FUTURE SKILLS ISSUES AFFECTINGINDUSTRY SECTORS IN WALES

Automotive sector

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Automotive Sector

Automotive Sector

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FUTURE SKILLS ISSUES AFFECTING INDUSTRY SECTORS IN WALES

Contents

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p4

1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p6

2. The Automotive Manufacturing Sector in Wales . . . . . . . . . . . . . . . . . . . . . . . . . . p7

3. Sectoral Skills Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p10

4. Action on Skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p15

Annex A: References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p18

Annex B: Sectors in context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p19

Annex C: The Supply of Manufacturing and Engineering Qualifications in Wales . . p22

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Automotive Sector

IntroductionThis document is one of a series commissioned by theFuture Skills Wales Research Forum. The overall projectaims to extend and complement the work begun by theoriginal Future Skills Wales project, which forecast futuregeneric skills needs across Wales using forecasting andsurvey data. The current project adds studies of futurevocational skills needs within key sectors in Wales. Eachsector study is based on desk research and qualitativeinterviews with practitioners and employers, and aims toprovide an overview of the sector, the skills issues, andcurrent and potential actions to further strengthen thesector.

Businesses and employees in each of the sectors studiedhave achieved great successes; that is why these sectorshave become important for Wales. Our focus on currentskills issues should not obscure these achievements orthe determination of all concerned to meet current andfuture challenges.

Sector ProfileThis report covers only the manufacturing aspects ofautomotive related activity; retailing and aftercare are notcovered.

The Automotive Manufacturing sector in Wales hasimportant existing strengths. Due in part to sustainedinward investment, there are over 80 significantmanufacturers in the sector, the majority in the South-East and the Swansea/Llanelli area, with a smaller groupin the North, mainly around Wrexham and Deeside. Thereare a few, locally significant, employers in Mid Wales. Thesector employs at least 16,000, and (depending partly ondefinition) estimates range up to 26,000. Employment inthe sector in Wales forms a greater proportion ofemployment in the UK sector as a whole than is theaverage for Welsh sectors.

There are prospects for further investment at some sites,and a recent forecast for the sector shows employmentgrowth over the next ten years. This is in contrast toforecast employment decline in the UK sector as a whole,and should benefit particularly West Wales and the North.

However the sector also faces a number of shorter-termand mid-term challenges:

• the probability of declining demand from Rover/Phoenix;

• global consolidation of volume manufacturers and theirsupply chains;

• regulatory and consumer moves, such as the fuel priceprotests;

• demands for lower costs and higher added valueproducts.

WDA information shows 34 former Rover suppliersemploying around 12,000.

One response to future challenges is interest intechniques like Lean Manufacturing; but new productdevelopment, and the formation of new alliances andchains, will also be necessary for growth in thedeveloping global market.

Skills ImplicationsThe changes taking place in the sector have forced anumber of developments which will impact on the needfor skills in the future:

• multi-skilled teams for flexible, high added valuemanufacturing;

• a greater development of Level 3 skills for supervision,team leadership;

• more emphasis on higher level entry skills (Level 2) andsubsequent development;

• generic skills are at a premium at all levels;

• more need for Level 4 and 5 skills, including intechnical areas for R&D and product/marketdevelopment.

Management and IT SkillsThe implications for non-vocational skills include:

• increased importance for management skills for thedevelopment of global strategy and alliances;

• more focus on IT skills needs including e-commercedevelopment.

Action on SkillsThere is a well developed sector group, the WelshAutomotive Forum, which has been working to addressmany of the above issues. Key themes for action are:

• supporting the changeover to lean manufacturingapproaches, at management and professional levels;

• developing high level marketing and strategy skills;

• supporting skills development for lean manufacturing;

• developing team leaders;

• developing skills in the supply chain, especially inSMEs;

• addressing basic skills issues in the workforce andamong new entrants;

• improving the work-readiness of workforce entrants atall levels;

• providing progression within the workforce;

• attracting new recruits into the sector;

• improving the supply and development of IT user andpractitioner skills in the sector;

• addressing some specific areas of vocational skillsshortage.

Some more detailed recommendations for action andfurther research are provided in the main report, andsummarised in the table below.

Executive Summary

Automotive Sector

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Themes and RecommendationsTheme Rec. Action Timescale Key PartnersNo: No:

1 1a Facilitate cross-sector working group on lean techniques From 2000 Various foralinking to existing initiatives

2 2a Disseminate best practice in HE/FE in-service provision 2001 HE/FE/Emps/CETW

2b Develop focused auto market intelligence network for Wales 2001 Emps/WDA(Net-based)

3 3a Review vocational qualifications to check applicability to 2001/02 NTO/CETW/lean manufacturing Emps

3b Review/update assessor training and awareness of lean paradigm 2001/02 NTO/CETW/Emps

4 4a Develop scope and availability of existing team leader programme 2001/02 Emps/CETW

4b Support proposals for free adult training to Level 2 and From 2000 Emps/WAF/make workplace opportunities available Assembly

5 5a Compile and disseminate directory of existing support 2001 WDA/programmes for SME training Bus. Connect

5b Build supply chain development into sector training 2001/02 WAF/CETW/NTOcluster programmes

5c Work to increase focus and profile of Business Connect services 2001/02 WDA/Bus. Connect

6 6a Work with Basic Skills Agency to implement common 2001 WAF/CETW/definitions and tests in recruitment and training needs analyses NTO/ES

6b Promote LearnDirect and learning centre opportunities to From 2000 UfI/Emps/workforces & jobseekers WAF/ES

7 7a Actively seek partnerships with local schools, EBPs, FE and HE Ongoing Emps/WAF/EBPsCETW

7b Proactively offer teacher/pupil/student placements 2001 Emps/WAF/HE/FE

7c Promote sector plans and prospects to schools, 2001 Emps/WAF/young people and communities CS/EBPs

8 8a Consider adoption of new simplified IiP standard Ongoing Emps/WAF

8b Review progression structures and opportunities Ongoing Emps/WAF

9 9a Use existing careers and skills events to promote sector 2001 NTO/CSto new recruits

9b Review feasibility of a Wales version of the UK Skills Show Now for 2001 NTOs/Assembly/(NEC 5-9 July 2000) UK Skills/fora

10 10a FE/HE and employers to co-operate to link e-commerce Autumn 2000 WAF/HE/techniques with sector applications FE/CETW

10b Establish Welsh auto sector portal site for sourcing, From WAF/WDA/information exchange, promotion and training delivery autumn 2000 CETW/NTO

11 11a Review adequacy of provision of Mechatronics training 2001 CETW/WAF

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Automotive Sector

1. Introduction1.1 This document is one of a series commissioned by

the Future Skills Wales Research Forum. The overallproject aims to extend and complement the workbegun by the original Future Skills Wales project,which forecast future generic skills needs acrossWales using forecasting and survey data. Thecurrent project aims to add studies of futurevocational skills needs within key sectors in Wales.

1.2 Businesses and employees in each of the sectorsstudied have achieved great successes; that is whythese sectors have become important for Wales.Our focus on current skills issues should notobscure these achievements or the determination ofall concerned to meet current challenges.

1.3 The FSW Sectoral Skills project aims to takeparticular note of the importance of themanufacturing sector for the Welsh economy andfor employment in Wales. In particular it covers fourmanufacturing sub-sectors (although forconvenience in individual sub-sector reports we willrefer to them as sectors). These are:

• food processing;

• aerospace;

• electronics;

• automotive manufacturing.

1.4 This report covers automotive manufacturing. Itshares some elements with the other reports, andparticularly with the other studies of manufacturingsub-sectors, but deals specifically with vocationaland other skills issues in automotive manufacturingin Wales and Welsh regions.

1.5 Each of the individual sector reports iscomplemented by a report on management andinformation technology skills issues across thesectors studied. This reviews the situation in eachsector and draws out common themes andimplications.

Method1.6 The first phase of the study proceeded mainly by

desk research and telephone discussions. Aninterview with Brian McCarthy of EMTA Wales wasuseful in setting the context for the sector withinengineering and manufacturing more widely.

1.7 In the second stage, further meetings were heldwith sector representatives, and employer casestudies were undertaken to extend and deepen theanalysis of vocational skills issues.

1.8 The aim was not to conduct quantitative primaryresearch, but to consult with sector representativesin order to identify perceived skills issues, theactions being taken in response to these, and thepotential for further action or policy development.The published reports should therefore provide aclear introduction to the sector, a ‘snapshot’ ofsector issues, and pointers to current and potentialaction.

Automotive Sector

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2. The Automotive Manufacturing Sectorin Wales

2.1 This report is concerned with the manufacture ofmotor vehicles and motor vehicle components,rather than retail and aftersales. In Wales, the sectorconsists of component manufacture rather thanvehicle assembly.

CharacteristicsNumber of firms2.2 The Clifton survey (Clifton,1999) based on WDA

records, estimates that there are 70 first tier firms inWales, 36% with turnover under £10m, 25% with£10-£20m, and 39% over £20m. This is fewer smallfirms and more large ones than in a 1990 study(Delbridge,1990), and the 1999 list has 46% UKowned as against 75% in 1990. However somefirms in the 1990 survey derived more than 50% ofturnover from other sectors.

