The productivity puzzle: how manufacturers can handle the skills gap

Posted on 19 Jul 2023 by The Manufacturer

Manufacturing is among the sectors worst hit by the UK’s growing skills gap, which is beginning to impact the business’ bottom line, with losses to the UK economy in the billions. Dave Atkinson, Head of Manufacturing at Lloyds Bank, discusses how manufacturers can alleviate their skills challenges and futureproof their talent pipeline.

Over the past few years, many businesses have been plagued by labour shortages. However, as one of the most rapidly evolving sectors, manufacturing has been hit particularly hard by the skills gap crisis. Make UK and BDO’s latest Regional Manufacturing Outlook highlights a shortage of almost 74,000 factory workers, costing the UK economy around £6.5bn. That’s a huge amount of lost productivity across manufacturing firms, which are unable to meet demand and realise new opportunities for growth because they don’t have enough of the right skills in their workforce.

Dual challenges of the pandemic, prompting people to switch industry or leave the workforce, coupled with the loss of European workers due to Brexit, has meant that manufacturers across all industries are struggling to fill vacancies. But it’s not just a lack of new talent entering the sector that’s fuelling the problem. Manufacturing has digitalised at pace over the past decade, with major leaps forward being made in automation, robotics and low carbon technology. This has changed the nature of some of the skills needed, and those that haven’t invested in training their staff in these technologies are now finding that they have a skills gap and lack essential capabilities.

And the shortage cuts right across the entire workforce, from management and R&D, to general operations and delivery.

Growing the talent of the future

Manufacturers are acutely aware of the harm that the skills gap is doing to their business, and are proactively taking steps to remedy the issue. In a recent survey conducted by Lloyds Bank, 45% of manufacturers said they were committed to investing in training, and 62% confirmed that this was to try and increase the productivity of their workforce.

One of the ways manufacturers can bring new skills into their organisation is via apprenticeships. On the job training that enables young people to continue their education, while learning practical skills and earning a wage has long been a popular route into the manufacturing industry. A third (33%) of manufacturers say they currently use apprenticeships to bring in new skills. However, in recent years manufacturing has attracted fewer and fewer apprentices, with less than half as many people beginning apprenticeships in manufacturing in 2020/21 compared with 2016/17, according to government data.

Walsall Wheelbarrow Company
Wheelbarrow manufacturer Walsall Wheelbarrow Company recently invested in upskilling its staff to operate and programme its new robotic welding system

This is a trend we need to turn the tide on if we’re going to guarantee enough young new talent entering the sector. The Advanced Manufacturing Training Centre (AMTC) is one of the organisations supporting manufacturers to do this. With Lloyds Bank’s support, the AMTC has so far trained more than 3,000 apprentices, graduates and engineers; a figure that’s expected to rise to more than 5,000 by 2030. It’s also working to bring in more diverse talent by supporting young people from disadvantaged backgrounds to take up manufacturing apprenticeships.

Technoset, part of Technogroup, a manufacturing specialist in the aerospace industry, is just one of the businesses the AMTC has helped take on new talent. The business uses apprenticeships to build a pipeline of future talent, such as Tyler Gilespie, who helped the business make important improvements to productivity across its sites. Technoset has recently welcomed three new apprentices that it’ll train with support from the AMTC.

Building from within

Skills don’t just have to come from external sources though. As a manufacturing business evolves and grows, its workforce should also. The AMTC, for example, offers a ‘step on, step off’ pathway, which upskills staff at different points in their career to ensure they are keeping abreast of the capabilities businesses need. The centre is also working with manufacturers to develop training on specific capabilities, such as sustainability skills.

By investing in training in the latest technology, businesses can make significant improvements to efficiency. For example, wheelbarrow manufacturer Walsall Wheelbarrow Company recently invested in upskilling its staff to operate and programme its new robotic welding system. This has increased the number of frames it can manufacture in a workday by 75%, while also freeing up other staff who were previously doing the role manually so they can boost production capacity elsewhere in the manufacturing process.

Training also isn’t just a way to ensure your business has the skills it needs today. It’s also a good way to help retain talent, with 58% of manufacturers surveyed by Lloyds Bank stating this was the driving force behind investment in training. In the currently highly competitive UK job market and with cost squeezes limiting the capacity for salary increases, development opportunities will be a crucial tool in manufacturers’ retention arsenal.

Manufacturing is hugely important to the UK’s economy, responsible for around ten percent of the UK’s economic output and employing two and a half million, plus another five million indirectly. Manufacturers have a responsibility to invest in their skills pipeline, not just for their own growth, but to address the skills gap and ensure the UK remains at the heart of manufacturing innovation.

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