Nine in 10 SMEs in manufacturing are facing some kind of skills gap
Published: 31 March, 2025
A new report into the 2025 skills and recruitment outlook of small and medium-sized enterprises (SMEs) in England reveals just over nine in 10 (92% of businesses) in manufacturing are anticipating some kind of skills gap within their business, with a third at entry level (33%)*.
Now in its third year, the Skills Horizon Barometer, launched by the Skills for Life campaign and featuring commentary from manufacturers Southbourne Rubber, also found that nearly four in 10 (38%) SMEs in the industry have noticed a skills gap in specialist areas. However, concerns about retaining staff have decreased since last year – three in 10 (30%) SME employers cited it as a worry this year, compared to a third last year (33% in 2024).
More widely across England, when it comes to specialist skills, opportunities with AI are firmly on the radar for the year ahead, as nearly a quarter (23%) are poised to train their staff in AI related skills or recruit those with knowledge in the field. The research found one in five (19%) are regularly using AI in day-to-day operations, with a further 20% using it occasionally. One in five (19%) also say experience in AI is an asset on a CV for potential new recruits.
While AI knowledge is high on the recruitment agenda for SMEs, they are also looking beyond the skillset to find human characteristics or transferable skills that are the right fit for their organisation too. The top five to pique the interest of employers in the manufacturing industry for 2025 are:
1. A good work ethic (40%)
2. Ability to work under pressure (30%)
3. A team player (28%) / A quick learner (28%) / Adaptability (28%)
4. A good personality fit for the business (22%)
5. Strong digital skills (19%)
Exploring the type of candidates manufacturing SMEs are looking for reveals employers looking to offer opportunities to those early on in their career, but crucially candidates who have some experience (49%). While one fifth (19%) of businesses still look to hire those from traditional academic routes, such as university, just over a fifth (22%) of firms would hire straight from school or college, supporting young people with relevant training to build up their skills, and 25% would look to hire candidates with experience from a different field.
The highlighted findings from the latest Skills Horizon Barometer look to help SMEs understand all the technical education training and employment schemes available to them, including Apprenticeships, T Levels, Skills Bootcamps, HTQs, as well as numeracy and digital skills courses.
Stephen Wilde, MD of Southbourne Rubber in Hampshire said: “Like other SMEs, we want to onboard more entry level staff members in 2025 and will be looking to apprentices to do so. As we do most years, we’ll hire three to four apprentices to help us with our continued growth.
“A real benefit of working with apprentices is you can upskill them to meet demand so it means we can focus on the talent themselves and who might fit well within the business, then shape them through training. We also see new fresh thinking and enthusiasm coming into the workforce via our apprentices – and they genuinely want to be there. We create an environment where they can both work hard and have fun doing so, and the business reaps the benefits.
“I’d encourage other businesses who are facing skills gaps to look into the opportunities available to them via technical education. There are many options for recruiting and upskilling and we have found it to be a really valuable asset.”
Minister for Skills, Apprenticeships and Higher Education Jacqui Smith said: “Meeting the skills needs of the next decade is central to delivering the Government's Plan for Change.
“Employers are key partners in our mission, helping address skills needs across sectors like AI, green tech, and construction. Using Skills Bootcamps, apprenticeships, HTQs, and T Levels, we’re supporting businesses and individuals to upskill, and establishing Skills England to find and fill skills gaps and support sustained economic growth.
“The Skills Horizon report highlights the progress we’re making together—giving people the skills they need to seize opportunity and drive growth.”
To find the suitable and cost-efficient training and employment schemes for your business, as well as support on how to implement these, visit: find-employer-schemes.education.gov.uk/.
*Research carried out with 3Gem Research & Insights between 28th November-12th December 2024, commissioned by DfE and Kindred, with 1,500 SME senior decision makers in England, 88 of which were based in the manufacturing sector.