2.3 The current Welsh Development Agency website(WDA, 2000) lists 82 firms, of which 53 namespecific volume manufacturers among theircustomers. In other words, these are ‘first tier’components manufacturers, supplying the volumecar assemblers direct.

2.4 What is not in doubt is that there is a substantialand important population of automotive componentmanufacturing plants in Wales, accounting for asignificant proportion of the manufacturing activityin the Principality.

Locations2.5 The main concentration of plants is in the M4

corridor and the valleys as far west as Llanelli, witha smaller group in the north around Flint andWrexham, with outliers in Colwyn Bay (QuintonHazell) and Caernarfon (Friction Dynamics).

2.6 There are generally smaller but locally significantplants in Powys, including Transtec Wales inLlanidloes and Kay at Presteigne, both producingaluminium castings, Traltec at Welshpool (plasticmouldings), Grayman at Llanfyllin (pressings) andTruesdell at Newtown (wiring systems). Lucas SEI atYstradgynlais is also in Powys although close to themain concentration of firms in South Wales.

2.7 There is a sprinkling of firms around Swansea,Neath and Port Talbot, but little further west (withthe exception of Dowty Auto Seal at Milford Haven).

Workforce Size2.8 Estimation of the size of the sector workforce in

Wales is complicated by difficulties in classifyingsome activity. For example components suppliersoften supply the aerospace or domestic appliancessectors as well as automotive manufacturers.Because of this estimates of employee jobs in thesector can vary between about 12,500 and 20,000,depending on the definition used. To support theYork Consulting sector studies, Business StrategiesLimited (BSL) produced estimates and forecasts ofemployment in all the sectors. The BSL figure foremployee jobs in the automotive manufacturingsector in 2000 is 12,830; this represents a fall froma peak estimate of 14,210 in 1996.

2.9 A separate estimate states that over two-thirds ofemployment is in foreign owned plants (WelshOffice estimate of 1998, quoted in Clifton, 2000).

2.10 The workforce figures given in the WDA list,however, show a total of 25,900 in the firms listed.The disparity illustrates the difficulty of assigningworkforce numbers to the sector, given that manycomponents suppliers also sell to othermanufacturing sectors. For analytical purposes it isprobably safer to use the smaller totals, but oneshould bear in mind that changes affecting theautomotive sector may not be confined in theireffects to the workforce of 12,800 or so within thisnarrower definition.

2.11 The smaller BSL total represents around 1.1% ofthe Welsh workforce (using the BSL estimate of1.206 million employee jobs in 2000).

2.12 Using the BSL figures, one can calculate theemployment quotient of the sector in Wales. This isdone by calculating the extent to whichemployment in the Welsh sector is proportionate toemployment in automotive manufacturing for theUK as a whole, given the relative sizes of the Welshand UK workforces. An employment quotient of 1indicates that the sector in Wales is roughly the sizeone would expect in employment terms; scoresbelow 1 indicate under-representation of the sectorin Wales.

2.13 The BSL forecast shows an employment quotient of1.35 for the automotive manufacturing sector inWales in 2000. This indicates the strength of thesector in Wales in employment terms, relative to therest of the UK.

Markets2.14 The first tier suppliers listed by the WDA name a

wide variety of volume manufacturers amongst theircustomers. These include:

• Rover (34 firms);

• Ford (31 firms);

• Honda (16 firms);

• General Motors/Vauxhall (14);

• Jaguar (12);

• Nissan (10);

• Toyota (7);

• Saab (6);

• Volvo (6);

• BMW (5).

2.15 Others also supply direct to vehicle manufacturerssuch as truck and earth moving equipmentspecialists. The rest occupy lower positions in thesupply chain, delivering to first or lower tiercomponents suppliers. In many cases, these firmsalso supply a substantial proportion of their outputto other sectors, particularly the electronics anddomestic appliances sectors. This makes for somedifficulties in classifying them and their workforces,as noted above.

Exports2.16 To date no figures are available for exports from the

sector as defined here, although many of the firms

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Automotive Sector

in the WDA list mention global or Europeanautomotive markets as key markets for theirproducts.

Investment and Turnover2.17 Since 1981, 16% of the £800m regional selective

assistance to industry (i.e. around £128m) has goneto automotive and transport equipment – 50% tonon-UK owned firms (Clifton, 2000). An example wasthe support provided for investment at Ford Bridgend.

2.18 An estimate of sales by the sector is £2bn (Clifton,2000, from Harman, 1996).

Workforce Characteristics2.19 No figures on the gender or other demographic

characteristics of the workforce have beenidentified. Information on qualifications is includedin Section 3.

2.20 Recent forecasts by Business Strategies Limited,provide an estimate of the broad occupationalprofile of this and the other sectors studied by YorkConsulting. Figure 2.1 below compares the profiles.Like the other manufacturing sectors, theautomotive sector is characterised by largeproportions of operatives and craft level workers. InWales it is closest in profile terms to the aerospacesector.

Figure 2.1: Sector Occupational Profiles, 2000

Source: BSL sector forecasts, 2000

Sources of changeTechnological2.21 ‘Vehicle manufacturers are focusing on their core

competencies, transferring significant responsibilityfor component design and development to their firsttier supply base’, (Rhys, 1996, quoted in Clifton,2000). First tier ‘full service’ suppliers are supplyingcomplete systems ready for integration.

2.22 The assemblers’ core competencies are powertrain,integration of subsystems, assembly, styling andmarketing (Rhys/Clifton). They now operate a policyof almost total outsourcing of, for example, waterpumps, exhausts, brakes, seats, and fuel tanks.

2.23 Suppliers therefore need to pursue R&D and effectivenew product development strategies.

2.24 To sustain this suppliers need to address the globalmarket to fund development and meet price limits.

2.25 Suppliers also need to find a place in smaller supplychains and closer supplier relationships – volumeassemblers are using fewer direct suppliers (PwC,2000).

2.26 Between 1986 and 1992 supplier numbers changedas follows for key manufacturers:

• Ford Europe - from 1250 to 1000;

• General Motors - from 2000 to 1200;

• VW – from 1700 to 1200 (Lamming, 1993, quotedin Clifton, 2000).

2.27 Other potential sources of change are as follows:

• competitive – consolidation of volumemanufacturers; impact on inward investmentopportunities;

• regulatory – environmental and road safetyregulation;

• consumer developments such as the UK pricingissue and the development of fuel price protestsacross Europe;

• sector activity – lean production initiatives.

2.28 The ‘lean production paradigm’ (Clifton, 2000)envisages manufacturing processes based on theprinciple of ‘no cost without added value’. Thisinvolves eliminating all delays, stockholding, orprocess costs which are not strictly necessary to theachievement of the end product. It is a key theme instrategy and operations across the automotivemanufacturing sector; it is also prevalent in othermanufacturing sectors, notably aerospace.

Prospects for the Future2.29 Forecasts for the sector must take into account

assumptions and forecasts affecting themanufacturing sectors overall. For the UK the issuescentre around the costs of manufacturing and theviability of the UK as a base for supplying Europe.The UK exchange rate, sterling value, and prospectsof entry to the currency union, are central issues;assumptions about these will influence forecasts to asignificant extent.

2.30 For the automotive sector in Wales these factors areparticularly key as they affect not only theperformance of existing units, but also prospects forfurther inward investment. Given the importance offoreign investment for the sector, this is likely to be akey determinant of future growth or decline in thesector.

2.31 Domestically, the prospects for Rover/Phoenix are afurther key factor. The 34 Rover suppliers identified inthe WDA list are shown as employing a total of12,000 staff. The scale of ex-Rover operations underPhoenix remains to be seen, and will presumablyhave a significant effect on these suppliers and onsmaller suppliers further down the chain. It seemsclear that there will be a decline in supply to thesuccessors of Rover and that this must have aneffect on the Welsh sector; what is not yet clear isthe extent of the decline and this impact.

2.32 Informal estimates by the Welsh Automotive Forummembers have suggested that a total of 1,500 jobs inWelsh plants are directly under threat from thedecline in Rover business; this figure would be likely

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Farms

Social Care

Tourism etc

Bus/Finance

Media/New Media

Automotive

Food Proc

Electronics

Aerospace

Managers Professions Technical Clerical CraftPersonal Sales Operatives Other

Automotive Sector

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to be increased by indirect effects on other jobsdown the supply chain.

2.33 In terms of the overall future scenarios for the sectorin Wales, the possibilities are:

• growth in output and employment – this willrequire an effective response to current challenges;cost pressures seem likely to force newmanufacturing jobs in less value added activitiesinto very low wage areas such as Eastern Europe.This scenario would probably require further andsignificant inward investment. The main prospectfor this currently is the introduction of new enginesat Ford Bridgend, which has been signalledpublicly by the company. Growth is alsoenvisaged, for example, as a result of new productintroduction at Toyota Deeside. However it is notyet clear whether new jobs associated with thesedevelopments would be sufficient to offset erosionamongst, for example, former Rover suppliers.

• growth in output with stability in numbersemployed: this is a possibility if Welshmanufacturers can continue to increaseproductivity as a response to market pressures;

• a decline in numbers employed, which may beaccompanied by decline or even some growth inoutput; this reflects the Rover situation, andcontinuing efforts by the volume car manufacturersto reduce supplier numbers and costs. This is inline with general forecasts for a continuing declinein employment in the manufacturing sectors.

