Thursday, 23 October 2014
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Onshoring: Are we ready for the return of manufacturing?

Derek Hill of Advanced Technology Services (ATS) argues that the return of manufacturing to the UK presents a serious challenge for skills, particularly in areas such as maintenance.

We are hearing a lot of about onshoring from the industry and with increases in transport costs, rising wages in China and a more competitive exchange rate, the prognosis is good for the return of manufacturing to the UK, but I must ask the question whether we have sufficient skilled labour to take advantage of this opportunity. 

Despite unemployment levels of around eight per cent (2.5 million people) in the first half of 2012, apprenticeship places remain unfilled and the level of skilled workers in many manufacturing facilities is still well below that required. While manufacturing production in the UK fell in May 2012 by 1.7 per cent over last year according to the Office of National Statistics, there are strong indicators that this tide will turn with companies returning to, or expanding production in, the UK. However, I believe that the skills shortage could seriously disrupt any potential growth in the sector and growth will only be achieved if companies have the right people in the right jobs.

Key factors such as the ageing population will mean a shortage of skilled labour

Maintenance is an area of particular concern. We provide maintenance services to companies such as Caterpillar and Eaton, and are very aware that key factors such as the ageing population, and retiring baby boomers will mean a shortage of skilled labour. Our approach to addressing the skills shortage is to create a compelling opportunity for career progression and training. By transforming perceptions of traditional maintenance roles we are attracting the right people from outside the sector. In the US, and indeed more recently in the UK, ATS has focused on attracting ex-services personnel as they have the mix of competencies, the drive and project management skills that suit the available roles.

Toyota

Toyota chooses to manufacture engines at its plant in Burnaston, Deeside, and ship them back to Japan

The drive to move business back to the UK is not just about labour costs. Companies such as BT and Santander returned their call centres to the UK because the customers demanded it. In manufacturing circles, Toyota produces the new hybrid engine at the UK plant in Deeside and then ships this back to Japan for installation, reminding us that production should not only be where it is most cost-effective but also where you can guarantee the standard of production and delivery required by customers.

The increasing cost of raw materials, transportation and the complexity of supply chains are also major considerations when considering plant location. It has taken harsh lessons in reality for companies to realise the fully loaded cost, not just the unit cost, has to be measured. Aside from the increasing costs already mentioned, there have always been ‘hidden’ costs associated with offshoring that, when considered, paint a slightly different picture. For instance, it is almost always necessary to engage a local agent to act as an interface with the supplier. There are long lead times, minimum-order quantities that necessitate holding more stock, this impacts upon cash flow and increases the danger of stock obsolescence. There is additional travel costs, as well as the difficulties arising from language and time-zone differences.

We have seen the effect of onshoring already in the US with companies such as Caterpillar opting to relocate its new plants in the US. The driving force for this was increased shipping costs, supply-chain complexity and inconsistent quality, which meant that the offshore plants were just not competitive.

The increasing cost of raw materials, transportation and the complexity of supply chains are also major considerations when considering plant location

Manufacturing is quite rightly back in the spotlight, but it needs a concerted investment in training, and a ‘make-over’ to ensure that it attracts the right candidates, so that it can once again serve as the catalyst for prosperity. The sector spurs demand for everything from raw materials and intermediate components to software and services of all kinds. Studies and statistics show that manufacturing significantly impacts upon the widespread creation of jobs-and wealth.

So why is manufacturing facing such a remarkable problem? Unfortunately, the old stereotypes of back-breaking labour and grimy working conditions persist. Ask people today what they think of manufacturing and most will probably describe dirty, dangerous work that requires little thinking or skill, and offers minimal opportunity for personal growth or career advancement. This is totally inaccurate.

Today’s manufacturing jobs are ‘cool’ and appealing. Workers are now required to be experts and operate the most sophisticated equipment in the world. They can cut steel with lasers, water jets and plasma cutters and can program robots to paint, package and palletise products. Computer programming and other high-tech skills are needed, which dovetails precisely with what younger people love these days; these jobs can be more fun and, ultimately, more satisfying than many service-sector jobs. 

