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Insights into UK manufacturing

Time for The Engineering Factor?

Verity O'Keefe August 28, 2014 10:43

My name is Verity O’Keefe. I am 26 years old. And I love reality TV shows.

Given this statement you can imagine my excitement at the fact that the X Factor returns to our screens on Saturday night – Saturday nights in become the new Saturday nights out. It is also, as my sister pointed out to me last week, the unofficial countdown to Christmas – as the winner’s song is a strong contender for Christmas number one.

*If you are currently slightly confused thinking this was a blog about manufacturing just bear with me*

One of the things that always strikes me when watching the audition episodes (the best ones really) is the thousands of people, of all ages, willing to stand outside (probably in the cold and rain), queuing for hours on end, just to see if a two-minute audition could land them the ‘job of the lifetime’.

Unfortunately the same doesn’t quite happen when employers have a job opening in the ‘real word’. Now admittedly the jobs on offer may not lead to a million-pound record deal, a more than likely Christmas number one, and multiple appearances in glossy magazines and sitting on morning television sofas discussing their ‘roller-coaster journey’, but they do have a lot to offer, yet can’t get the people to fill their posts.

So what’s on offer? Firstly there are ample opportunities – Engineering UK predicts there will be around 2.74 million job openings in engineering companies up to 2020 (including those working in other industries such as construction).

There are also some pretty nifty reward packages – the median basic annual salary for a Chartered Engineer is now at £60,000, the average pay for an Engineering Apprentice is £7.03 (and that’s just to train) and as we reported this week, average pay deals are running at 2.6% in manufacturing.

Yet, four in five manufacturers are struggling to recruit. Two-third say the reason for these difficulties is that candidates lack the right technical skills, over half say applicants lack relevant experience, almost half say applicants lack relevant qualifications and almost half say an insufficient number of applicants. The latter is particularly important – as it seems the hordes of people queuing up in cities across the country for a glimpse of the celebrity lifestyle (and possiblY the Judge's Houses) aren’t exactly lining up for jobs in manufacturing.

We know that companies are struggling to both attract people to the industry, and also attract people with the right skills and experience into the industry. UKCES research has found that the number of hard-to-fill vacancies in manufacturing has increased from 30% in 2011, to 35%.

This is likely to reflect the difficulties manufacturing has in attracting people into the industry in the first instance. The image of manufacturing remains a significant challenge and is one of the fundamental reasons why our industry has a severe gender imbalance.  Steps are being taken to overcome this – industry and government campaigns to tackle the perceptions of what it means to be an ‘engineer’ and the various opportunities within manufacturing and engineering more widely.

UKCES research has also shown that the number of posts that are skills-shortage-vacancies (vacancies which are difficult to fill as candidates lack the right skills and qualifications specifically) is also on the rise. More and more orders are coming in and manufacturers are looking to recruit (EEF’s own research has shown that manufacturers’ plans to increase numbers of employees has been positive for 19 consecutive quarters) but employers are struggling to find both the quantity and quality of skills required.

Yet what they are looking for isn’t as challenging for someone to acquire as those aspiring singers waiting in the X Factor audition wings.

Take recruitment of apprentices for example – what do manufacturers prioritise?

• 77% are looking for a willingness to learn
• 71% look for passion and enthusiasm for the industry among candidates
• 76% prioritise maths and science qualifications

So attainment in maths and science qualifications, together with passion for the job and willingness to learn and succeed is likely to get you through?

Compare that to the perhaps ‘unwritten criteria’ of a Final 12 X Factor hopeful. Number one is of course a good voice but even those that don’t have the greatest of voices get through if they have stand out personalities (the days of Jedward and more recently Rylan Clark). Then there is ‘the look’ – “You look like a popstar” – I have never quite understood what that means but I don’t think I would make the cut. And of course if you haven’t got either of these then you can always go down the road of ‘my hamster died three years ago, or ‘this is my last chance’ (you then see them rock up on rival TV show The Voice).

So what is manufacturing doing wrong that Mr Simon Cowell is doing so right? Competition? Possibly? However, many organisations do fantastic work organising engineering competitions with young people to get them interested in the sector. The British Science Association last year had a manufacturing category, the Big Bang Fair integrates competition into its events, and Primary Engineer, supported by many EEF members holds regional and national competitions for the engineers of the future.