Employment Forecast 2.34 The BSL forecasts produced for this study support

the first and most positive scenario, envisaginggrowth in employee jobs in the sector from 12,830 in2000 to 15,290 in 2010. Of the 2,460 additional jobs,the largest share (1,020) is forecast to go to WestWales (which includes Bridgend), with 830 in SouthEast Wales and 590 in North Wales.

2.35 As noted earlier, the BSL forecast shows anemployment quotient of 1.35 for the automotivemanufacturing sector in Wales in 2000. This hasincreased by 2010, when the employment quotienthas risen to 1.67. In other words, the forecastsuggests that the sector in Wales is currentlyrelatively strong in employment terms, and that it willexperience employment growth, which will make itstill stronger relative to the UK sector as a whole.This reflects the BSL forecast for falling employmentin the sector across the UK, from around 221,000 in2000 to less than 213,000 in 2010.

Summary Sector SWOTStrengthsCritical mass of existingplantsSkills and experience ofcurrent workforceGlobal and diversemarketsSectoral initiativesStrong history of inwardinvestment success

OpportunitiesIncreasingcompetitiveness if weakerpoundGlobal consolidation ofsupply chainsBuild on leanmanufacturing initiativesEnter integrated first tiersupply networksNew product/materialsdevelopmentFurther investment at keysites

WeaknessesEnvironment of exchangerate volatilityWeak UK volumeassembly performanceReliance on overseasinvestorsSome lower value addedactivity

ThreatsRover/Phoenix demanddeclinesNo entry to Euro/foreignwithdrawalsGlobal supply chainconsolidationNPD investment demandand market riskEnvironmental regulationInternational traderestrictionsHigher social costs withEU integration

Automotive Sector

3. Sectoral skills issues3.1 The Labour Force Survey (LFS) produces estimates of

qualifications levels by industry (based on StandardIndustrial Classification, or ‘SIC’, codes). These havebeen used to produce workforce qualification profilesfor each of the sectors studied in the FSW SectoralSkills project. These need to be treated with caution,as in many cases sample sizes are inadequate toprovide firm estimates. Nevertheless, they do providesome broad indication of qualifications levels as abasis for any further investigation.

3.2 For the automotive sector in Wales, the profile isshown in Figure 3.1.

Fig 3.1 Estimates of Highest Qualifications –Automotive and Aerospace

3.3 The aerospace and automotive sectors have a similaroverall profile – large numbers qualified at craft level(Level 2), and a significant proportion qualified atLevel 4, but with lower proportions at the supervisoryLevel 3. The comparison shows the lower estimatedproportion of automotive workers with Level 2qualifications, and higher proportions of those withLevel 1, compared to the aerospace sector.

3.4 The comparison also suggests a particularly lowproportion of workers qualified to Level 3 in theautomotive workforce (an estimate of zero from LFSreflects inability to report a percentage due to thelow likely numbers involved). This does not entirelyreflect the findings from the qualitative research,where Level 3 skills and qualifications seemed toform an important component of the workforce inthe large organisations. Although these estimatesmust therefore be treated with considerablecaution, they do suggest a key skills issue for someparts of the automotive sector – the relativeweakness of the supervisory level in theworkforce. The comparison also suggests that,although this feature may not be unique to theautomotive part of the manufacturing sector, it isparticularly marked in the automotive workforce.

3.5 Allied to this is the relatively high proportion ofworkers qualified to Level 1 or lower in theautomotive workforce. Figure 3.2 compares theestimates for these proportions in the fourmanufacturing sectors studied. Only foodprocessing (where one might expect that largernumbers of less qualified workers will be engagedin volume processing tasks) has a higher estimatedproportion of these workers.

Fig 3.2 Percentages Qualified to Level 1 or Lower

3.6 What does this mean in the context of the sectorfuture? The key message is that the scenario forfuture development of the sector points toincreased globalisation and fiercer competitionbased on more efficient addition of value to thecomponent supply process. This will require:

• extremely effective management with aninternational perspective;

• an increasingly key role for non-manufacturingstaff (strategy and marketing professionals,logistics and supply chain managers, productresearch and development teams, HR andtraining professionals);

• efficiently organised and led manufacturingteams, able to implement ‘lean’ approaches, andflexible enough to cope with rapid change andredeployment.

3.7 This implies a general increase in skills andqualifications levels in the sector, but especially:

• an increase in the proportions of those with Level4 and 5 skills within the sector, at managementand professional/senior technical levels;

• a significant increase in supervisory and teamleadership skills among the manufacturingworkforce, closely allied to high levels ofvocational or craft skills;

• an increased incidence of multi-skillingthroughout the manufacturing workforce, topermit increased flexibility;

• the development of high levels of generic skill inareas such as problem solving, team working,and communication, at all levels in the workforce.

3.8 This scenario would also envisage the establishmentof a clearer continuum of skills levels, and of careerdevelopment, within these firms. This would mean,for example, that fewer workers would stop addingto their skills and qualifications when they reachedLevel 2. More would aspire, (and have the ability), tomove up to Level 3, and from there onwards.

Vocational Qualifications3.9 Because of the diversity of components and

materials involved in the automotive sector inWales, the list of potentially relevant vocationalskills and corresponding qualifications is a longone. Those relevant only to vehicle retail andmaintenance have been omitted, as these activitiesare not the focus of this study.

3.10 Initial examination of the ACCAC qualifications listsillustrates the wide range of NVQs relevant to thesector:

0

5

10

15

20

25

30

35

40

45

50

Aerospace Electronics Automotive Food Processing

Level 5Level 4 Level 3 Level 2Level 1 No

quals

0

5

10

15

20

25

30

35

40

45

percent

AutomotiveAerospace

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Automotive Sector

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Level 1 and 2: Manufacturing:

• Processing Rubber (general rubber goods ) – forseals, gaskets etc

• Performing Manufacturing Operations

• Forming Ceramic Items (Automotive)

Engineering: Various Levels:

• Automotive Glazing

• Cable and Wiring Loom Manufacture

• Electronic Product Assembly

• Engineering Construction – Maintaining Plant andEquipment

• Engineering Design

• Engineering Maintenance

• Engineering Material Processing

• Engineering Installation

• Engineering Manufacture

• Engineering Production

• Welding

• Process Engineering Maintenance

• Project Control

3.11 In non-technical areas of the business,qualifications in the following areas are also likely tobe important:

• Providing Goods and Services (InformationSystems Acquisition, Analysis, Design andProgramming, Development; Key AccountManagement);

• Providing Business Services (EnvironmentalManagement, Implementing IT Solutions,Installing and Operating IT, OperationalManagement, Project Management, QualityManagement, Strategic Management, SupportingWorkplace Organisation and Representation);

• Developing and Extending Knowledge and Skill(Personnel Management, Strategy and Support,Training and Development).

Future Skills Demand 3.12 General remarks on future demand trends for

vocational skills have been made above. The scaleof this demand for the automotive sector will ofcourse depend on which of the possible scenarioscomes to pass. The BSL forecast suggests risingemployment in the sector (paragraph 2.34 above).

3.13 However it is important to appreciate that, even ifoverall employment in the sector declines, there willbe a significant demand for workers to replace thoseretiring or moving to other employment. Annex Billustrates the point with an analysis showing UKreplacement demand projections for Skilled Metaland Electrical Trades (Annex B, Figure B.5).

3.14 We have no similar formal projections ofreplacement demand for the automotivemanufacturing sector in Wales. However it ispossible to construct some estimates, which,although crude, might serve to indicate the issuesinvolved in estimating future needs at this quitedetailed level.

3.15 Annex B suggests a replacement demand across

the six years 1998-2004, for skilled metal andelectrical trades in Wales, of 7,600. This is itself arough extrapolation based on the ratio of jobs inWales and the UK. In order to translate this intodemand in the Welsh automotive manufacturingsector, we would need to know what proportion ofpersons working in these trades are in this sector.Taking an estimate of 12,800 employed in thesector (1998), we can say that this representsroughly 6.3% of the 203,000 or so employees inWelsh manufacturing plants with over 10 employees(source: National Assembly for Wales, 2000). If weapply the same percentage to the 7,600 figure forreplacement demand in skilled metal and electricaltrades, this gives a replacement demand for thesetrades in the Welsh automotive sector of around480 over six years.

3.16 This would not include other, non-skilled or semi-skilled manual occupations, or non-manualoccupations, which would considerably increasethe overall replacement demand for the sector. Therecent BSL forecast for additional jobs in the sectorover the same six years is modest (430), but thisnumber would be swelled by the need to replaceretiring workers or those moving into other sectors.

3.17 This is necessarily quite a crude estimate, but giventhe uncertainties inherent in estimating, forexample, expansion or contraction in the sectoreven across this short period, it seems unlikely thata much more reliable figure could be constructed. Itdoes at least give an idea of the kinds of numberslikely to be involved.

3.18 The employers participating in the case studiesreported few if any vacancies, small apprenticeprogrammes, and in some cases decliningworkforce numbers over the last year or so (seeCase Study boxes). These limited qualitativeindications tend to support the suggestion thatreplacement demand in the sector is likely to bequite limited in scale for the foreseeable future,except in individual cases where significant newinvestments are involved.

