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Skills, digital and the manufacturing sector

Manufacturing still accounts for a large amount of the UK economy, and when it comes to the fourth industrial revolution, the UK has aspirations to be a world leader – but does it have the digital know-how to back it up?

Despite being in steady decline since the 1970s, the manufacturing sector is still much more important to the UK economy than most people think.

According to Make UK (formerly EEF), it currently contributes 11% of gross value added and accounts for 45% of the country’s £275bn export market, making the UK the ninth largest manufacturing nation in the world by output – the equivalent of 3% of the global total.

Some 2.7 million people out of an entire working population of 32.7 million currently work in the manufacturing sector, earning an average of £32,500 compared with a national median wage of £29,588. In other words, it is a significant, and relatively high-paying, employer too.

But Lorraine During, Make UK’s business environment policy adviser, says the UK as a whole is still lagging behind many other industrialised nations in automation and digitisation, where the likes of China, South Korea and Germany are leading the way. The Economist Intelligence Unit’s Automation Readiness Index, for example, ranks the UK only eighth out of 25 such nations.

“Many things that the country has to offer, such as its industrial strategy and the government’s desire to create a suitable business environment, are being held back by a lack of skills,” says During. “We are improving, but not fast enough, which means we really need to work on it if we want to remain competitive, especially with Brexit and forthcoming changes to the trading environment.”

While During says the skills situation is not yet at “crisis point”, Gary Bainbridge, director at manufacturing and engineering specialist Theo James Recruitment, believes things are not far off a crisis in the case of highly skilled engineering and technical roles, which are currently in high demand.

“To put things in percentage terms, about 30% of the roles we recruit for are difficult to fill, so that’s about one in three, which is significant,” says Bainbridge.

A key problem in today’s candidate-driven market is the fact that the abolition of vocationally oriented polytechnics in 1992, combined with a lack of suitable apprenticeships during the 1980s and 1990s, led to “a void in the middle” in talent terms, which is now making itself felt – despite recent renewed interest in apprenticeships.

Image problems

Another issue is the sector’s image problem. Not only is it seen as a rather traditional, and somewhat staid, industry, but the many recent examples of employers moving operations overseas to low-cost jurisdictions has also heightened the perception that job prospects are not secure either.

This already difficult situation is also not helped by the fact that manufacturing is viewed as a “dirty, polluting industry, which means that many graduates and school leavers aren’t convinced they want to work there”, says Nick Harrison, manufacturing partner at management consultancy KPMG.

In other words, “the sector has a branding issue”, he says, which is only being exacerbated by a dwindling interest among schoolchildren in science, technology, engineering and maths (STEM) subjects.

Make UK’s During agrees. “Children aren’t necessarily seeing manufacturing and engineering as relevant to them as they don’t think they offer highly paid or interesting jobs, so there aren’t enough young people in the talent pool,” she says. “This is a massive issue and has been for a number of years now.”

But the problem is further compounded at the graduate level, where too many future engineers are opting to train in areas where demand is falling. For example, Theo James’ Bainbridge says there are five or six times more mechanical than electrical or electronic engineers currently graduating from university, even though it is the latter who are “in real short supply”.

To make matters worse, most employers are not only looking for skilled workers, but also for people with specific sector knowledge, whether that be pharmaceutical or automotive because of differences in standards and procedures.

“In manufacturing, there’s no one person fits all,” says Bainbridge. “There’s a generic skills shortage, but if you want experience and someone who understands the standards of your particular sector, it shrinks the talent pool even further.”

While he often advises clients to consider workers with transferable skills that can be trained up in sector specifics, he acknowledges that employers working to a just-in-time model need people to hit the ground running because of the “breakneck speed” at which they operate.

Impact of AI and automation

But worryingly, this situation is only expected to get worse as digitisation and technologies such as artificial intelligence (AI) increasingly take hold.

