Survey shows 92% of SME manufacturers have a growth strategy, but a growing skills shortage may hinder their plans
Published:  03 April, 2014

The latest annual SME Manufacturing Survey from MHA, the UK-wide group of accountancy and business advisory firms, paints a picture among manufacturers of growing optimism, supported by continuing investment in R&D and capital expenditure and an increase in recruitment, including a 13% rise in the numbers due to take on apprentices. That said, a shortage of recruits at every level, is harming future prospects and has been described by Chris Coopey, the Head of MHA's Manufacturing Group as "a national scandal." Interestingly, despite nine in every 10 small and medium-sized manufacturers predicting growth in 2014, more than half of these businesses still feel unable to pass on any increased costs to customers. The latest annual SME Manufacturing Survey from MHA also highlights that 36% of the same businesses are unsure how they will meet the upcoming cost of pension auto-enrolment. Unsurprisingly, given the level of administration involved in auto-enrolment, almost six in 10 also say that ‘red-tape' is getting worse, despite government pledges to reduce regulation. Energy costs also remain a major issue.

Coopey, further commented: "The underlying trend is very positive for those small and medium-sized businesses operating in the manufacturing sector. It's possible that many had to restructure during the economic downturn and now they are reaping the benefits of improved productivity. For the time being most are looking to absorb any cost increases rather than passing them on, however, this is unlikely to be a sustainable option for the long term."

One area of increasing concern is the availability of motivated recruits, skilled engineers and graduates. While apprentice recruitment is due to increase among 64% of companies, the shortage of skilled and experienced engineers - and graduates - is becoming an increasing challenge, with 65% of companies experiencing problems.

"The government is committed to rebalancing the economy through manufacturing - yet the sector continues to suffer from a shortage of capable and motivated recruits and skilled engineers, including graduate engineers, which is a national scandal" says Coopey. "This will become a real barrier to growth and will undoubtedly affect the UK's ability to compete on the global stage. One suggestion among the survey respondents is to create an ‘Industry to Education' interface that will support the education system in developing young people with the right skills set for industry."




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