ENGINEERED IN BRITAIN MANUFACTURING A SUCCESSFUL ECONOMY?

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FOREWORD Philippa Oldham CEng MIMechE Head of Manufacturing and Transport Institution of Mechanical Engineers 2015 has been a year of political surprises. Few had predicted a Conservative majority Government, and even fewer that a relatively unknown backbencher would become the new Labour leader after the party’s poor General Election performance. Similarly, the SNP’s overwhelming success in Scotland stunned the media and commentators, making it the third biggest party in Westminster, and replacing the Liberal Democrats whose vote almost entirely disappeared. However, it was not unexpected that a Conservative administration would continue its drive towards making the country live within its means, and therefore begin the slow process of eliminating our sizable national debt. The second Comprehensive Spending Review presented by the Chancellor, Rt Hon George Osborne MP, in November turned out to be less severe than many had expected, although over the 2010–2020 period many unprotected Government departments will have had at least a 40% reduction in their overall funding, leading to inevitable cuts in services and projects. Throughout 2015, the UK has seen the Purchasing Manufacturing Index figure remain above 50, indicating constant expansion within the sector. The figure is derived from data on production levels, new orders, supplier deliveries, inventories and levels of employment. However, the latest Office of National Statistics manufacturing figures suggest that the sector’s output is down on last year. The reason for these contradictory figures can be explained by individual elements of the sector, such as the automotive and food & drink, experiencing strong growth over the last 18 months, whereas aerospace has felt the effects of the global economic slowdown. These concerns may be a leading factor in the results of our fifth Engineered in Britain survey. The report consists of two surveys, the first conducted by MSS Research, which gathered the views of 1,000 senior professional engineers working in the UK’s manufacturing sector. The second was conducted by ICM Unlimited, which put a majority of the same questions to 1,000 members of the general population. Looking through the results, I have been struck by the level of concern regarding the engineering skills shortage that companies are experiencing. While this has not come as a surprise to me or the Institution, it is worrying to see evidence that the skills shortage is starting to bite. We know the issue exists, but there remains a lack of clear, joined-up action to address the problem. The solution is not for Government to resolve on its own, having neither sufficient knowledge nor the resource to do it alone. What is required is an agreed approach from all involved parties, in Government (primarily the Departments for Education and for Business, Innovation & Skills), industry, teachers and academia. This is a longterm problem which needs a long-term solution, if we are to remain a major player in the global economic marketplace. Following the publication of our Five Tribes: Personalising Engineering Education report in late 2014, which highlighted the fact that 71% of all students feel disengaged from science and engineering, we will be following this up with our Big Ideas report in 2016, which will provide a range of innovative solutions to encourage more people to pursue engineering careers. It is my hope that our Institution can play a significant role in helping the UK change the way we teach and promote science and engineering, and maintain our position as a leading economic power. Finally, I would like to thank BDO LLP for partnering with us on this report. This partnership allows us to report the results with a broader perspective, allowing some economic analysis and insight from one of the country’s leading accounting firms. 02 Engineered in Britain: Manufacturing a Successful Economy?
Tom Lawton Head of Manufacturing BDO LLP As always, the Engineered in Britain research provides a rich source of information on the views of manufacturers and the public on the state of UK manufa cturing. I hope you enjoy the report and that it provides either support or challenge to your views on key issues in the sector. I have not attempted a comprehensive critique of the results in this overview but focus on findings that I thought were particularly interesting. One big challenge facing us at the moment is the need for European reform. The findings show that 62% of manufacturers and 58% of the public believe that uncertainty about the UK’s position in the EU is having a negative effect on UK manufacturing. The survey also shows that 58% of manufacturers and 47% of the public feel that the UK remaining in the EU with renegotiated terms is the best option for UK manufacturing, with 32% of manufacturers and 26% of the public feeling that staying in the EU with no change is the best option. What is not clear, however, is what happens if the terms of membership are not able to be renegotiated – would manufacturers move to the ‘stay in’ or ‘leave’ camp? I remain of the view that continued uncertainty is not helpful to UK manufacturing and an early vote would be useful. I also believe that, in world of increasingly large economic power blocks and alliances, leaving our largest trading markets – and what is still our largest export zone – would seem a risky step to take. Despite this, a third of manufacturers believe the government is performing well in terms of its education and skills policy. Unfortunately, we believe that the skills crisis is likely to worsen as more automation and digitisation is required for UK manufacturing to remain competitive. It is far from clear that the ‘strategic approach’ to education and skills in this country is being changed or responding fast enough to provide the skills necessary in the next five, ten and 15 years. Finally, question 20 delivers some very interesting results about the UK’s infrastructure, with electricity generation, rail network, and road infrastructure being identified as key weaknesses for more than half of all manufacturers. All I would say is that it is difficult to address such fundamental and long-term challenges without a long-term industrial policy that avoids the disruptions of political cycles. The government should match manufacturers’ long-term outlook by looking 15–20 years ahead to plan an industrial policy, avoiding the disruptions of the political cycle. The programme must be steered by a dedicated manufacturing minister, able to focus on firms’ needs in a way that will benefit us all. BDO is again delighted to partner with the Institution of Mechanical Engineers in producing this research, which we hope will be a valuable addition to the UK manufacturing debate. Fears of the impact of the skills crisis remain high. More than half of manufacturers think that the lack of skilled people is the biggest danger to UK manufacturing, far ahead of global competition at only 25%. Our findings also show that three quarters (77%) of manufacturers feel that the skills gap has a negative effect on investment in UK manufacturing. imeche.org/engineeredinbritain 03
Page 1 and 2: ENGINEERED IN BRITAIN MANUFACTURING
Page 3: CONTENTS 02 FOREWORD 04 GOVERNMENT
Page 7 and 8: GOVERNMENT SUPPORT FOR MANUFACTURIN
Page 9 and 10: Q1 The Government is committed to c
Page 11 and 12: Q3 The Government is more committed
Page 13 and 14: Q5 Would you rather the Government
Page 15 and 16: Energy Policy Transport Policy 2011
Page 17 and 18: EDUCATION AND SKILLS UK science and
Page 19 and 20: Q7 Do you think the Government is d
Page 21 and 22: Q9 Is your company currently recrui
Page 23 and 24: Q11 If yes to Q9, are you finding e
Page 25 and 26: Reduction in corporation tax 2011 2
Page 27 and 28: Practical skills Leadership 2013 20
Page 29 and 30: UK MANUFACTURING Although the UK ec
Page 31 and 32: Q14 Do you think the uncertainty su
Page 33 and 34: Q16 Is overseas investment into the
Page 35 and 36: Q18 What is the biggest danger to t
Page 37 and 38: Q20 Which of the following parts of
Page 39 and 40: Q22 How positive or negative do you
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ENGINEERED IN BRITAIN MANUFACTURING A SUCCESSFUL ECONOMY?

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