3.19 The case studies do, however, indicate theimportance of improving the quality of theworkforce in terms of skills and performance at alllevels. This will depend in part on ensuring that newentrants to the workforce are highly qualified andprepared. Hence, though the numbers of these newentrants may be relatively limited, the quality of theirtraining is a key factor for the sector.

3.20 Similarly, there will be an ongoing need to providetraining to the existing workforce, to meet the needfor increased flexibility, multi-skilling and efficiency.

Provision and Supply3.21 The qualitative fieldwork gave few indications of

current or near-term difficulties in supplying theneeds of the sector, as far as recruitment ofqualified workers is concerned.

3.22 Concern tended to be stronger in the smaller firmsemploying significant numbers of lower skilledoperatives, and centred on deficiencies in terms ofemployability (reliability, commitment, and initiative).

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Automotive Sector

3.23 Employers with significant training needs have oftenformed effective relationships with local colleges,supplementing these, especially in the largest sites,with some in-house provision. Where employerswere working with local colleges they appearedgenerally content with the capacity andperformance of these suppliers.

3.24 To supplement the local and employer structures,the Waterton Technology Centre at Bridgend hasbeen established. This is a large, well-equippedfacility, which enjoys the support of sponsoringemployers and the Welsh Automotive Forum. Itseems likely that this facility remains relativelyunder-used, perhaps due to the distracting effectsof current upheavals within the sector.

3.25 There were a number of reservations concerningthe details of the current vocational trainingframework:

• a factor mentioned by a number of consulteeswas the lack of funding to support training foradults over the age of 25;

• NVQs, though generally accepted, were restrictedin terms of their use in training or developingexisting workforces. The main difficultiesmentioned were the cost and complexity ofplanning and assessment, and in particular theamount of ‘paperwork and bureaucracy’ involved.

• An associated issue was the recognition thatNVQs are a recognition and certification ofcompetence, and can be achieved in some cases(depending on the existing competencies of thecandidate) independently of additional vocationalskills development.

• There was a proposal for the development of a‘Lean Manufacturing’ NVQ or other qualification,to inculcate and accredit understanding of theprinciples and implementation of this approach.

The Scale of Provision3.26 If we examine the scale of appropriate provision, it

is less clear that the future supply of new skills (asmeasured using course enrolments or qualifications)will be adequate in numerical terms. Annex Ccontains a comparison of provision and demand formanufacturing as a whole, which suggests that thesupply of new manufacturing related qualificationsmay not match replacement demand inmanufacturing in the future.

3.27 In the case of automotive manufacturing, thisproblem may be lessened to some extent due tothe existence of specialised provision, particularly inthe FE sector, and in TEC funded provision, nearkey employers. For example, in 1999/2000, 669 ofthe 4,003 Modern Apprenticeships funded by SouthEast Wales TEC, and 259 of the 3,770 NationalTraineeships, were automotive related.

Skills Issues3.28 The Case Studies included here provide some

illustrations of the points made above. The casesselected are very different, and suggest the range ofsituations faced by employers of different sizes andin different positions in the supply chain. They alsosuggest some of the differing strategies adopted inresponse to current market developments –

focusing on core businesses, moving to the qualityend of the volume market, or occupying lower-volume, higher-margin market niches. Thesestrategies each have their impact on skills andworkforce development needs and approaches.

3.29 Throughout the cases there is a common theme,which one might characterise as the application oflean techniques to training and development. Costpressures make it difficult for manufacturers toprovide or support training which does notultimately add value for the customer. This linkneeds to be established with some degree ofcertainty, in order for expenditure to be justified.

Key Points from the Case Studies3.30 Particular points to note from the cases include:

• the probable new engine introductions at FordBridgend – this could have a significant impacton employment there and on the scenario for thesector overall;

• clear trends in two studies towards a ‘retreat’from high-volume, low-margin manufacturing, topremium or other niche markets – but withslightly different skills implications in the twocases;

• particular interest in ways of developing teammembers and team leaders for cell or teambased production using the lean manufacturingparadigm.

Automotive Sector

13

Case Study: Caerbont Automotive InstrumentsCaerbont Automotive Instruments employs around 110people in Abercrave near Ystradgynlais –geographically in Mid-Wales, although relatively closeto Swansea. It is a result of a management buy-out in1993, and remains independent. The companysupplied gauges and instruments to clients includingLand Rover, Dennis and Leyland Daf Vans. The highervolume end of this market has become more difficultto supply due to the level of investment required inplant and quality compliance. Caerbont thereforerefocused on lower volume niche markets wherehigher margins were available – a strategy which isproviding profits but which initially involved somedecline in workforce numbers.

The higher volume market was seen as requiring alower level of operative skills (for loading and mindingautomated processes) but was dependent on asmaller team of more highly skilled workers. This, plusthe level of investment required to automateproduction, was not available, therefore forcing theadoption of a strategy requiring more modestinvestment, few highly skilled workers, but a higheraverage level of shop floor skills. Operatives aregenerally semi-skilled across a range of areas, withhighly developed job-specific skills for intricateassembly tasks.

The outlook is now for stability in workforce terms –turnover is low and the average age of workers is inthe low 40’s, so ‘there will be replacement needs in tenyears or so’. There is currently one ModernApprentice, but the main need is to continuouslydevelop the skills of the existing workforce. In-housetraining is focused on understanding the business andcustomer needs, general manufacturing skills (buildingto assembly lists, using assembly jigs, calibration,working to limits and tolerances) and job-specificskills.

NVQs are not used – potential team leaders are trainedusing the NEBS Supervisory Management qualificationwith support from Mid-Wales TEC. An external tutorworks on-site, with trainees released during the dayand offered overtime for project work. This is seen as‘similar to an NVQ but not as bureaucratic’. NVQs areseen as requiring more time to provide structures,agree training plans, communicate with assessors andsupport learners. The NEBS approach is seen as moreefficiently packaged.

Caerbont has been a strong proponent of an NVQ inLean Manufacturing, and has discussed this withothers in the Welsh Automotive Forum (it wasmentioned also by Ford Bridgend). This would serveas a means of recognising workers who were attunedto team working, waste minimisation, problem-solving,and competitive advantage via manufacturing flexibilityand efficiency. There is a perception that existingqualifications do not necessarily indicate possessionof these qualities. The proposal appears to have metwith some resistance from EMTA, on the (reported)grounds that such ‘soft skills’ were difficult to assessand certify, and should anyway be embodied inexisting qualifications.

Case Study: Ford at BridgendFord is involved in a global race for volume and marketpresence with Daimler Chrysler, General Motors and theother remaining global players. It is acquiringcompetitors in key markets such as Asia, and isdivesting itself of component manufacturing activities,often by transferring them to new joint venturecompanies part-owned by existing suppliers. It recentlyfloated a large part of its component manufacturingoperation as Visteon. The core competencies for Ford inthe future will be marketing, new model design andintroduction, and the sourcing of product from thesupplier chain.

Engine manufacture remains very much a part of coreFord plans. The Bridgend plant, building a range ofpetrol engines for Ford and Jaguar models, employsaround 1350 workers. Possible additions to the range ofengines were suggested by Ford when the Dagenhamredundancies were announced, but as yet no detailedannouncements have emerged. It is possible thatoutput and employment at the plant could growsignificantly as a result of these new requirements.Currently 80% of output is exported.

The plant ‘pays significantly above regional rates so hasnever had a problem getting quality people’. It employsmore skilled men with degrees than any other plant inFord Britain. Labour turnover is very low. There is afairly small apprentice programme – around 5 per year.These can be selected from as many as 800 applicants,all qualified to Level 2. They are trained partly at theSwansea Training Centre, in what is now the Visteonsite; this also trains other Ford and Visteon apprentices.Apprentices progress from NVQ3 to HNC.

Ford is keen to provide development opportunities forthe existing workforce. NVQs are ‘not much used’,partly because so many of the workforce already holdqualifications. However it is acknowledged that, for theindustry in general, ‘there has to be a place for BTECsand assessment-driven provision allowing the non-graduate to find his or her place in the sun’.

The company is deeply committed to leanmanufacturing principles, and this shapes the provisionof training for existing workers. The emphasis is ontraining for flexibility, with additional allowancesavailable for skilled tradesmen who train in a secondtrade. The majority of skilled workers are now multi-skilled in both electrical and mechanical trades. Theyare organised in teams where the traditional boundariesbetween engineers, tradesmen, and supervisors areslowly becoming blurred. There is a clear progressionfrom semi-skilled workers, to ‘integrated manufacturingspecialists’, to adult apprentices and assistedengineering degree programmes. The plant has stronglinks with Pontypridd College, West Glamorgan College,and Cardiff University Business School.

Ford is also keen to help develop the capacity of itssupply chain. The company has been a partner in theestablishment of the neighbouring Waterton TechnologyCentre, and has worked via the Welsh AutomotiveForum, the WDA and TECs, to ‘share blue-chipexperiences with SMEs – to fast-track them to bestpractice’. However some SMEs have had difficultiesreleasing trainees for longer courses, creating a need tore-design or modularise existing Ford provision.