Anything else? Profile? Whatever you may think of him Mr Cowell is quite the media mogul and love it or hate it, there are not many people that don’t know about The X Factor is. Yet sitting in the back of a taxi yesterday trying to explain to the driver what manufacturing consists of (I had just been picked up from EEF’s Apprentice Training Centre) it was clear to me that we haven’t quite done the job.

National Campaigns such as Tomorrow’s Engineer Week have been effective, but the focus remains on 11-14 year olds. Yes it is important to get those young people, making those crucial decisions to consider a job in engineering, but I can’t help but think that the message needs to be far louder and far wider. Manufacturing and engineering needs to become part of our everyday conversation – so next time I strike up conversation with a cabbie, my reality-TV loving sister or anyone else, and explain I was talking to a room full of manufacturing and engineering companies about apprenticeships, they don't quickly move the conversation on.

Perhaps it is time we create The Engineering Factor?




UK Port Freight Statistics 2013

Chris Richards August 27, 2014 11:14

The Department for Transport have today released freight statistics for the UK’s 111 commercial ports. Around 93% of UK’s international trade is sent via sea (54% if measured by value).

Today’s figures show that total tonnage at 503 million tonnes has still not returned to pre-recession levels.

However, looking at the top 5 ports for outward traffic, two ports have returned to 2008 levels: Grimsby & Immingham and Milford Haven.

Looking at the top 10 busiest ports by total tonnage, in 2013 Tees & Hartlepool and Belfast grew the fastest, largely attributed to an increase in the amount of coal (both inward and outward traffic) handled at these ports. The vast majority of this was inbound coal, 95% of coal handled travelled into UK major ports.

The level of imports through UK major ports (there are 51 major ports, which handle 98% of total traffic) has continued to increase and the level of exports decrease.

These stats reflect the broader trade picture we blogged about earlier in the month.

Manufacturing Pay update

Lee Hopley August 26, 2014 12:39

The major pay rounds for most manufacturers (and their employees) are more or less behind us now. And what we can see in 2014 is a very stable picture of pay settlements which are running only very slightly ahead of the average since for most of the past couple of years.

Average pay deals running at 2.6% in the past six months

Source: EEF Pay Bulletin

There has been a great deal of discussion about the relative weakness of pay growth across the economy, even while unemployment has been falling sharply. See here and here.

The trend has been somewhat different in manufacturing with pay growth outpacing inflation and rising more or less with productivity growth over the past year. A couple of other factors are also at play which are not being felt across other sectors of the economy:

- Skills shortages - higher pay increases are necessary to attract and retain key skills

- Catch up from past pay restraint.

- Manufacturing productivity is now growing.  


#GCSEresults deliver the news manufacturers have been waiting for

Verity O'Keefe August 21, 2014 11:20

Last week we blogged about A-level results which showed a positive trend in the take-up of STEM (science, technology, engineering and maths) subjects but the gender gap remaining.

This morning young people up and down the country have been tearing open their GCSE results. Those opening their results this morning have probably had quite a dramatic build-up with initial headlines this morning of ‘the most volatile results ever’ and question marks over the impact of various government reforms that have taken place.

So was it a case of getting the red pen out or did this year’s pupils get a whopping great big tick?

Well…I would say it was a pretty big tick! There was a significant boost in the number of students passing the sciences and maths:

% achieving A* to C grades
Maths – 62.4% (up from 57.6% in 2013)
Biology -90.3% (up from 89.8% in 2013)
Chemistry – 90.7% (up from 90% in 2013)
Physics – 91.3% (up from 90.8% in 2013)

Employers highly value these subjects and so those students passing with flying colours today will undoubtedly find themselves heading for prized and highly rewarded careers in industry.

And what was the fate for design and technology?

Unfortunately the decline in the numbers taking, and indeed passing, design and technology continued which may leave manufacturers concerned. The reason being design and technology can sometimes be the inspiration that young people need to pursue a career in manufacturing (I like to call it the nudge factor). It can also equip young people with much needed practical skills - particularly important for those considering a vocational pathway post-GCSEs.

But before we get too down in the dumps it is worth noting that the number of pupils taking engineering at GCSE has increased, as has those taking computing. So the nudge factor is back in the form of engineering GCSEs and young people are being equipped with the critical digital skills needed for the future.

So far so good. Was there any bad news at all?

The only real disappointment from today was the fall in those passing English (61.7% - down from 63.6% the previous year). Manufacturers may fear their entry-level pipelines may suffer as a result of not enough candidates having the desired level of literacy skills. Three-quarters of manufacturers say they prioritise candidates with qualifications in English, maths and the sciences when recruiting apprentices.

