uk manufacturing skills shortages, leadership and investment
TRANSCRIPT
UK Manufacturing Skills Shortages,
Leadership and Investment
White Paper by Cranfield University
24th May 2017
National Manufacturing Debate
Page | 2
Supported by;
Overview
This white paper provides three key pieces of information:
1. Facts and statistics about skills shortages in the UK’s manufacturing sector and their
comparison with competitor countries.
2. Leadership and investment for the development and delivery of manufacturing skills
in the UK were also identified. Finally
3. An updated well-being profile of UK manufacturing was prepared and compared
with the US.
Part 1 Research Methodology and Data Sources 3
Part 2 Analysis of History 4
Part 3 Analysis of Current View 8
Part 4 Comparison with Competitor countries 10
Part 5 Well-Being Profile for 2017 12
Part 6 Conclusion and Recommendations 16
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Part 1: Research Methodology and Data Sources
The study focused on the UK exclusively. The survey included responses from mainly British companies as well as some UK operations of non-British companies.
The manufacturing sector: includes the manufacture of food, beverages and tobacco, textiles and leather products, wood, paper and printing, coke and petroleum, chemical and pharmaceutical products, metal products, computer, electronic and optical, electrical and transport equipment, machinery and equipment, other manufacturing and repair.
(Source: Statistical Industry Classification 2007)
Manufacturing skills: includes skills required for research and development, concept design, engineering design, manufacturing technologies, manufacturing systems, manufacturing operations, manufacturing management, through-life support (including maintenance, repair and overhaul), recycling and remanufacturing.
Manufacturing skills shortage: is defined as the difficulties in recruiting the workforce required for vacancies in a manufacturing company due to the scarcity of skilled people available in the external labour market in the UK for a given salary range.
The subject of this white paper concerns a structured approach and methodology to collect and analyse data relevant to skills requirements in the manufacturing sector. Data was gathered by an historical analysis of articles and citations. To identify specific skills shortages in the sector, a wide range of articles in the British government, organisations and media over the past five years were read and analysed. Moreover, the same documents were used to assess the leadership and investment required for the development and delivery of these skills.
All articles come from government and organisations’ websites as well as the Factiva and ABI databases (business information research tools).
In total, 373 reports were selected for the study as follows:
1. 198 reputable reports and articles on manufacturing skills from government and organisations, including:
The Foresight Report on the Future of manufacturing (2013)
UK Commission for Employment and Skills (UKCES)
Office for National Statistics (ONS)
Department for Business, Energy and Industrial Strategy
EEF reports
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2. 175 Media reports on manufacturing skills were selected from credible sources such as:
Financial Times
The Guardian
The Manufacturer
The Telegraph
BBC
3. NVivo software was used to analyse these published reports. NVivo is a qualitative data analysis software tool.
4. Interviews and survey questionnaires were designed to provide insights about skills shortages, and leadership and investment into skills development from industry personnel. The questionnaires were executed as face to face and phone interviews and as an online survey. 24 complete responses were received.
Respondents included industry personnel ranging from chairmen and directors to operations managers and skills training heads
Most of the respondents were from the aerospace manufacturing industry, working for companies including Boeing, Leonardo and BAE Systems.
Employee numbers ranged from 10 employees (Restoration Partners) to 15,000 employees for Siemens UK
The average working life experience of the interviewees was 25 years
5. The comparison of competitor countries’ skills shortages was made with the help of international reports and documents from organisations including the International Labour Organisation (ILO), International Monetary Fund (IMF), World Bank, The Organisation for Economic Co-operation and Development (OECD) and the US Bureau of Labour Statistics (BLS).
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Part 2: Analysis of History
Top 10 UK Manufacturing Technical Skills Shortages
As shown above, shortages in robotics & artificial intelligence, data analysis skills,
electronic & electrical engineering, software skills and machine operative skills were
among the top 10 manufacturing technical skills shortage identified by both government &
organisations’ articles as well as media articles. The similarity in the frequency of these skills
39%
39%
41%
43%
48%
50%
52%
54%
55%
62%
0% 10% 20% 30% 40% 50% 60% 70%
Cloud Computing
Production & Process Engineering
Machine Operative Skills
Industrial Biotechnology
Material Science
Software Skills
Electronic & Electrical Engineering
Additive Manufacturing
Data Analysis Skills
Robotics & Artificial Intelligence
Source: Government & Organisations
18%
21%
22%
23%
26%
28%
33%
33%
36%
36%
0% 10% 20% 30% 40% 50% 60% 70%
Modelling Skills
Electronic & Electrical Engineering
Information Technology
Robotics & Artificial Intelligence
Data Analysis Skills
Mechanical Skills
Computer Programming
Mathematics
Machine Operative Skills
Software Skills
Media
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in both article sources indicates the prime importance of these skills to manufacturing.