According to the Made Smarter Review 2017, which was led by Juergen Maier, chief executive of Siemens UK on behalf of the government, the UK’s ambition is to become a world leader in the so-called Fourth Industrial Revolution by 2030. But to do so, it needs to unlock the potential of industrial digital technologies (IDTs), which could boost growth in the manufacturing sector by 1.5-3% a year – the equivalent of about £455bn over the next decade – and create at least 175,000 new jobs.

But there are currently three key barriers to achieving these aims:

  • Lack of effective leadership relating to the digitisation of industrial production at a national level.
  • Under-utilisation of assets to support innovation among manufacturing startup and scaleup companies.
  • Poor levels of IDT adoption, especially among small to medium members of the manufacturing supply chain, with the greatest barrier being a lack of skills in general, and of digital engineers in particular – a situation not helped by a fragmented skills system and a lack of systematic engagement between education and industry.

But in a world that, according to the Made Smarter Review, within 20 years will see 90% of all jobs across all sectors requiring digital skills, it seems that employers have a gargantuan task ahead.

The report says: “Because two-thirds (65%) of the workforce of 2030 has already left the education system, the UK cannot rely on the education system to satisfy industry’s demand for digital skills in the short to medium term. In an industrial sector which employs around three million workers, this means that two million people will potentially need to be upskilled or reskilled in the workplace.”

Such training will also need to take place across the board – among blue-collar, unskilled workers whose jobs will otherwise be automated out, among managers who will need to become more data literate, and in the creation of new roles, particularly in areas such as AI, programming and data analytics.

As KPMG’s Harrison explains: “Technology can take out manual processes that are currently delivered by humans, but you still need people to develop, and maintain, a solution that works specifically for your operation – and they are very difficult to find and expensive. Basic and semi-skilled jobs will be automated out, but it’s at the skilled layer where the real issues are.”

Another challenge, says Theo James’ Bainbridge, is the requirement for workers, such as maintenance engineers, to be increasingly multiskilled, with one foot in traditional engineering disciplines and the other in the tech world.

Read more about manufacturing and digital

“Employers are increasingly looking for people with an electronics bias and competent mechanical skills as well as experience of robotics and PLCs [programmable logic controllers] – and the more automated the industry becomes, the higher level the skills requirement will be, which is only going to make the situation worse,” says Bainbridge. “The problem is that technology like robotics is a totally different kettle of fish as it’s a completely different skillset at a completely different level.”

One solution, says Sarah Sharples, manufacturing champion for the Chartered Institute of Ergonomics & Human Factors, and professor of human factors at the University of Nottingham, is to create larger, more fluid teams than has traditionally been the case, which combine a range of skillsets to achieve a particular outcome.

Although Sharples acknowledges that working in these kinds of network “is perhaps challenging the traditional view of how engineering works”, she points out that the skills required by an engineer in an industrial context have changed significantly. They now include everything from needing to understand environmental impacts to how humans interact with technology and how traditional engineering principles affect the behaviour of systems and components.

“So it’s about broadening out the understanding of what engineering actually is,” says Sharples.

Worryingly, though, UK employers across the board continue to under-invest in skills development. According to the Made Smarter Review, they currently spend half as much on ongoing vocational training as the European Union average, at a time when public investment in skills development for workers has been cut drastically.

While this lack of investment clearly has to change, one way of at least partially addressing the situation, says Sharples, is to proactively target new talent pools, such as ethnic minorities, older workers and women returners, that have traditionally been under-represented.

Nonetheless, it seems that things are unlikely to change significantly over the next year or so, not least because of the sheer weight of challenges that need to be addressed.

As a result, Theo James’ Bainbridge concludes: “In the short to medium term, unless we go into another recession, there will continue to be a shortage of skilled staff. Employers need to take a much longer-term view of the skills required and have a clear plan of how they’re going to bring them in, especially in areas where AI and automation are going to become more prevalent, because there is going to be a major skills shift.”

This was last published in May 2019

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