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Manufacturing in the Heart of the South West

Employment & Skills Issues

14th November 2011

Ben NeildAssistant Director, SLIM

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PresentationContents

Source: ONS

Overview of manufacturing in the Heart of the South West

Five issues for discussion during the workshop

1. Product Innovation

2. Business Support and Planning

3. Higher level skills & graduates

4. Workforce skills

5. Leadership & Management

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Manufacturing in HoSW

Source: UNCTAD

In 2009, UK manufacturing sector generated some £140 billion in GVA.

However, between 1990 to 2009, manufacturing’s contribution to UK GDP has fallen from 22% to just over 11%.

This fall has been faster in the UK than in many other industrialised nations.

Due to factors like:- off-shoring- out-sourcing- falling prices

Manufacturing as a % of GVA in leading industrial countries, 1990-2009

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Manufacturing in HoSW

Source: LFS

Locally, the decline in manufacturing GVA follows the national trend, declining from 20.5% in 1998 to 12.8% in 2009.

0%

5%

10%

15%

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25%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

% o

f GV

A Heart of the South West

SW

GB

Share of Total GVA accounted for by Manufacturing (%), 1998 - 2009

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Manufacturing in HoSW

Source: BRES

There were approx 67,200 manufacturing employees in HoSW in 2010

Equivalent to 10.2% of total employment in HoSW (8.8% nationally).

Variations within HoSW are significant.

4.2% in Torbay13.2% in Somerset

Lower than average prevalence of high-tech. More medium-high tech and low-tech.

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2%

4%

6%

8%

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12%

14%

Devon Plymouth Somerset Torbay HotSW South West England

% of

em

ploy

men

t

Low-tech Manufacturing Medium-Low Tech Manufacturing

Medium-high tech manufacturing High tech manufacturing

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Manufacturing in HoSW

Source: SW Regional Accounts

Although there are areas of high productivity, overall manufacturing output per full time employee (FTE) is significantly lower in HoSW than it is across GB as a whole.

Productivity per FTE, Manufacturing sub-sectors, HoSW & GB, 2009

Heart of the South West Great Britain

Chemicals and nuclear fuel 71.4 116.4 Food, drink and tobacco 56.4 56.1 Electrical and medical equipment 50.5 55.0 Manufacture of transport equipment 41.1 54.7 Textiles, clothing, leather goods and footwear 38.3 32.7 Non-metal products 32.0 41.6 Manufacture of machinery 31.9 46.2 Printing and publishing 29.8 53.9 Metal products 27.7 36.0 Wood and paper products 22.6 35.5 All Manufacturing 40.2 53.1 All sectors 34.2 49.7

Sector

GVA per FTE (£000s)

Between 1998 and 2009 manufacturing productivity in HoSW rose by 34%.Nationally it rose by 58% in the same period.

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Manufacturing in HoSW

Source: SW Regional Accounts

Manufacturing Businesses by sizeband, 2009

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1-10 11-49 50-199 200 or more

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Employee Sizeband

HOTSW

SW

England

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Product InnovationPolicy

Source: Going for Growth – Treasury / BIS

Supporting particular industries / sectors was anathema to Mrs Thatcher. Things changed little under Labour, until the recession, the collapse of financial services, the call for ‘rebalancing’ and a new ‘industrial activism’.

This activism focused on ‘new’ industries that would support jobs growth post recession – New Industries / New Jobs.

This has resulted in a range of small scale initiatives. Examples include:

• Technology and Innovation Centres (TIC) – ‘will draw on excellent university research to accelerate the commercialisation of new and emerging manufacturing technologies’

• EPSRC funded centres for Innovative Manufacturing to ‘combine inventive research and business acumen to develop the sorts of innovative ideas taken forward to commercialisation through TICs’

• Manufacturing Fellowships - Providing exceptional engineers from business to lead a £1 million programme of research within HEIs

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Product InnovationHotSW Strengths

Source: LFS

Plymouth University - 'the enterprise university’ offering help to businesses in entrepreneurship, research, knowledge transfer.

Completing a £19m marine facility w/ state-of-the-art research facilities, including the most advanced wave tank and testing facilities in the country.

University of Exeter – investing £230m in a science strategy w/ 5 themes, including: Climate Change, Systems biology & Functional materials.

Investing £2.6 million Centre for Additive Layer Manufacturing (CALM) to help businesses, entrepreneurs develop prototypes.