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Automotive Sector

Case Study: Harman InternationalHarman International is a US owned group manufacturingentertainment systems for a range of OEM, professionaland consumer markets. The Bridgend plant designs andmanufactures speakers for the automotive market undera range of brand names. Customers are carmanufacturers such as Mercedes and BMW. Rover was asignificant customer, but orders from this source haddropped by one third in a four month period; thecompany expected to be further affected if the Rover 45was discontinued. However the main factors affecting theworkforce are the need to cut costs and streamlineproduction, and the introduction of new technology toachieve this. In 16 months numbers fell from just under500 to around 350 employees. It was expected that anyfurther decline would be limited, although as numbersstabilised productivity would need to rise.

The plant cannot compete on cost with units in EasternEurope, but has built a quality and performance basedstrategy. It manufactures many product lines in smallbatches, so needs to build workforce flexibility andminimise downtime and changeover delays. Workforcereliability and commitment is vital. Widespread technicalchange had been implemented in order to reverseturnover decline, and sales growth is foreseen – someproduction is due to be transferred from Germany,though more is going to Hungary.

Although there is little current recruitment, the companyhas experienced difficulty in obtaining good Mechatronicsskills (combinations of electronics, mechanical androbotics skills used for process automation). As a resultless automated workstations have had to be introduced.There are difficulties in introducing recruits directly fromdegree courses – ‘usually they are too specialised ornarrow, and not totally up to date with technology, andthey may not have other skills needed in the workplace’.Cardiff University was seen as an exception to this, withrelevant, modern provision. Better HE and EBP links toindustry are needed. School leavers at 16 and 17 areperceived as very poor in terms of basic skills andattitudes to work. Any future recruiting will include basicskills tests.

Harman supports HNC and HND qualified technicians tostudy for degrees via the Open University, by paying forfees and study leave and providing mentoring. Linemanagers are pursuing OU Effective Managementcourses. The majority of operatives have NVQ2 inPerforming Manufacturing Operations (EMTA), and this isseen as providing encouragement to further learning.Last year nine took up an offer of support to study IT atGCSE.

Harman has been involved with the development ofan ‘NVQ on CD-ROM’ which aims to streamline theNVQ process.

The company has benefited from TEC partnership andsupport and feels that similar employer involvementneeds to be ensured within the replacement CETWstructures.

Case Study: Toyota DeesideThe Toyota engine plant at Deeside is a division ofToyota Motor Manufacturing UK. It employs around350, but the centre of gravity for Toyota in UK is inBurnaston, Derbyshire, where around 3,000 areemployed. Most training and human resourcesdevelopment activities are therefore located inDerbyshire.

Toyota is an example of a global operation wheretraining and development have been largelyinternalised and integrated with a total operationalphilosophy. The Toyota approach to manufacturing isclear, comprehensive and systematic and embodies‘lean manufacturing’ principles. It determines howoperations are conducted, and this in turn determinestraining and development needs.

The selection process for production members (theToyota term for staff) focuses on attitudes, personalityand learning ability. Teamwork and quality awarenessare seen as central attributes. These are measured in ahalf-day assessment centre which includespsychometric tests. Successful candidates enter a oneweek induction to Toyota philosophy and procedures,conducted at Deeside if numbers permit, or atBurnaston when numbers are small.

Maintenance team members are externally recruitedwith apprentice level qualifications, or selectedinternally from production team members whoprogress via in-house training programmes to becomefully qualified maintenance members. Most technicaltraining in areas like pneumatics, hydraulics, andprocess control is conducted at Burnaston in apurpose-built technical training centre. Such trainingincludes NVQ3 awards.

Maintenance members are expected to be multi-skilled. Engineers can access in-house provision tochartered status, and may also undertake technicalcourses to facilitate co-operation and flexibility withmaintenance teams.

Recruitment difficulties can be experienced formaintenance members, partly because of a tendencyfor candidates to display narrow technical skills, andbecause of the demands of the Toyota shift systems.No real problems are experienced at graduate andproduction member levels. The workforce in the area isrelatively skilled in manufacturing work due to thepresence of companies such as BAe, BICC, Ford andGeneral Motors across the border in the North West ofEngland.

The workforce is likely to expand over the next 2-3years with the introduction of new engine lines, from350 to approximately 500.

Automotive Sector

15

Management and IT Skills 3.31 The analysis so far suggests that Management and

IT Skills development will be central to the successof the automotive sector during the next phase ofrestructuring. Not mentioned so far, but important,is the likely central role of e-commerce throughoutthe sector. This is already an issue of strategicconcern for the volume car manufacturers, whoperceive a real threat to the existing distributionstructures from net-based vehicle purchase.

3.32 It is likely that volume manufacturers will embracee-commerce, not only to sell and communicate withthe purchaser, but also as a key tool in establishingand developing the more closely knit global supplychains which we have already described. ThereforeWelsh component suppliers will also need tobecome leaders in e-commerce in order to maintaincompetitive position against overseas suppliers.

3.33 An early example of this is the Ford, GM andDaimler-Chrysler collaboration, COVISINT,described as a ‘business to business web portal’,intended to provide component sourcing, and‘ordering parts and sub-assemblies from the shopfloor over the internet’ (from @Ford, the companyin-house magazine, June 2000).

Current and Potential Impacts of Skills Issues3.34 The need to address skills issues in the automotive

sector is very real and probably also urgent. This isdue to the strong pressures for change in thesector, allied to the uncertainties affecting thegeneral competitive environment for manufacturingin the UK. There is a clear need to maintain andincrease productivity growth, and to cope withincreasing demands for flexible supply of a range ofintegrated component systems.

4. Action on Skills4.1 Much excellent work is being taken forward by the

Welsh Automotive Forum (WAF) and others, toaddress the issues outlined so far.

4.2 The Wales 2000 Project is an example of actiondesigned to improve the acquisition and applicationof management and IT skills by small and mediumsized enterprises (SMEs) with under 250employees. By these means it aims to help thesefirms identify and respond to current andanticipated skills shortages within their sectors. Theproject aims to support 34 SMEs in the automotivesector, out of a total of 160 companies trained. Theinitiative is funded by the European Social Fund(ESF).

4.3 However there remains a need for the variousplayers in the public and private sectors to agree anintegrated approach to skills issues in theautomotive sector. There is a need for:

• a collective and agreed statement of the keyissues;

• a closer dialogue and partnership betweenemployers, providers, and national or regionalpublic sector bodies;

• based on this partnership and dialogue, anagreed strategy to address the skills issues via aspecific schedule of activities by each partner.

4.4 This Skills Strategy for the Automotive Sector inWales should dovetail with more general skillsstrategies for each region and for the manufacturingsector as a whole. These in turn should form part ofthe national skills action plan which will bedeveloped as an aspect of the national economicdevelopment strategy. But the priority for actors inthe sector is to start work on a sectoral strategywhich can form the basis of early action while thesewider relationships are being worked out.

4.5 Clearly the representatives of the sector, meetingwithin the Welsh Automotive Forum, will be key tothis development work and subsequentimplementation.

4.6 Based on our desk research and fieldwork, thereare a number of key themes for action. Many ofthese themes also appear in our reports on othermanufacturing sectors, particularly aerospace andelectronics. They are as follows:

1: supporting the changeover to leanmanufacturing at management andprofessional levels;

2: developing high level marketing and strategyskills and practice;

3: supporting the development of skills for leanmanufacturing;

4: developing team leaders;

5: developing skills (including management skills) inthe supply chain, especially in SMEs;

6: addressing basic skills issues in the workforceand new entrants;

7: improving the work-readiness of school leaversand intermediate and higher level entrants to theworkforce;

8: providing progression within the workforce;

16

Automotive Sector

9: attracting new recruits into the sector;

10: improving the supply and development of ITuser and practitioner skills in the sector;

11: addressing specific current or potentialvocational skills shortages.

4.7 In relation to these we make specificrecommendations.

• It would be possible to establish a cross sectorworking group on lean techniques and theimplications for training and qualifications; theremay be common ground between sector bodies,employers, and educationalists, which will permita closer match between needs and provision inthis area.

• The sector should identify and disseminateexisting best practice in FE and HE provision;there have been a number of developments inWales which can be usefully promoted within andbeyond the sector; some are mentioned in thisreport, but there are likely to be others to beidentified.

• There are some existing websites providinguseful intelligence on the sector in Wales, notablythe WDA site referenced in this report. However itwould be useful to develop or add to these toproduce a source of current intelligence foremployers, employees, careers advisers andpotential recruits to the sector. Information fromemployers would be a crucial input to this site,although intelligence from other bodies such asWDA, CETW and the Future Skills Wales Unitwould also be important.

• Some employers feel there is scope to focusmore sharply on the delivery and assessment ofskills for lean manufacturing. There is scope toreview the situation and if necessary to reflect thelean manufacturing approach more explicitly inframeworks and assessment practice.

• An existing team leader programme has beenwell received by some employers in the sector(see Case Studies); this could be developed andmade more widely available throughout Wales.

• Some employers are concerned at the costs oftraining adults over 25; there is some prospect ofa change in policy on this issue at national level;representation from the sector could strengthensupport for these potential changes.

• The large number of existing SME trainingsupport programmes, while positive in itself, maypresent problems for employers wishing toaccess help. A central source of information forthis and other sectors is needed, as part ofcurrent and future work on business support inWales.

• There is some existing sectoral training activityvia the Automotive Forum; this can be extendedto cover current issues affecting the supply chain,such as development and integration issues andthe impact of electronic commerce.