Perhaps some work to do here, but let’s not allow this one fall to mask the great results we have seen today.

And to end on yet another positive – the number of A* to C grades across all subjects increased to 68.8% (up from 68.1% in 2013). So congratulations to the class of 2014!

Keep an eye out for our follow-up blog to see whether we are closer to achieving our Route to Growth benchmark of 65% of students achieving five A* to C GCSE grades including English and maths

Do you want ‘work-ready’ employable graduates? The solution is in your hands….

Guest Blog August 20, 2014 09:00

Paul Clavell is Senior Engineering Lecturer at the University of Bolton

A key theme at EEF’s Make It Britain conference was that the engineering industry needs more graduates with first-hand experience and a working knowledge of the sector they are preparing to join.

Here at the University of Bolton we’re running a new scheme which will see companies and 2nd and 3rd year students working together on selected engineering projects. This will give students hands-on experience of ‘real world’ problem-solving plus the chance to see how businesses operate.    

We’re hugely excited by what this could mean for both our students and the skills-hungry manufacturing and engineering sector. It’s a great opportunity for companies to forge strong links with us and to help shape and inspire our engineering students. Our scheme means that the answer to getting graduates more ‘work-ready’ now lies – at least in part - in the hands of companies themselves.

So why should manufacturers and engineers get involved?

How better to trial prospective employees than to have undergraduates working on projects with you before they graduate? You may also get back more from placements than you expect, as students may well give you a fresh perspective on processes and approaches to problems.

But more importantly, you will be playing your part in the resurgence of British manufacturing. To aid this upward trend, industry needs to invest in the next generation of engineers and engage with us – universities – in the process of preparing them for professional life.

Companies interested in taking part should email details of their proposed project to  Twitter: @BoltonUni


CPI falls back down to 1.6%

Felicity Burch August 19, 2014 11:07

Statistics released this morning confirmed that last month’s increase in CPI to 1.9% was a blip rather than a trend, as the inflation rate fell back down to 1.6% in the year to July 2014. CPI inflation has now been below the Bank of England’s target rate of 2.0% for seven months. 

  • Looking at what’s happened over the month, the largest contribution to the fall in the inflation rate was clothing and footwear, where prices fell 5.7% between June and July, a larger-than-normal fall for this time of year, due to later timing of summer sales.  Other downward contributions to inflation came from alcohol and tobacco; miscellaneous goods and services (particularly financial services); and food and non-alcoholic beverages.
  • There was some upward pressure on inflation from transport prices, particularly the price of second-hand cars and sea transport.

As we reported last month, a range of factors should continue to keep inflation subdued, including the stronger pound; limited inflationary pressure from commodities; and spare capacity, which is likely to continue to bear down on margins and wages.

The strong pound has certainly had a bearing on input prices for manufacturers, as today’s producer price figures highlight. The overall price of inputs bought by UK manufacturers for processing fell 7.3% in the year to July, linked to a falling prices for crude oil and imported materials. The only area where input prices increased was home-produced materials, with prices of some construction products rising, reflecting capacity constraints in that sector.

The falls in input prices have also fed through to output prices: the output price index for goods produced by UK manufacturers (factory gate prices) fell 0.1% in the year to July.


A UK Infrastructure Authority - streamlining the infrastructure debate #UKIA

Chris Richards August 18, 2014 07:20

What are the infrastructure challenges of the future that as a country we need to solve?

Most people would be able to give you a list of say five. But are those the only five? What about my list of five? Of those ten which are the most important? What method would you use to help you decide?

Our current system isn't geared up to answer such a complex string of questions. While we've improved the way in which infrastructure projects are eventually delivered - the process to identify what infrastructure we will need in the future is a complete mess and something needs to change and as we've written before, infrastructure matters to manufacturing.

Several other organisations agreed with us and in a recent letter we set out the key principles of any change, today EEF has published a policy paper setting out what that change could look like.

Other organisations have looked at this and come up with their own solutions including the LSE Growth Commission, the Institution of Civil Engineers, Management Consultancies Association and the Armitt Review. This is our take on what needs to happen.

Last week we set out why this is an issue, public support for infrastructure investment is crucial and to get this there needs to be clarity on the infrastructure challenges we face. Yet the public have been locked out of debates on infrastructure, being limited to comment on infrastructure projects as they are presented by Government.