Top 10 UK Manufacturing Non-Technical Skills Shortages
The top 10 non-technical skills in the manufacturing sector in short supply from government
and organisations and media documents were found to be similar. Therefore, it is clear
there is an acute shortage of these skills in the sector, particularly in innovative skills,
leadership skills, communication skills, management skills and supply chain.
18%
20%
22%
28%
32%
32%
33%
37%
43%
46%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Numeracy & Literacy
Language
Team Working
Problem Solving
Risk & Project Management
Supply Chain
Management Skills
Communication Skills
Leadership Skills
Innovative Skills
Government & Organisations
14%
15%
15%
16%
18%
19%
21%
21%
23%
25%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Team Working
Problem Solving
Risk & Project Management
Language
Numeracy & Literacy
Supply Chain
Communication Skills
Innovative Skills
Leadership Skills
Management Skills
Media
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Root Causes of Skills Shortages in UK Manufacturing
Five main underlying causes were identified from the study of both sets of articles:
1. Young people in the UK have less interest in manufacturing related subjects
2. Female employment in manufacturing is far less than male employment
3. The perception that employees have low income in the manufacturing sector
4. The lack of applicants with the right skills to fill open posts
5. UK manufacturing has an aging workforce which needs replacements quickly
Major Actions Taken to Deal with Skills Shortages in Manufacturing
49%
41%
33% 28%
25%
33% 33% 36% 31%
42%
0%
10%
20%
30%
40%
50%
60%
Less Interest inManufacturing
Related Subjects
Gender Inequality Low Income Few QualifiedApplicants
Retiring Workforce
Government & Organisations Media
Page | 8
Leadership and the Contributors to Skills Development
The graph above illustrates both government, organisations and media articles show that
people believe employers should lead on and be accountable for skills development.
Other organisations such as government, schools & universities, academic and engineering
institutions should also make some contributions to skills development.
Investment of Skills Development – Whose Responsibility?
14%
17%
13%
22%
50%
11%
15%
33%
40%
54%
0% 10% 20% 30% 40% 50% 60%
Hire From Overseas
Internship
Awareness and Interest Development
Invest in Skills Training
Apprenticeships
Government & Organisations Media
79%
66%
47%
28% 22%
50%
38%
21% 17%
13%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Employer Government School &University
AcademicInstitution
EngineeringInstitution
Government & Organisations Media
Page | 9
Part 3: Analysis of Current View - Interview and Survey
Skills Shortages in UK manufacturing
The top ten skills in short supply, which were identified by the respondents are listed as
follows;
The above graph shows that technical skills forms the biggest part of the skills shortage in
the United Kingdom, dominated by engineering qualifications, while non-technical skills like
51%
16% 33%
65%
22% 13%
Government andEmployer Both
Invest
GovernmentEmployer
Media Government & Organisations
1%
2%
2%
3%
3%
5%
9%
14%
17%
44%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Finance
HR
Material Sciences
Software Skills
Supply Chain
Sales and Marketing
Management
Science and Technology
Technicians
Engineering
Page | 10
management and sales and marketing skills will also be important requirements.
Main Skills Shortages - Engineering sub-categories
1. Systems Engineering
2. Production Engineering
3. Software/IT Engineering
4. Control and Instrumentation Engineering
5. Electrical Engineering
Others
• Mechanical Engineering
• Process Engineering
• Quality Engineering
• Maintenance
• Civil Engineering
Leaders and Contributors to the Delivery of Manufacturing Skills
The biggest proportion, 88%, of the survey identified schools and universities as the leaders
for skills delivery. Employers, engineering institutions and then government should be the
next most active contributors of training the workforce in manufacturing skills.
Actions taken by employers to deal with skills shortages
In order to overcome these skills shortages, the main actions taken by employers were:
88%
70%
58%
46%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Schools andUniversities
Employer EngineeringInstitutions
Government
Page | 11
Educating students about careers in manufacturing
Internal training of the workforce
Apprenticeship and internship schemes
External recruitment from job centres
Improved government involvement with respect to encouraging manufacturing
Skills Training Investment Responsibility
From industry’s point of view, government should be more responsible than any group for
training investment. However, employers also ranked highly (75%), and manufacturing
institutions should also invest more in training to develop their current and future
workforce. Several interviewees commented that government and employers should work
together when investing in skills training.
