Engineering trade body Make UK’s take on the sector’s challenges and opportunities
Energy and staff costs are the biggest challenges faced by UK manufacturers according to membership organisation for manufacturing engineers Make UK. A representative from the organisation, which represents 22,500 companies, was speaking at PPMA, a recent process manufacturing trade show in Birmingham.
Following energy and staff costs in the list of biggest challenges, is the cost of technology and IT, although the Make UK spokesperson Ben Courts argued that this might be alleviated by using AI, VR and robotics.
In a presentation based on a survey of members, Courts, a membership manager for the group, gave a state of the market overview of engineering companies that was rather mixed. On the upside, the sector’s scale is considerable, with UK manufacturing accounting for about £270bn of output and providing 2.6 million jobs. The sector pays average wages at about 10% higher than other sectors in the UK. In addition, 47% of the UK’s R&D goes through the manufacturing sector, as does 40% of total business investment.
Unfortunately, the UK’s position on the global stage has fallen from eighth in the world to 12th in recent quarters since several other countries have recently invested heavily in engineering. For example, Russia has leapfrogged as a result of investment following the war in the Ukraine.
The threat of rising costs
“‘Costs costs costs’, are the biggest problem for the engineering manufacturing sector,” Courts explained. He said that reducing expenditure on energy with efficiency drives or moves to be more sustainable (if cost effective) will be high on the agenda, and technology may be used to fill job vacancies where possible. According to statistics from LinkedIn there are still well over 60,0000 vacancies in the UK’s engineering sector with two and half jobs vacancies for every 100 roles. This is clearly a big issue for many business owners.
In addition, employment costs are affecting the levels of training being offered while the skills gap has also increased these costs. “We’re seeing many companies paying a lot more money to either attract new people into the business or actually retain existing employees. In addition, staff are moving around more than they were since the skills gap is so great. People are likely to be with one business for a shorter period of time in this climate,” he added.
The Net Zero opportunity
Despite these challenges there are many opportunities in the UK engineering sector according to the Courts, not least around the transition to Net Zero. In 2019 the UK became the first major economy to set a legally binding target to achieve ‘Net Zero by 2050’ and 92% of firms see this as a priority for their business. Over two thirds have already made investments and 22% plan to make these investments in the next 12 months. Almost a quarter of manufacturers (23%) have invested in digital technologies while 24% have a plan to do as part of a decarbonisation road map.
As mentioned automation is another opportunity for many; a considerable 67% of manufacturers have invested in automation with 60% citing an increase in productivity as the main benefit. Manufacturers are also investing in industrial digital technologies such as additive manufacturing (3D printing). 58% of companies plan to recruit engineering technicians, and 61% aim to recruit production and process engineers. This shift underscores the essential use of data and the need for employees trained in the latest digital technologies. More than a quarter of companies now say they need data analysts, and 11% plan to employ data scientists to drive automation changes.
However, technical skills alone are not enough. In fact, The World Economic Forum’s “Future of Jobs 2023” report says that analytical thinking, creative thinking, AI and big data skills will be in high demand by 2027. Leadership skills, social influence, and lifelong learning is also important for engineers that want to remain employable in a changing market. Despite the need for reskilling and upskillng (six in ten workers will require training by 2027), only half have access to adequate training opportunities.
Manufacturing outlook
Output turned negative for the first time in quarter four since 2020 signalling a contraction in the sector. This was in line with official statistics which suggested manufacturers had reduced production owing to falling demand and were using pre-built stocks to fulfil backlog orders. There was also some reticence regarding production owing to uncertainty ahead of the UK election. However Make UK thinks this is a blip and that the the sector is likely to see an uptick in the coming months.
What would make a difference?
As shown, UK manufacturing engineers face a rather complicated outlook. As such, organisations like Make UK and 99% of manufacturers are calling for an industrial strategy from government with eight out of 10 members saying it would give their business a stable business environment. 87% of companies agree that the lack of such a strategy is putting the UK at a disadvantage. Three quarters cite Germany as providing a better environment for the manufacturing sector, while 2/5ths think the US provides a better environment.
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