A major skills shortage, tight profit margins and the threat of low cost offshore manufacturing are the top three challenges for the UK manufacturing sector this year.

These are some of the conclusions generated by a survey of 400 interim managers specialising in manufacturing, commissioned by interim management provider, Russam GMS.

Eighty-six per cent of interim managers claimed there was an industry-wide skills shortage and over half believed that the greatest skills gap was in general management. One in five also thought that employees with change management skills were needed, and 18 per cent felt there was a lack of good project management skills in the industry.

When asked what issues are worrying managers working in manufacturing the most at present – 35 per cent stated that it was tightening profit margins; whilst 34 per cent said that low cost off-shore manufacturing was the most significant threat. Increased EU regulations, a lack of skilled employees, rising interest rates and reliance on export markets were also causes for concern.

Interim managers are, however, optimistic about the future of UK manufacturing. A third of interims are more optimistic about the industry’s prospects in 2008 than 2007, 45 per cent feel as positive as they did last year, whilst 22 per cent believe that the outlook looks worse this year.

This positive outlook could be attributed to the fact that 75 per cent of interims worked on projects in 2007 that helped business start-ups or existing businesses grow and develop. This is a far higher percentage than Interims who worked on downsizing projects (36 per cent) or in off shore or outsourcing projects (33 per cent).

In terms of industry sectors, 51 per cent of respondents felt the aerospace was particularly buoyant; 49 per cent predicted that the pharmaceutical industry would experience strong growth; whilst 40 per cent of interims stated that both the food industry and the chemical industry were set for excellent growth in 2008.

John Wilson, head of manufacturing practice at Russam GMS said, ‘Whilst there are clearly challenging times ahead for UK manufacturers in terms of dealing with tough competition from overseas manufacturers and tight profit margins, interim managers are highly confident about the outlook for the sector and the fact that two thirds of their projects last year focused on business growth speaks volumes.’

‘One cause for concern however, is the significant skills shortage which appears to be particularly pronounced at managerial level. Whist this is good news for interim managers in terms of generating good employment prospects, it is an issue that needs addressing now if


manufacturing companies want to retain their competitive edge in the future,’ he added.