.

For other firms, it makes more sense to concentrate on the domestic market. Bisley makes office furniture and filing cabinets: bulky items where the cost of shipping can be high. This makes exporting expensive, but it gives the company an advantage over foreign competitors that has helped it build a strong position in the UK.

The report also notes a blurring of the division between manufacturing and service activities in a development that some commentators are calling ‘servitisation’.

Manufacturers are realising that after-sales support, spares and maintenance are more than just revenue streams, but can also strengthen the bond between supplier and customer. BAE Systems is one company whose support services business has grow significantly in the last ten years. This includes work on military aircraft that would previously have been carried out directly by the Royal Air Force.

Customers are coming to see the benefits of buying a service without owning the product. So aero-engine manufacturers may take responsibility for aircraft engines, their maintenance and availability, under contract from the airlines. The same can be seen elsewhere - whether in the provision of ‘by-the-hour’ surveillance UAVs in military theatres, or in the contract for new Inter-City Express trains, which will require a daily supply of clean, working trains to operate the specified timetable.

Manufacturing companies have a proud record of self-reliance, the report says, but that can hinder political understanding of the sector. One speaker at the launch went so far as to say that getting consistent policies out of different government departments was “like herding cats”.

Greater and more consistent dialogue would be beneficial to ensure that the UK is creating the right environment for manufacturing to flourish and that support schemes are not skewed in favour of larger enterprises. One respondent said: “Funding for research seems to be looking for volume production of tens of thousands, not just tens.” Another point was that support for a ‘brand name’ at the top of the chain does not help that company’s suppliers. Smaller companies said that many of the schemes available are just too time-consuming in terms of the paperwork required.

Andrew Churchill, managing director of JJ Churchill, one of the companies interviewed for the project, said: “This report recognises the enormous diversity of our sector, but from that variety has drawn some common themes. I’m not looking for the government to plan for me or run my business, but there remain some key areas where their engagement is essential. These include the on-going need for a clear, top-level vision from government together with consistency and predictability of any intervention; the vexed skills issue and global competitiveness of the UK as a manufacturing base as described by fiscal attractiveness.”

The report says the challenge of finding skilled workers at all levels was a recurring theme raised by nearly all contributors.

Almost all the companies expect skill shortages to constrain their ability to grow, and some are already experiencing this. One SME said recruitment is difficult if you are not large or well-known, and several firms noted problems in finding senior design engineers.

The problem is exacerbated by the looming retirement of many experienced staff - a point supported by manufacturers’ organisation EEF, which said in April that the sector will need almost a million workers by 2020.

Many companies are trying to ‘grow their own’ staff through apprenticeships and by developing new and enhanced skills in their existing workforce.

Two separate areas of alarm emerge from the report. One is that young people are not being encouraged either to see manufacturing as an attractive career or to pursue STEM subjects (science, technology, engineering and mathematics). The other is that even for those who get past this barrier, universities and colleges are not preparing students adequately for the world of work.

In fact, the report says: “Their concern over the quality and quantity of skilled technicians and graduates and the output of the UK education system is the single strongest message that manufacturers wanted to send to government and academia.”

IET chief executive Nigel Fine is also chair of the Engineering the Future panel. Launching the report, he commented: “‘An insight into modern manufacturing’ is reliably the voice of the manufacturers - ‘straight from the horse’s mouth’.

“It is not about detailed econometric analysis or statistics. Instead, by using their own words and experiences, it gives a snapshot of the issues that matter to manufacturers.
“The report’s aim was to find out what could be done better to help future development and growth in manufacturing. While we have undoubtedly achieved this, we have also succeeded in separating the reality of 21st century manufacturing from some of the myths that pervade and owe their origin to badly outdated stereotypes - something that I am sure we all want to change.”
He added: “It is great news to see that UK manufacturing, which is often perceived as struggling, is in such fine form.

“The priority now must be to make sure it stays that way.”

Further information

Read the report in full: An insight into modern manufacturing

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