This not only creates a confrontational us vs. them situation, but misses out on the collective wealth of knowledge and vision available from the entire country.

The approach currently taken of delaying action until the spare capacity in our energy or transport networks is at a critical level not only undermines growth, business and skills investment, but leads to more costly projects being developed overall.

Our approach set out in our paper today, changes this. We recommend:

  • The creation of a UK Infrastructure Authority as a Non-Ministerial Government Department, with a parent board to provide oversight and accountability to Parliament. We believe trust in infrastructure analysis is as important as national statistics; it requires the same institutional independence
  • Every five years, the Authority will be tasked with developing a new National Infrastructure Assessment which would look ahead at the country’s infrastructure needs over a 10, 20 and 50 year horizon at both national and regional levels. It would identify future challenges and trends, and would also outline when political decisions will need to be made
  • The public, businesses, political parties and others will then be consulted on the long term assessments and invited to submit their own ideas for projects. Just as with the current Airports Commission, the final decision would be taken by the Government of the day

In effect the UK Infrastructure Authority would be the referee, providing the rules of the game in the form of independent analysis, keeping an eye on the clock in terms of flagging up when goals have to be met and reassuring the public by not being in the pay of any one side or the other.

Such a small change could be a potential game changer and combined with the improved method of delivering infrastructure projects would see the UK leading the world in having a system to identify, plan and deliver infrastructure to deliver a more productive, competitive and environmentally sustainable economy.

Policy Paper: A UK Infrastructure Authority streamlining the infrastructure debate.pdf (405.60 kb)

SME R&D tax credit claims: progress report

Felicity Burch August 15, 2014 13:00

In 2012 we published The Route to Growth, our take on how Industrial Strategy could lead to a better-balanced economy for the UK. At the time we laid out four key ambitions, which, if achieved would point to an economy on the right track. These were:

1.       More companies bringing more products and services to market
2.       More globally focused companies choosing to expand in the UK
3.       A lower cost of doing business
4.       A more productive and flexible labour force

Underlying these ambitions, we had a series of metrics, one of which was released this morning.


As part of our ambition to see more companies bringing products and services to market we wanted to see a 60% increase in the number of companies taking advantage of the SME R&D tax credit. Good progress has been made towards this target.

The number of companies claiming the SME R&D tax credit increased by 95% between 2008/09 and 2012/13.
Strong increase in proportion of companies claiming SME R&D tax credit

Claims for the SME R&D tax credit by financial year, 2008-09 to 2011-12

Source: HMRC


This is the most consistently strong performance against any metric laid out in Route to Growth and it is no coincidence that this is also an area where there has been concerted policy action.



The existing government has done much to boost the attractiveness of the R&D tax credit (for both large and small companies):


  • Large companies’ R&D tax credit moved above the line, and rate set at 10%
  • Rate of SMEs’ R&D tax credit increased to 225%
  • The rate of the R&D tax credit payable to loss-making SMEs increased from 11% to 14.5% from April 2014. (NB this will not have impacted on the most recent uptake data)

These changes will be encouraging more companies to apply for the tax credit and should support the amount of innovation that companies are able to do.


Also of fundamental importance is the long-term stability that is inherent in the R&D tax credit, which is not the case with most other forms of innovation support. Stability has led to high levels of awareness of the scheme among manufacturers. Our Innovation Monitor survey shows a consistent increase in the proportion of companies aware of – and claiming – the R&D tax credit over time.


The stability of the R&D tax credit is a strong feature of the UK innovation system: given its position within the tax system, the tax credit is less subject to review than items of expenditure such as innovation grants. The tax credit’s position within the innovation landscape must be maintained.


Large company claims also on the rise

Just as the number of companies claiming the SME R&D tax credit has increased strongly since 2008/09, the number of companies claiming the large companies’ tax credit has grown too, by 29% over the same period, another reflection of the value of long-term stability in this area.


The Airports Commission should remain in place until the Government acts on its recommendation

Chris Richards August 15, 2014 09:29

One of the remarkable things about the establishment of the Airports Commission is how it has brought coherence to the debate on airport capacity and as an independent body established a level of trust between the different players in that debate.

It has managed to do this by establishing the basis of the need for airport capacity, and testing its findings widely through open consultation. It sought submissions from different groups and airports on proposals to meet that need and followed this up with public evidence sessions. It published the framework it intends to use to judge final options for airport expansion and again, tested this widely though open consultation.