• Some employers report deficiencies in basic skillsamongst job applicants, and in some cases areplanning to include basic skills tests inrecruitment programmes. The Basic Skills Agencyis leading work in this area which will be of directrelevance to such employers.

• Other opportunities for adult learning, includingbasic skills provision, will arise from the initiationof Learndirect programmes. Employers can joinwith other agencies such as the EmploymentService in encouraging their staff to takeadvantage of these new opportunities.

• Although much good work is being done, thereare opportunities to work more widely, andacross a wider range of employers, to establishlinks to education at all levels, and to promotethe sector to educationalists and learners.

• Employers should review, where appropriate, thenew Investors in People standard, as part of ageneral assessment of their human resourcedevelopment strategies; the progression aspectof this work is particularly key in developing teamleaders and future managers.

• Existing careers and skills events can be used topromote the sector; in addition, the recent UKSkills Show at the NEC in July 2000 showed howa major event focused on vocational skills canattract large numbers and showcase the potentialfor personal and career development. It would bepossible to combine the Welsh finals of theconstituent skills competitions to produce aWelsh version of this event (the co-ordinatingbody, UK SKILLS, would be a key player in suchan initiative, together with Welsh FE colleges,National Training Organisations, and employers).

• Practical experience with e-commerce is needed bysuppliers in order to meet manufacturerrequirements. FE and HE institutions with existingskills can co-operate with employers to establishelectronic networks and applications in non-criticalareas. This would link to the earlier recommendationfor a sector intelligence site or portal.

• Some employers felt that existing training inMechatronics was a relatively weak area ofprovision. It was not possible to substantiate thisto any degree within the study, but it may be anarea for future review.

4.8 Recommendations for action under these themesare summarised in Table 4.1.

4.9 The potential impacts of action if taken forward areconsiderable – they could provide a basis forcontinued growth and success in the sector into thefuture, especially in the light of forecast growth inemployment.

Recommendations for future research4.10 In general there is good, publicly available

information on the Welsh sector, particularly fromthe Centre for Automotive Industry Research at theUniversity of Wales Cardiff. However as regards theworkforce, information tends to be available for theengineering or manufacturing sectors more widely,reflecting to some extent the NTO structures inexistence.

4.11 The first requirement is agreement on the numberand definition of sectors which are to form theobjects of strategies and action by the Assemblyand public and private sector partners. Given theimportance of the automotive sector foremployment and output in Wales, we recommendthat it is defined as a distinct sector, withinmanufacturing, for these purposes.

Automotive Sector

17

4.12 Our recommendation is further that EMTA or aconsortium of researchers including the NTO,should commission quantitative research toestablish current workforce numbers andcharacteristics in the automotive sector in Wales.Unless there are existing data sources which wehave not identified in this study, this will requireprimary research with manufacturing employers inWales.

4.13 In principle this can be a fairly simple postal and/ortelephone survey, which should be as nearly aspossible a census of all significant operations in the

sector. It should be possible to enlist the co-operation and support of the Welsh AutomotiveForum to facilitate this process.

4.14 This research could be combined, for efficiency,with similar work on other manufacturing sub-sectors, particularly aerospace and electronics,where similar information also appears lacking. Theresults, as well as informing strategy developmentfor these sectors, should be useful to EMTA in thetask of producing and updating a workforcedevelopment plan with a distinctively Welshcharacter.

Table 4.1: Themes and RecommendationsTheme Rec. Action Timescale Key PartnersNo: No:

1 1a Facilitate cross-sector working group on lean techniques From 2000 Various foralinking to existing initiatives

2 2a Disseminate best practice in HE/FE in-service provision 2001 HE/FE/Emps/CETW

2b Develop focused auto market intelligence network for Wales 2001 Emps/WDA(Net-based)

3 3a Review vocational qualifications to check applicability to 2001/02 NTO/CETW/lean manufacturing Emps

3b Review/update assessor training and awareness of lean paradigm 2001/02 NTO/CETW/Emps

4 4a Develop scope and availability of existing team leader programme 2001/02 Emps/CETW

4b Support proposals for free adult training to Level 2 and From 2000 Emps/WAF/make workplace opportunities available Assembly

5 5a Compile and disseminate directory of existing support 2001 WDA/programmes for SME training Bus. Connect

5b Build supply chain development into sector training 2001/02 WAF/CETW/NTOcluster programmes

5c Work to increase focus and profile of Business Connect services 2001/02 WDA/Bus. Connect

6 6a Work with Basic Skills Agency to implement common 2001 WAF/CETW/definitions and tests in recruitment and training needs analyses NTO/ES

6b Promote LearnDirect and learning centre opportunities to From 2000 UfI/Emps/workforces & jobseekers WAF/ES

7 7a Actively seek partnerships with local schools, EBPs, FE and HE Ongoing Emps/WAF/EBPsCETW

7b Proactively offer teacher/pupil/student placements 2001 Emps/WAF/HE/FE

7c Promote sector plans and prospects to schools, 2001 Emps/WAF/young people and communities CS/EBPs

8 8a Consider adoption of new simplified IiP standard Ongoing Emps/WAF

8b Review progression structures and opportunities Ongoing Emps/WAF

9 9a Use existing careers and skills events to promote sector 2001 NTO/CSto new recruits

9b Review feasibility of a Wales version of the UK Skills Show Now for 2001 NTOs/Assembly/(NEC 5-9 July 2000) UK Skills/fora

10 10a FE/HE and employers to co-operate to link e-commerce Autumn 2000 WAF/HE/techniques with sector applications FE/CETW

10b Establish Welsh auto sector portal site for sourcing, From WAF/WDA/information exchange, promotion and training delivery autumn 2000 CETW/NTO

11 11a Review adequacy of provision of Mechatronics training 2001 CETW/WAF

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Automotive Sector

4.15 The qualitative approach undertaken in this study isinvaluable as a means of exploring issues within asector and interpreting developments which,although expressed in similar language acrosssectors, often translate into quite different realitiesin each. We recommend that a similar methodologyis used to examine further Welsh sectors in future,and, as suggested above, that it be used as aprecursor and foundation for focused quantitativeresearch.

4.16 Other recommendations for research onmanagement and IT skills issues, which will affectthe automotive sector, are contained in the separatereport on management and IT skills issues.

Annex A: ReferencesJune 2000:@FordFord in-house magazine.

Clifton, 1999:‘The Welsh Automotive Component Industry and NewProduct Development’, Clifton et al, in ‘Welsh Economic Review’, Spring 2000.

Delbridge, 1990: ‘Welsh Automotive Components Survey, ExecutiveSummary’:Delbridge et al, Japanese Management Research Unit,Cardiff Business School, Working Paper No. 14.

National Assembly for Wales, 2000:‘Digest of Welsh Local Area Statistics 2000’,The National Assembly for Wales.

PWC, 2000:‘Over 700 Tier One Component Suppliers will Go asRestructuring of the Motor Industry Accelerates’:article by PriceWaterhouse Coopers, May 18, 2000, onwww.just-auto.com/features.

Rhys, 2000: ‘The Automotive Sector and Wales’, Professor Garel Rhys OBE, Director of the Centre forAutomotive Industry Research, Cardiff UniversityBusiness School.

WDA, 2000: The Welsh Development Agency (WDA) maintainsinformation on companies in the automotivemanufacturing sector in Wales onwww.autoline.org/WDA/datasheets

Other Key SourcesThe Centre for Automotive Industry Research (CAIR),Cardiff Business School, Cardiff University; informationon research and publications onwww.cf.ac.uk/carbs/research/cair.

The Wales 2000 Project, European BusinessManagement School, University of Wales Swansea.

Automotive Sector

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Annex B: Sectors in contextA Brief Overview Of The Relative Size AndImportance Of Welsh SectorsThis paper presents an overview of the sectors selectedfor study within the Future Skills Wales Sectoral Skillsproject. It aims to give the relative scale of the sectorsinvolved and some idea of their relative importance inWales.

The data on employment used in this section is takenfrom the latest estimates from Business StrategiesLimited (August 2000). Data on business units are takenfrom NOMIS. Some of the values given (for example forthe number of businesses within Wales, or the size of theworkforce, for a given sector) will not agree withestimates or calculations from other sources. This is dueto differences in the detailed definitions of sectors, or inmethods of estimation. However by using one source inthis discussion, consistency in measurement orestimation is established, and better comparability isensured. This is appropriate since here we are concernedwith the relative sizes of sectors and their workforces, asmuch as with absolute numbers.

Sector Size: Workforce NumbersFigure B.1 shows the employment figures for each of thesectors (employees and self employed) as a percentageof the total for Wales. By this measure Tourism, Leisureand Hospitality is the largest of the selected sectors,followed by Business and Financial Services, Social Care,and Agriculture and Farm Enterprises.

Together, the nine sectors selected for study in thisproject provide work (either as employees or in selfemployment) for around 26% of people working in Wales.This indicates the scope and potential importance of theexercise for the understanding of skills issues in Walesand the formulation of policy responses. (The rest ofemployment in Wales is accounted for by a large publicsector, including government, education and publicsector healthcare, and by the primary, construction,transport and distribution sectors, including retail).