83% 75%
41% 38%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Government Employer ManufacturingInstitutions
Government andEmployer Both
Invest
Page | 12
Part 4: Comparison with other competitor countries
Density of Skills Shortage Vacancies (SSVs) in Manufacturing SSVs is defined by UKCES as the “number of manufacturing skills shortage vacancies as a
proportion of total manufacturing employment”.
The density of skills shortage vacancies in the UK and Japan continues to grow, while
countries with improved manufacturing working infrastructure like Germany and the United
States have been able to reduce the number of skills shortage vacancies.
Root Causes for Skills Shortages
0%
5%
10%
15%
20%
25%
30%
35%
2012 2013 2014 2015 2016
UK Germany Japan USSources: UKCES, OECD, Manufacturing Institute (Delloitte 2015 US Manufacturing Report) , Japanese Statistics Bureau, Destatis – German Statistics Department)
Page | 13
Although manufacturing in some competitor countries has shown improvement and growth,
shortages in various types of skills are still observed in the current workforce and expected
in the future. Some of the root causes are stated below.
Japan
1. Declining and aging population (low fertility rate)
2. University curriculums do not meet the emerging needs of its industries
Germany 1. German adult population shows high levels of under skilled labour 2. Reduction in enrollment in dual education system 3. Retirement of baby boomer generation
United States 1. Downsizing and offshoring of companies 2. Lack of adequate training and education pipeline for talented new entrants
Percentage of Investment for Skills Development in Manufacturing GDP
The above graph shows that Germany and the United States spend a lower percentage of
their manufacturing GDP on skills development, compared with Japan and the UK. The
United Kingdom has seen fluctuations in the amount of investment in manufacturing skills
development, with recent trends showing a decline in these investments.
Actions taken to deal with skills shortages
In order to overcome skills shortages, these countries have taken the following actions:
Germany
0%
2%
4%
6%
8%
10%
12%
14%
16%
2011 2012 2013 2014 2015
Japan UK Germany US
Sources: UKCES, OECD, World Bank, Trading Economics, WEF
Page | 14
1. Dual vocational training programmes and on-the-job training and work experience 2. Co-Determination, which ensures the right of workers to participate in the
management of the companies they work for Japan
1. Adopting higher international standards for education 2. Nurturing local talent and casting a wider recruitment net to include more women 3. Partnerships and exchanges with foreign companies for two-way transfer of
knowledge and management practices
United States
1. Collaborating with colleges and universities to review, and update, the curriculum 2. Setting up open access training programmes and remote skills training for
manufacturing to assist manufacturing companies in building skills that culminate in a certified skill level
Part 5: Updated Well-being Profile for 2017 The manufacturing sector not only plays a major role in the economic development of a
country but also impacts the well-being of the people. For creating a well-being profile,
framework ONS and OECD well-being indices were referenced. A new framework was made
by selecting five key indicators, which are:
Income, work-life balance, health and safety, gender equality and employment
…used for the simplified profile calculation. For comparison, a well-being profile for the US
was also created.
All data for the UK was collected from the ONS except health and safety, which was
obtained from the Health & Safety Executive. For the US, all statistics were obtained from
the Bureau of Labour Statistics.
The simplified framework for well-being profile is shown below:
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Normalization
Indicators for well-being are represented in different units like hours, pounds, etc. To
eliminate the unit differences these values are normalized for comparison of the
manufacturing sector with other sectors in the UK economy.
