Politicians 'not listening' to manufacturers

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During the General Election campaign all political parties, in their own ways, pledged their support for rebalancing the economy and supporting UK manufacturing. After four decades in which the sector has slipped from making up nearly a third of our economy to just 12 per cent, this cross-party support was not just welcome, but vital for Britain’s economy.

A quick glance at France and Germany, both of whom have manufacturing sectors double the size of the UK’s as a proportion of their economies, shows that exports produced by a strong manufacturing base have helped to drive them out of the economic doldrums at a much faster pace than the UK. A balanced economy is a healthy economy.

Yet the Institution of Mechanical Engineers’ latest industry survey, canvassing the views of 1,000 UK manufacturers, has revealed that, one year on, the industry is not convinced by the Coalition’s actions to boost the sector.

Over half of Britain’s manufacturers think the Government is pursuing the wrong strategy to rebalance the economy, with the same proportion saying that the Government is performing badly when it comes to manufacturing. Just 12 per cent believe it is performing well.

And it is not just the parties in power that should be concerned. When asked which parties they believe are listening to the concerns of manufacturers, no party got a higher approval rating than 10 per cent.

The Conservatives had the biggest approval rating with 9 per cent of respondents, Labour followed with 2 per cent while just 1.1 per cent of manufacturers showed approval for the Liberal Democrats. 56 per cent of manufacturers said no parties are listening to their concerns.

The biggest challenge for the manufacturing sector that the Government can address is its ability to recruit adequately trained staff today and in the future. Our survey hints at a dangerous skills shortage within the sector, with half of manufacturers currently recruiting unable to find employees with the right skills, and lack of skills is seen as the biggest barrier to foreign investment.

This is particularly true in the area of technicians. Many companies have embraced new apprenticeships, which polled the highest approval rating of any policy announced in the last budget, but more needs to be done. An apprentice is a fantastic investment for both a business and the economy – BIS figures show that the economy gains £40 for every pound invested in one – yet each apprentice a business takes on brings with them a high initial cost. This is a big ask for companies emerging from the recession.

There needs to be incentives in place. The manufacturers in our poll ranked a £3,000 per annum grant or a break in NI contributions as the two policies most likely to incentivise them to take on an apprentice, helping to lighten the initial financial load. Policymakers need to take a serious look at these measures.

We also need a skilled graduate workforce coming through our universities, a vital factor which may be under threat as tuition fees rise and Government subsidy decreases. Universities may start looking at their outgoings and see long, costly engineering courses as ripe for cutbacks. Poorer students may see an engineering course as out of their financial reach. Both the public, in a separate poll, and the manufacturers overwhelmingly supported continued Government subsidy of expensive courses, such as engineering, in our survey.

Over the past two years heading the Institution, I have been privileged enough to visit many of Britain’s world-class manufacturers. These are excellent companies that have embraced the latest in techniques and technology, and are delivering competitive products of the highest quality. They have had to take the pain of recession but this is not the first time and now many are working flat out. There is a perception that manufacturing has no future in the UK. We now need politicians of every hue to help prove this is simply untrue.

Stephen Tetlow is Chief Executive of the Institution of Mechanical Engineers.

The Institution of Mechanical Engineers is a partner of Dods Manufacturing Dialogue.