The “dramatic” skills gap is the biggest challenge facing UK companies, said Make UK chief executive Stephen Phipson CBE at the Advanced Engineering event last Thursday (31 October), with 58,000 vacancies currently open in the manufacturing sector.
An ageing workforce, drop in apprenticeship starts and a lack of access to European labour are all putting a “real squeeze” on vocational skills, Phipson told an audience at the NEC in Birmingham.
Companies are investing in automation and digitisation to counter that squeeze with potentially “vast” increases in efficiency, he said to Professional Engineering. “The challenge with it is, when we're talking about ‘What skills are we generating?’ the complaint I get is we're not generating enough digital skills to help us with these transitions,” he said.
“If you look at graduate programmes, for example, universities, another complaint I get from the larger companies… is: ‘They're not fit for work when they come out. They haven't got the right digital skills. We are way ahead of this now, we're using AI in our maintenance programme. They don't have the right skills.’
“So somehow what we need to do is to match the education with the skills we are needing.”
As the government works with industry to formulate the new Industrial Strategy, it needs to ensure the education system provides workers with the right skills to enable the transition, he said. Circular manufacturing will soon be another major focus, he added, but there are few relevant qualifications receiving significant take-up.
Following the recent announcement of the Industrial Strategy plan, IMechE president Dr Clive Hickman OBE also called for a focus on skills. “To truly realise the strategy's potential, it is essential to invest in the development of engineers who will drive the scale-up and deployment of these initiatives nationwide,” he said. “Aligning skills programmes with industry needs will be critical to ensuring we have the right talent to meet future demands.”
While digitisation and automation could make an important contribution, Make UK’s Phipson said hiring skilled employees will make the biggest difference – including recruiting more engineers from countries with skilled workforces, such as India.
“Recent measures by the new government have been to make it even worse to get engineers from overseas, rather than better. So we still need to work on that. Politically nobody wants to touch it,” he said.
“For some of these issues, like welding people, we should just ‘turn the tap on’ and bring them in, add them to the Shortage Occupation List… otherwise we're going to have big problems building wind turbines and everything else.”
Speaking the day after chancellor Rachel Reeves delivered the Labour government’s first autumn budget, Phipson said there were some “very challenging” aspects and some “very positive” ones. The increase in National Insurance contributions could increase employment costs by 20%, he said. “For most companies, that's very difficult to bear.”
On the other hand, he said the new government is much more supportive of manufacturing. Make UK is working with ministers on the Industrial Strategy, which the organisation hopes could boost the sector from 10% to 15% of GDP and return it to the global Top 10.
The strategy is needed to set out routes to British success in the global race to ‘onshore’ net zero technologies such as batteries, wind turbines and carbon capture systems, Phipson said. “We have a few legal frameworks and objectives set by the previous government – net zero by 2050, everyone's got to have an EV by 2035, those sorts of things. But there's no strategy to bring the country to a point where we can be self-sufficient in many of those technologies, take really good advantage of them.”
Investing pension funds in start-ups and scale-ups, as highlighted in the budget, could tackle the UK’s tendency to export innovative techniques and technologies elsewhere, Phipson added.
“That's how we want to try and compete with things like the Inflation Reduction Act and $400bn – we haven't got that, but can we make it. Our clever innovation can actually be scaled up here in the UK.”
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Content published by Professional Engineering does not necessarily represent the views of the Institution of Mechanical Engineers.