It followed this up by publishing its emerging thinking one year on and again, sought views and comments on whether or not it ignored anything as part of its analysis.

In line with the remit set out by the Government, the Commission published an interim assessment of what action was needed in the short term and also a short list of options to meet long term capacity requirements.

This separation of analysis from final decision making has allowed an extensive amount of public consultation to be undertaken and has resulted in the major players (including airports which haven’t been shortlisted) still remaining supportive of the process.

As we noted in another blog earlier this week,

“Governments don’t want to highlight that they know a problem exists without having a solution to address it”

By moving the analysis of the problem to a separate entity this allows the Government to take a final decision on the basis of widely trusted analysis.

In our submission today (available below) to the Airports Commission on their Discussion Paper 7 on the delivery of a new runway, we noted the importance of this separation.

The Government was right to establish the Airports Commission as an independent body to undertake the required analysis; the independence of this analysis and its interpretation should be maintained within the Airports Commission until a final decision is taken.

We believe the Airports Commission should remain in place until the final National Policy Statement on Aviation is designated by the Secretary of State, this would also allow the Airports Commission to publicly comment on whether or not the final NPS matches their analysis and recommendations.

On Monday we will publish our proposals for a UK Infrastructure Authority, this would expand the excellent work done by the Airports Commission to other infrastructure sectors and ensure that all debates on infrastructure can take place in this more streamlined and trusted way.

EEF submission - Discussion Paper 07 - delivery of new runway capacity - Airports Commission.pdf (86.41 kb)

A-level #resultsday: Hurrah! STEM subjects are up…but what about that gender gap?

Verity O'Keefe August 14, 2014 10:36

The talk of the office this morning has of course been A-levels. My colleagues and I have been reminiscing about the day we opened those big brown envelopes and have been comparing subject choices and grades (I won’t go into mine now!) So what are the scores on the doors?

What story has the media gone with?

The big headline has been that the number of A* - B passes have dipped – falling to 52.4% from 52.9% in 2014. A minor dip I would say and nothing much to write home about.

It’s not just about A, so what has happened with the S.T.E.M?

As we have blogged in previous years it’s not just about the A, but it’s also about the take up of S.T.E.M also known as the sciences, technology, engineering and maths. With more and more vacancies to fill, manufacturers will be breathing a sigh of relief that the take up of STEM subjects at increased for the 5th year in a row (Chart 1 below).

Chart 1: Numbers of students taking chemistry, physics, biology and maths A-levels

Without a doubt, students who have achieved top grades in these subjects have significantly boosted their employability and their chances of enjoying a successful and sustainable career.

What about that STEM gender gap?

Unfortunately, the overall increase in the take-up of STEM subjects disguises a mixed bag. Having looked through the data, I can announce (with genuine delight!) that the number of girls studying physics has increased by 4.7% year-on-year. However, with the number of boys studying physics also increasing, the gap between the two has in fact widened. (Chart 2 below).

Chart 2: Number of pupils taking A-level physics by gender

Disappointingly the number of girls taking maths has fallen, albeit slightly. Some respite can be taken from the fact that the number of girls taking further maths has increased, balancing out the figures slightly.

Is there more to do about the gender divide?

Absolutely. Whilst we are happy to report the increase in girls study physics, we cannot become complacent. Instead, we need to build on this momentum, with a concerted effort between government, industry and the education sector to also close this yawning gender divide.

How can this be achieved? Over a third of students say they received poor careers provision relating to A-level choices and careers. Therefore we must radically overhaul careers provision so that every student – male or female - understands the impact A-level subject choices can have on their future career and is fully aware of the opportunities for those who choose wisely.

What’s in it for those that choose wisely and were successful today?

In short – a prosperous career in manufacturing.

A job in an industry where the average engineering apprentice earns over £7 per hour just to train and where the average engineering graduates earns a fifth more than all over graduates. So whether those opening their A-levels today decide to progress down a vocational or academic pathway – a career in manufacturing is always in reach.


This is an informal blog about manufacturing and the economy written by EEF's policy and representation staff. While it is written from an EEF perspective, contributions should not be taken as formal statements of EEF policy, unless stated otherwise. Nor does it cover all the issues on which we campaign - you can check these out in more detail at our main site.

We welcome and encourage comments, but we reserve the right to remove any that are offensive or irrelevant. We are not responsible for the content of external internet sites.

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