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Latest survey findings highlight national scandal in manufacturing

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.

However, a shortage of recruits at every level is harming future prospects and has been described as “a national scandal” by Sarah Dodds, Head of Manufacturing & Engineering for MHA MacIntyre Hudson in Peterborough.

Interestingly, despite 92% of companies in the East Midlands predicting growth in 2014, over half feel unable to pass on increased costs to customers. Findings from the survey also highlight that 36% are unsure how they will meet the upcoming cost of pension auto-enrolment and six in 10 say that ‘red-tape’ is getting worse, despite government pledges to reduce regulation.  Energy costs also remain a major issue.

Survey highlights:

• Optimism among manufacturers is high, with 92% in the East Midlands predicting growth
• 64% of companies intend to take on apprentices or trainees. However, there are calls for an ‘Industry to Education’ interface to address the predicted shortage of engineering graduates
• 86% of companies intend to invest in R&D this year
• All participants who applied for R&D Tax Credits last year were successful – a government-backed initiative to promote innovation

Sarah Dodds comments: “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.

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 skills deficit is of growing concern 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 Dodds.

“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.”

Download the survey results here:  MHA Manufacturing Report 2014_PRINT