Normalized Value for Manufacturing = 𝑽𝒎𝒂𝒏𝒖𝒇𝒂𝒄𝒕𝒖𝒓𝒊𝒏𝒈−𝑽𝒎𝒊𝒏
𝑽𝒎𝒂𝒙−𝑽𝒎𝒊𝒏 X 100
For average weekly hours, workplace illness and non-fatal injury, which are considered as
negative indicators, the following formula is used:
Normalized Value for Manufacturing = 100 - 𝑽𝒎𝒂𝒏𝒖𝒇𝒂𝒄𝒕𝒖𝒓𝒊𝒏𝒈−𝑽𝒎𝒊𝒏
𝑽𝒎𝒂𝒙−𝑽𝒎𝒊𝒏 X 100
Page | 16
UK Manufacturing Well-being Profile 2017
44.0
37.2
35.7
36.7
29.9
36.0
28.3
35.2
34.0
33.2
30.5
32.1
26.6
29.3
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0
Agriculture, forestry & fishingMining, energy & water supply
ManufacturingConstruction
Wholesale, retail & repair of motor vehiclesTransport & storage
Accommodation & food servicesInformation & communication
Financial, insurance & real estate activitiesProfessional, scientific & technical activities
Administrative & support servicesPublic admin & defence; social security
EducationHuman health & social work activities
Weekly Working Hour UK
0
39
46
42
81
46
90
51
58
62
78
69
100
85
0 20 40 60 80 100 120
Agriculture, forestry & fishingMining, energy & water supply
ManufacturingConstruction
Wholesale, retail & repair of motor vehiclesTransport & storage
Accommodation & food servicesInformation & communication
Financial, insurance & real estate activitiesProfessional, scientific & technical activities
Administrative & support servicesPublic admin & defence; social security
EducationHuman health & social work activities
Weekly Working Hour UK - Normalized
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Employment showed the best performance, while the other indicators were below average.
On comparing with other sectors, female participation was low resulting in poor
performance for gender equality.
UK Manufacturing Well-being Profile 2017 vs 2016
On comparison with the 2016 well-being profile, all the indicator performance were more or
less the same except for health & safety. Increase in work related illness and non-fatal injury
lead to the decrease in health and safety performance.
Manufacturing Well-being Profile of United Kingdom vs United States
45 46 46.5
67
13.7
0
10
20
30
40
50
60
70
80
Health & Safety Worklife Balance Salary Employment Gender equality
45 46 46.5
67
13.7
67
41 47
69
15.7
0
10
20
30
40
50
60
70
80
Health & Safety Worklife Balance Salary Employment Gender equality
2017 2016
Page | 18
From the above diagram, it is evident that UK performed better in terms of work-life
balance and employment. Weekly earnings, gender equality and health & safety were found
to be higher for US manufacturing. Unlike UK, Manufacturing is seen as an attractive career
choice by females in US resulting in their higher participation.
Part 6: Conclusion and Recommendations
56
17
54
44
40
45
46
46.5
67
13.7
Health & Safety
Worklife Balance
Weekly earningsEmployment
Gender equality
US UK
Page | 19
Conclusion
• Technical skills required for manufacturing were in shorter supply than non-technical skills measured by all articles, interviews and the survey.
• Robotics & artificial intelligence, data analysis skills, electronic & electrical engineering, software skills and machine operative skills were the most frequent manufacturing technical skills in short supply, according to historical analysis.
• Innovative skills, leadership skills, communication skills, management skills and supply chain skills were the biggest skills shortages in the non-technical category according to historical data.
• Interviews and survey: Recruitment of engineering skills is the biggest skill set deficit from the employer’s experience, while people with management skills are also difficult to recruit among non-technical skills.
• Skills development leaders: Government & organisations’ sources and media sources, both say that employers should lead skills training development*. Industry expects schools and universities to be responsible for the delivery of skills.
• Skills investors: Government & organisations and media articles suggest that employers and government should both invest in skills training, whereas the view from industry believes that government should be contributing more.
Recommendations
• Employers should work more closely with schools and universities in designing the curriculum to ensure that the skills industry needs are delivered.
• Government should increase investment in skills training and develop supporting policies.
• Educational institutions and engineering institutions should raise awareness of manufacturing career opportunities for the students.
• Skills training, such as apprenticeships and internships, should improve the quality as well as the quantity of the qualified workforce.
• Although this will have challenges in the current political environment, strategic
overseas recruitment could be a way to deal with manufacturing skills shortages in
the short term.
• All stakeholders of manufacturing should work together and invest in the
development of skills.
National Manufacturing Debate Vincent Building, Cranfield University, 24th May 2017
Theme: Leadership and Investment for Manufacturing Skills
Now in its eighth successful year, the National Manufacturing Debate hosted by Cranfield
University brings together manufacturing professionals from a range of sectors to discuss
and debate current challenges in the industry. This event is designed to encourage
networking and collaboration across the sector to enable continued and long-term growth.
This white paper and collected data are available from:
www.national-manufacturing-debate.org.uk
Contact us:
Professor Rajkumar Roy
Director of Manufacturing
Cranfield University
Cranfield, Bedfordshire
MK43 0AL
T: +44 (0) 1234 758555