Figure B.1: Employment as a percentage ofWelsh Employment: by Sector

Source: BSL FSW Sector Forecast

Employment Location QuotientsFigure B.2 provides a different view of the sectors, interms of their importance within Wales relative to the UKas a whole. It does this by comparing the employmentlocation quotients for the sectors. Employment locationquotients are used to express the degree to whichemployment in a given sector is located in a selectedregion. To calculate a location quotient, an averagepercentage is first calculated for all employment in theregion. Using the BSL estimates, for example, one findsthat 4.3% of all employment in the UK is located inWales.

Figure B.2: Employment Location Quotients forWales: by Sector

Source: BSL FSW Sector Forecast

Therefore, if employment in a given sector is distributedevenly over all regions of the UK, one would expect 4.3%of its employment to be in Wales. The sector’s Welshemployment percentage, at 4.3%, will be equivalent tothe average employment percentage for Wales.

To calculate the employment location quotient, thesector’s percentage is expressed as a ratio of the Welshaverage percentage. For example if a sector has 5.2% ofUK employment, the employment location quotient willbe the ratio of 5.2 to 4.3, or 1.2. Quotients of more than 1therefore indicate over-representation of employment inthe Welsh sector relative to the UK as a whole. Quotientsof around 1 indicate that employment in the sector inWales is much as one would expect given the overalldistribution of employment across the UK; and quotientsbelow 1 indicates that the sector in Wales is relativelyunder-represented in terms of employment.

Figure B.2 shows that the strongest Welsh sectors, inthese terms, are Agriculture, plus three of themanufacturing subsectors – Automotive, Aerospace andElectronics Manufacturing. UK employment is relativelyconcentrated in Wales for these sectors, despite the factthat some of them are small in relation to Welshemployment as a whole (Figure B.1). The Social Caresector also shows employment strength, while FoodProcessing and Tourism, Leisure and Hospitality areapproximately in line with the Welsh share of UKemployment.

Media and New Media, and the Business and FinancialServices sector, are both under-represented in Wales inemployment terms, with employment location quotientswell below 1.

0.0 2.0 4.0 6.0 8.0

Aerospace

Automotive

Electronics

Food Processing

Agriculture

Tourism

Social Care

Media

Bus. & Fin. Services

0 0.5 1 1.5 2 2.5

Aerospace

Automotive

Electronics

Food Processing

Agriculture

Tourism

Social Care

Media

Bus. & Fin. Services

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Automotive Sector

Sector Size: Number of BusinessesAn alternative method of comparing sectors is by thenumber of business units in each sector. This can be lessstraightforward than the employment location quotientmethod used above. Here we are using data on businessunits in Wales and for Great Britain as a whole, providedin NOMIS. The main difficulty is the definition of abusiness unit within the published figures. This does notmake a distinction between separate businesses, andlocations representing branches or sites within onebusiness. It also omits small ‘one-person’ business siteswithout formal employees.

This means, in particular, that these figures are apt to bemisleading as applied to the agricultural sector, sincethey represent agricultural businesses with employees,rather than all farms. They therefore greatly under-represent the number of agricultural enterprises in Wales.Although the business unit figures for agriculture havebeen included in the following analysis, they are thereforenot a reliable guide to agricultural sites in Wales.

Figure B.3 shows the sectors studied in terms of thenumber of business units in Wales. It shows that, by thismeasure, the Tourism, Leisure and Hospitality sector is bysome way the largest. According to the NOMIS figures,this sector contains 12.4% of all Welsh business units, -around 1 in every 8.

A further 6.6% of Welsh business units are in theBusiness and Finance sector, and 3.2% in Social Care.The next largest sector, Media and New Media, includesa large number of businesses classified under ‘Othercomputer related services’. Many of these may be ‘NewMedia’ businesses within our study definition. Others,however, may be providing services which are notrelevant within this definition. As explained above, thefigures for agriculture do not represent the farming sectoraccurately.

In total the sectors covered by the study account for over25% of business units located in Wales.

Figure B.3: Number of Business Units – SelectedSectors

Source: NOMIS

Site Location Quotients of Welsh SectorsFigure B.4 shows the site location quotients calculatedfor the sectors covered by this study. These arecalculated as for the employment location quotients usedearlier, but using business unit figures instead ofemployment numbers. Four of the sectors have quotientsgreater than 1. In other words, these sectors are ‘over-represented’ in Wales relative to what one might expecttaking Great Britain as a whole. These quotientsrepresent a degree of concentration of business units in

these sectors within Wales. These sectors are Aerospace,Tourism, Hospitality and Leisure, Social Care, and FoodProcessing.

The Automotive Manufacturing sector in Wales, with alocation quotient of 0.96, is close to the size one mightexpect (in terms of numbers of business units). In otherwords, Wales has ‘a fair share’ of business units in thissector, according to these NOMIS figures. At the otherend of the scale, the Business and Finance sector, with asite location quotient of only 0.6, is under-representedwithin Wales – confirming the findings of the first FutureSkills Wales study in 1998.

Again, the quotient for ‘Agricultural Businesses’ reflectsthe limitations of the method, although it may indicatethat Welsh farms and agricultural businesses tend to besmaller than the average for Great Britain, inasmuch asfewer of them are large enough to be included asbusiness units.

Figure B.4: Site Location Quotients

Source: NOMIS

Selection of Sectors for the StudyThe above discussion sheds light on the reasons forselecting this set of nine sectors. The reasons vary, butcan be simply expressed as follows (some sectors areselected for more than one reason):

• sectors with significant proportions of Welshbusinesses and/or workforce (Tourism, Business andFinance, Social Care);

• sectors which are important components ofmanufacturing industry within Wales (Aerospace,Electronics, Automotive, Food Processing);

• sectors which are relatively strong in Wales(Aerospace, Tourism, Social Care, Food Processing);

• sectors which are relatively weak in Wales, but areimportant for future growth (Business and Finance,Media/New Media);

• sectors with particular significance for Welsh cultureand communities (Agriculture, Media/New Media).

The Manufacturing SectorManufacturing has been more important in the Welsheconomy than for the UK as a whole. In 1998employment in manufacturing (including but not limited tothe sectors studied in this project) accounted for 19.7%of Welsh employment. This contrasted with 16.6% for theUK – a difference of 3.4 percentage points. Projectionsfor 2004 show manufacturing employment as a lowerpercentage of employment in both cases – 17.3% in

0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6

Business/finance

AgriculturalBusinesses

Electronics

Media

Automotive

Food Processing

Social Care

Tourism

Aerospace

0 2000 4000 6000 8000 10000 12000 14000

Agricultural Businesses

Business/finance

Media/New Media

Social Care

Tourism

Aerospace

Automotive

Electronics

Food Processing

Automotive Sector

21

Wales, against 14% for the UK. Although the percentagesare smaller, the difference between Wales and the UK, at3.3 percentage points, remains almost unaffected. (DfEE,Skillsbase/IER, June 2000).

Although these projections show a fairly significantdecline in the size of the manufacturing sector as apercentage of overall Welsh employment, the absolutenumbers involved change less significantly. This is due toa projected rise in the total numbers employed in Walesover the period 1998-2004. Thus, the figure of 227,000for those employed in manufacturing in 1998, becomes205,000 in 2004 – a decline of 22,000, or just under tenpercent.

When considering the future demand for skills it isimportant to keep in mind that, as illustrated above,relative decline in the manufacturing sector does notimply lack of future demand for manufacturing skills. Thiswas one of the insights behind the original Future SkillsWales project methodology.

This point is further illustrated by the replacementdemand projections for occupations associated withmanufacturing. Figure B.5 shows the replacementdemand projection for skilled metal and electrical trades(SOC 52) for the period 1998-2004, across the UK. In thisperiod, 145,600 jobs in these trades are expected todisappear – part of the overall decline in employment inmanufacturing noted above. However, losses from thesetrades are projected consisting of 248,000 fromretirement, and 56,600 from occupational mobility(movement into other jobs), a total of 304,600 workers tobe replaced. This more than offsets the effects ofdeclining employment, leaving a net requirement figure of169,500. This represents the requirement for new, trainedentrants to these trades in these six years. These may benew entrants to the workforce, or existing workers whohave upgraded or added to their skills and qualifications.

Figure B.5: Replacement Demand: Skilled Metaland Electrical Trades, 1998-2004 (UK)

Source: DfEE Skillsbase/IER

Based on the assumption that Wales would require about4.5% of this number (this being the approximate size ofthe Welsh workforce relative to that of the UK), thisimplies a net requirement for some 7,600 skilled metaland electrical tradespeople over this period for Wales.

22

Automotive Sector

Annex C: The Supply of Manufacturingand Engineering Qualifications in WalesIt is far from straightforward to produce meaningfulfigures on the provision of skills in relation to sector skillsneeds. However it is at least possible to look at theprovision of qualifications in the Welsh FE and HEsectors, and to examine the profile of these in relation tooverall demand in the manufacturing sector in Wales.

The latest comprehensive figures on Welsh provision arepublished by the Wales Funding Councils and relate tothe academic year 1997/98. In other words they describeprovision which will generate skills and qualificationswhich typically became available to the labour marketfrom late 1998 and (in the case of students in the earlieryears of three year courses) in 1999 and 2000. Figures for1998/99 should be published in late 2000.