Also offer Knowledge Transfer Partnerships, joint EU research proposals

Further Education - e.g. Petroc’s ‘Business Innovation Service’ / South Devon College ‘Innovation Escalator’ etc

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Business Support

National / Government backed• Business Link• MAS / SW MAS• UKTI

Sector focused• EEF

Membership based• FSB / CBI

A complex and quite crowded landscape, involving providers that are:

Institutionally based• University Plymouth’s

‘Enterprise Solutions’• South Devon College’s

‘Business Advantage’

‘Local’• North Devon Plus• Torbay Development Agency

The emphasis, with the disbanding of Business Link, is on LEPs and Local Authorities taking increasing responsibility for ensuring business support meets local business needs.

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Planning

Source: LFS

• A ‘presumption in favour of sustainable development’

• Increasingly localised decision making

• Retention of growth in business rates

• Enterprise Zones

Highly contested area, with tensions between ‘development’ and ‘environment’.

Role of the LEP, as a voice for the business community.

Already used, in relation to support for the South Devon Link Road

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Higher Level Skills

Source: Working Futures

Employment in manufacturing is becoming more skills intensive.

Employment by Occupation (% of employment), SEMTA, SW, 1987 & 2017

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35%

1987 2017 (proj)

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Higher Level Skills

Source: LFS

‘Access to a skilled workforce, particularly science, technology, engineering and maths (STEM) skills, is vital for the sector'.

Plan for Growth, BIS / HM Treasury

Exeter and Plymouth universities provide c.30% of all STEM provision in the South West - over 20,000 students in total.

50% of all Plymouth & 40% of Exeter students were studying STEM subjects in 2009/10.

Since 2002/03, the number of STEM students at the two universities has risen by around 18%, faster than either regional or national growth.

The proportion of all students studying STEM subjects at Exeter has risen v. rapidly, from 26% in 2002/03 to its current level of 40.1%.

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Higher Levels Skills

Source: LFS

In 2008-09, nearly 43% per cent of first degree graduates from UK HEIs were in STEM-related subjects.

However, of these graduates, less than 5% entered employment in the manufacturing sector, despite average wages in engineering comparing favourably to other professions.

Plan for Growth, BIS / HM Treasury

Nearly a quarter of UK engineering graduates are working in non-graduate jobs or unskilled work such as waiting and shop work.

46% of 2009 engineering graduates were in jobs directly related to their degree subject six months after leaving university.

Prof Emma Smith, Uni Birmingham

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Higher Level Skills

Source: LFS

So how do we make better use of these skills?

• Graduate Internships

• Knowledge Transfer Partnerships

• Student Business Partnerships

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Workforce Skills

Source: LFS

The manufacturing workforce is gradually becoming more highly qualified.

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30%

NQF Level 4 and above

NQF Level 3 NQF Level 2 NQF Level 1 No qualifications

% o

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ufac

turi

ng e

mpl

oyee

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2006

2011

Manufacturing Employees by Qualification Level, South West, 2006 & 2011

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Workforce Skills

Source: LFS

But…. it remains less well qualified than the workforce as a whole

Employees by Qualification Level, Manufacturing vs All, South West, 2011

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40%

NQF Level 4 and above

NQF Level 3 NQF Level 2 NQF Level 1 No qualifications

% o

f em

ploy

ees

Manufacturing

All Sectors

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Workforce Skills

Source: NESS 2009

Skills-shortage-vacancies (vacancies that employers cannot fill because applicants lack the right skills) are uncommon - less that 0.2% of total employment.

Skills gaps (where staff are not being fully proficient in their current job) are common – reported by 20% of employers and as affecting 200,000 employees nationally.

Skills missing are most commonly practical / technical & job-specific. Team-working and communication skills are also cited.

They are most prevalent in Skilled Trades and among machine operatives.

They can have significant impacts – e.g. increase in the workload for others (51% of employers); increased operating costs (37%); difficulties w/ quality standards (24%).

But (good news) 70% say they are due to people lacking experience and / or having been recently recruited.

Points to issues around recruitment, induction and initial VET – rationale for Apprenticeships etc.

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Leadership &Management Skills

Source: LFS

Are generally acknowledged to be critical to the success of all enterprises.

However…. managers are also identified as the occupational group where the need to upskill was greatest.

“There remain situations where “cheap labour and a shortage of capital to invest in automation sees workers taking items off one belt and placing them on an adjacent conveyor system all day long”.

Training individuals in these roles is unlikely to impact on the profitability, growth or survival, unless accompanied by a review of “work organisation, job design, how employment relationships are managed and conditions are achieved whereby employee motivation, commitment, and discretionary effort are maximised”’.

Keep, Mayhew & Payne, From Skills revolution to productivity miracle – not as easy as it sounds? cited in B. Neild, Training and business survival during recession, SLIM, Nov 2008.