To be fair, the government has made some steps to address this but much more needs to be done to ensure we capitalise on the opportunity presented and ensure the multinationals see the UK as the most viable option for their manufacturing plants.


Readers' comments (10)

  • We all realise what is required to get the UK back on a manufacturing footing unfortunately the last two Governments made it their policy to undermine the need to gain a working knowledge of maths and English to encourage youth employment in the manufacturing industries. Currently we have an army of supermarket shelf stackers within a huge service industry who's main aim is to keep the same pound coins in circulation moving from person to person. It has taken 15 years at least to break down the UK's engineering advantages in world trade to the present day and it is going to take another 15 years to get it back to where it can be of use. On the change of Government Alistair Darling is reputed to have suggested that any distribution of money to the banks under the "Competitive Easing" programmes should be immediately shared with industry to get the recruitment and training of new engineers up and running again. No one listened and we have lost valuable time which will be sorely felt in the years to come. it is hard to see a quick solution to this dilemma.

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  • I am an Electrical Engineer with MSc in Materials Engineering and very strong background in electromechanical services. With that level of skills it is still hard to get a job and I don't think that the skills is the key issue to the manufacturing return to UK.

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  • Along with the requirement for skilled workers is a more important requirement for HR departments to be open minded about who they are hiring. Intelligence and skills are more important than paper qualifications. A degree does not guarantee intelligence or ability. The worst worker I ever managed had a degree in philosopphy. When I asked how he got his degree, he replied that turning up to 40% of the lectures was all it took. This conveyor belt education system has got to stop and revert to the Maths and English based learning experience of previous times.

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  • I am an electrician with a degree in electrical engineering and I agree with the last comment, here in Australia we only survive because we can dig raw material out of the ground. Our manufacturing base has reduced to almost nill with sucessive governments ignoring the sector. Again the defence is the best training platform, however governments don't understand how to manage this valuable resource.

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  • @Apostolos

    It is hard for graduates to get jobs because employers want to see experience of some kind. I had to do bit jobs at the start of my career. Have you tried smaller companies and internships?

    A degree on it's own isn't really that big of a deal, its hard to face when you have just spent so long getting one but it is only part of what you need. Also grade inflation has made it's way right up to degrees, (another reason why employers want to see some employment history).

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  • This country has to learn the difference between "skills", which are largely the domain of trade apprenticeships, and "engineering", which should be via University (a proper one) based education.
    The 2 are very different, but seem to be merged into one here, with little understanding of the difference.

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  • A degree used to be an award of high academic achievement, and quite rightly, not everyone would have the ability to work to a high enough standard to win one. However, these days most people are expected to have a degree. But how is this possible? It's because successive Governments have dumbed the entire educational system down and have eroded these previously high standards. Quite frankly, a degree just isn't worth what it used to be.

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  • how true, earlier this week I visited an engineering company which has been advertising for 1 yes 1 turner and cannot fill the vacancy !

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  • I agree with many of the comments above. I am a manager in the automotive sector but I have worked my way up from mechanic through toolmaker, production engineer, project engineer to Programme manager over the space of 15 years (picking up NVQ's and BTEC's along the way). I consider myself knowledgeable and competent in my field.
    I am now having to do a degree to get any further in my career as my CV will not make the cut without it. Don't get me wrong, my degree is worthwhile but it is not difficult and anyone with any level of dedication could get one. I am fortunate enough to be sponsored through my degree but I would put forward the only real thing stopping everybody having a degree in the UK is the cost!

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  • I work for a company who design and manufacture products in the UK, and we're struggling to recruit SKILLED design engineers.

    I'm a design engineering having gone down the degree route (MEng from good university), but I have to admit that the two best design engineers in our office are those who went down the apprenticeship and HND route!

    Unfortunately our narrow minded managers are rather arrogant, and keep advertising the jobs to people with degrees only, and employing product designers (i.e. very little mechanical knowledge) rather than engineers, hence those of us here with engineering knowledge are now being given all the work that the others can't get their heads around!

    The government need to stop giving money to students from "poor" families, and instead offer full bursaries to students wanting to study engineering, as well as financial support for engineering apprenticeships.

    It is the ONLY way we can bring back British manufacturing, which is something that we NEED to do.

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