The 1997/98 figures for all of Wales show that withinFurther Education, around one per cent of students werepursuing qualifications relating to Manufacturing. Thisrepresents some 5,441 students from a total of 398,044enrolled at Welsh FE institutions. (These figures and thosebelow are based on both full and part-time studentenrolments).

In addition to this, approximately 4 per cent of FEstudents (16,543) aimed for Engineering qualifications.

These proportions are broadly reflected in the figures forthe Welsh regions (Table C.1). There are slight variations:Manufacturing qualifications, for example, are morestrongly represented in West Wales, and Engineering in theNorth, perhaps reflecting the emphasis of local demand.

As for the rest of the UK, Wales displays a stronggender bias to this enrolment pattern. Of those aimingfor Manufacturing qualifications, 83% were male (4,529).Of those seeking Engineering qualifications, almost 94%(15,506) were male. This contrasts, for example, with thecase of IT qualifications, where males represented justunder 43% of the students enrolled.

For 1997/98 and the succeeding years, this total of21,984 students enrolled will form the main input (fromFurther Education) of new skills and qualifications whichare specific to the manufacturing sectors. This input willbe complemented by entries to manufacturing of FEstudents with less sector specific qualifications and skillsin, for example, sales and marketing, science andmathematics, or IT.

In Higher Education, there are no comparable figures forManufacturing related subjects, but student enrolmentsare recorded for Engineering and Technology. The totalenrolled for these qualifications in Welsh HigherEducation Institutions in 1997/98 was 7,800.Theseenrolments are concentrated in institutions in the South-East and South-West of Wales (Table C.2). The mainexception is North East Wales Institute, with 857enrolments, though Bangor also has 233 enrolments inthese subject areas.

Again, there is a very pronounced gender bias in terms ofenrolments - 92% of students in this subject area aremale. Only 1.6% of female students are enrolled in thesesubjects, as against 15% of male students.

In 1997/98 a total of 990 first degrees were awarded inEngineering and Technology by Welsh Higher EducationInstitutions (HEIs), mostly by full time and sandwichstudy. A further 776 other undergraduate qualificationswere awarded, the majority via part-time study, giving atotal of 1,766 awards at undergraduate level.Postgraduate qualifications were awarded in 256 cases.

There are no comparable published figures for awards bysubject area from FE. Estimation of qualificationsawarded per annum in Manufacturing and Engineeringwould need to take account of the average length ofcourses and the retention and attainment rates for thesesubjects. From the 22,000 students enrolled, for example,assuming two year courses, a retention rate of 83% (theaverage for all subjects), and an attainment rate of 60%(actual rates vary between 49% and 70% by qualificationtype), we can construct a rule-of-thumb estimate forannual output of these qualifications by FE. This wouldbe 11,000 x 0.83 x 0.6, or 5,480 awards.

Table C.1: FE Enrolments in Manufacturing/Engineering by Region 1997/98 SE W Mid N Totals

Manufacturing 1,697 1% 2,721 3% 174 1% 849 1% 5,441 1%

Engineering 7,204 4% 3,728 4% 824 3% 4,787 5% 16,543 4%

Totals 8,901 6,449 998 5,636 21,984

Table C.2: Engineering & TechnologyEnrolments, 1997/98

Institution Enrolled in Total HEI Engineering Enrolled

& Technology at HEIUniversity of Glamorgan 2,014 15,148

University of Wales 0 9,743Aberystwyth

University of Wales 233 10,017Bangor

Cardiff University 1,394 20,294

University of Wales 0 2,313Lampeter

University of Wales 1,323 13,085Swansea

Univ. Wales Coll. 0 3,208Of Medicine

Univ. Wales Institute 415 7,853Cardiff

Univ. Wales College 976 7,757Newport

North East Wales 857 4,952Institute

Swansea Inst. 588 4,272of Higher Ed

Trinity College 0 1,590Carmarthen

Welsh Coll. 0 599 of Music & Drama

Total for Welsh HEIs 7,800 100,831

Automotive Sector

23

Taken with the 2,000 outputs from HE, this gives a figureof around 7,500 qualifications in manufacturing,engineering and technology subjects per annum at alllevels. A complication is the relative lack of data onstudent destinations. Especially for Higher Educationawards, students receiving the relevant qualifications mayleave Wales before entering employment. This may bepartly balanced by inflows of Welsh students who havecompleted studies at other UK universities. Therefore thisis in many ways a rough estimate, but it does providesome basis for comparison with the size of themanufacturing sectors now and in future.

To this figure we also need to add qualifications obtainedvia non FEFCW funded provision – primarily vocationalqualifications gained in sixth forms, and those gained viastudy with employers and private sector trainingproviders, funded by the Welsh TECs. The yearly cohortsize for pupils aged 18 or over leaving Welsh schools isaround 12,000 (Digest of Welsh Statistics, 1999, NationalAssembly for Wales/Government Statistical Service, Table3.2). However most of these will leave with non-vocational qualifications and skills; no figures forvocational awards were available at the time of reporting.

We do not have a comprehensive set of figures forqualifications gained, by vocational subject area, via TECfunded provision. Figures provided by Mid Wales TECand South East Wales TEC suggest that a total of around1,000 students per annum enter manufacturing relatedvocational courses in these two regions (at ModernApprentice and National Traineeship level: adult trainingnot included). Given the preponderance of the populationin the South-East, one might assume that not more thananother 1,000 per annum enter across West and NorthWales. This gives a maximum estimate of 2,000 perannum for possible outputs of learners withmanufacturing specific vocational skills and awards fromTEC provision.

Taking all the key sources of supply, therefore, we arriveat a rough estimate of 9,500 for the annual supply of newpeople with manufacturing specific skills andqualifications.

Manufacturing Sector Employment DemandWe can compare these estimates for annual supply withthe BSL forecast for job opportunities in Wales, includedin the original Future Skills Wales report. Table C.3 showsgross job opportunities per annum in occupations whichare closely related to the qualification subject areasanalysed above (The Future Skills Needs of Wales, AllWales Report, Table 6.8). These figures take into accountthe effects of expansion or contraction in theseoccupations as well as retirement or movement out of theoccupations due to occupational mobility.

The table shows that the forecast for new entrantsneeded in these largely manufacturing-specificoccupations was 18,200 per annum – almost double ourestimate of the annual supply of people with directlyrelevant and newly acquired training and qualifications.

Manufacturing Specific Skills/Qualifications:Supply versus Demand Given that our estimate of an annual supply of 9,500 isroughly correct, this implies that the remaining 8,700 newentrants to these occupations per annum will fall into oneof the following categories:

• people with no training or qualifications;

• people with training or qualifications not in relevantvocational areas;

• people with relevant training and qualifications fromoutside Wales.

To this extent, one might speak of a mismatch betweensupply and demand for vocational manufacturing skillsin Wales. However, more qualitative evidence fromemployers suggests that they are often concerned aboutthe quality of skills on offer, rather than the numbers ofpeople applying with qualifications in the right area andat the right level. We must be cautious, therefore, indrawing conclusions about the need to change thebalance of provision, based on the estimates presentedhere.

There is little in the analysis to suggest that therelationship between supply and demand will besignificantly different in different Welsh regions. It doessuggest, however, that the supply of people withmanufacturing qualifications is strongly biased towardsmales – a situation which is unlikely to assist in theelimination of existing gender imbalances in themanufacturing sector workforce as a whole. In particularit would seem that workers with relevant qualifications –and therefore a better chance of progressing within theworkforce – are much more likely to be male.

This attempt to analyse the fit between supply anddemand has indicated some of the difficulties arisingfrom limited current availability of provision data, andsome of the complexity inherent in this task. While suchan analysis can probably not provide a complete andaccurate basis for provision planning (which, anyway, willbe strongly affected by student demand), it does serve toindicate the relative scales of provision and occupationaland sector needs. In the case of manufacturing, itprovides food for thought about the balance of provision.

Table C.3: Forecast of Who Will Take Up JobOpportunities in Wales, 1997-2007

(000s per annum)

Occupation Gross Job People OthersOpportunities already (new p.a working entrants)

in WalesSkilled Engineering 3.7 1.8 1.9

Other Skilled Trades 7.9 3.7 4.3

Industrial Operatives 14.4 6.8 7.5

Drivers/Machine 5.6 1.1 4.5Operatives

Total 31.6 13.4 18.2Source: FSW All Wales Report, BSL 1998 (ONS and LFS data)

24

Automotive Sector

AcknowledgementsBrian McCarthy – EMTA WalesNick Miller – Miller ResearchWelsh Development AgencySheridan Jeffrey – TEC South East WalesTerry Davies – TEC South East WalesJoanne McCallum – TEC South East Wales Annette Jones – Mid Wales TECTim Williams – Welsh Automotive ForumNicky Jones – Harman InternationalRyland Evans – Ford BridgendGavin Roberts – Caerbont Automotive InstrumentsSarah Overson – Toyota DeesideCliona O’Neill and colleagues – Wales 2000 Project, University of Wales SwanseaMax Munday – Welsh Economic Research Unit, Cardiff Business SchoolKathryn Hughes – National Assembly of WalesThe statistics team – Welsh Funding CouncilsBusiness Strategies Limited

The views presented in this report are those of York Consulting Limited.Stephen Burniston, August 2000.

Notes