More than a third of the South West’s small and medium-sized manufacturers are having their growth plans jeopardised by skills shortages, according to a new survey.
The annual Manufacturing Survey by MHA – an association of independent regional accountancy firms – reveals that recruitment issues are acting as a “significant barrier” to expansion for 35% of companies in the sector. 
The survey, run in the South West by regional chartered accountancy firm Monahans, showed that these concerns are having a knock-on effect on optimism among manufacturers, with of those taking part saying it made them less confident about their prospects.
While half the South West’s manufacturers expanded last year – 38% of them achieving growth of 10% or more – optimism levels have fallen by 23% against this time last year, although they still remain high at 65%.
Some 60% of South West businesses plan to increase staff numbers – 10% above the national level – and half plan to take on apprentices or trainees in the coming year. However this is slightly below the national average of 52%.
Unsurprisingly, a quarter of the 400 manufacturers taking part in the survey across the UK said the Government needed to do more to resolve the skills crisis, with a bigger emphasis on skills training in schools and colleges to help develop the next generation of engineers and technicians.
Monahans manufacturing partner Iain Black, pictured, who is based in the firm’s Swindon office, said: “The survey provides a valuable insight into the challenges facing a sector with considerable growth potential but one also struggling to recruit the skilled people needed to help deliver plans for growth.
“While there are some hopeful signs for the future, such as the increase in STEM (science, technology, engineering and maths) students at A Level, the six university technical colleges in our region promoting manufacturing and engineering, and employers playing a more proactive role in schools, signposting engineering as a ‘go to’ career in secondary schools just doesn’t appear to happen.
“Improving careers advice and skills training within the education system needs to become a major focus of debate if we are to attract the next generation into manufacturing and engineering.”
The survey was also supported by Lloyds Bank Commercial Banking. Its head of manufacturing, SME, David Atkinson, added: “The news that we are facing a significant skills shortage is no surprise, but it should be alarming that the issue is now reigning in the ambitions of management teams across the sector.
“Without a solution the UK’s manufacturing and engineering industry will not be able to fulfil its potential and we will see the UK economy continue to be dominated by the services sector.
Other regional findings show that exporting remains key for South West manufacturers, with 25% of businesses exporting to the Eurozone – 4% below the national average. Some 58% spend somewhere between 1% and 6% of their turnover on research and development and 54% have received Government or grant funding in the past five years.
While nine in 10 firms expect their production costs to rise in 2015 for the fourth year in a row, primarily through higher wages, more than 80% of South West businesses feel unable to pass on price rises to customers. This means that productivity gains are becoming ever-more important.
South West businesses say they continue to face the burden of red tape, with 42% noting an increase.
