In recent years, UK Engineering has had to face up to many changes as the world economy has become ever more competitive. Industry is converging and becoming global in its operations, and new technologies are emerging ever faster. Competition from western industrialised nations and from Asia, Latin America and Eastern Europe is getting ever more fierce.
If present trends continue, by 2020 developing countries will have increased their share of world trade from one third to over half. China will be the biggest economy in the world and a low-labour-cost one at that.
All of these changes are having a dramatic impact on the working environment in which we operate. The twin influences of technology and globalisation will have important implications for the skills that industry will need from its employees.
In addition to these long-term factors, the engineering industry is facing more immediate challenges of high interest rates, a strong pound and skills shortages in certain disciplines and geographical areas. The instability caused by problems in some of the UK’s overseas markets is an added complication.
In the face of such changes, there is no future for UK engineering in competing on cost alone at the bottom end of the market. The only way forward is to improve the UK’s competitive position as a skilled producer of value-added goods.
Consequently, one of the most vital components in attaining this long-term goal is our people and, in particular, the way they are educated and trained.
The next generation of the engineering workforce is going to have to be highly skilled and flexible, able to adapt to many different cultures and manufacturing environments. We must ensure that we have people with the requisite skills to design and develop the products of the future, the skills to manufacture them competitively, the flair to market them and increasingly importantly the skills to service products through their lifetime with the customer.
It is because we are putting such emphasis on the importance of the skills and training of our workforce that the People Skills Scoreboard has been developed. The initiative is backed by EMTA and the EEF, with the support of the Department for Education and Employment and the Department of Trade and Industry, and builds on the pilot skills scoreboard undertaken last year.
Its aim is to establish a training benchmark for engineering employers so that they can measure their training activity in relation to their own sector average. It will also provide an indication of the level of investment in training that businesses are making across other engineering sectors.
While these indicators are vitally important at a micro level for businesses, equally important is the desire to raise the profile of education and training. Companies need to be encouraged to view human resource development as an investment to increase profitability.
In recent months, industry has been heavily criticised by the Government for its performance. The Chancellor has repeatedly asserted that industry’s problems lie not with high interest rates or the strong pound but with poor productivity and too little investment in people and technology. Even the Prime Minister weighed in during his Labour Party Conference speech with criticism of British management.
Nobody would deny that, over a period of time, UK Industry has not invested sufficiently in the skills and training of its workforce, compared with our major competitors. But such sweeping criticism from the Government does little to help the situation and ignores the fact that there are many world-class UK engineering companies that invest large amounts of money in continually updating the skills of their workforce.
We have the strong support of both the DTI and DfEE for this initiative and will continue to do so for at least the next two years.
In setting up the People Skills Scoreboard, EEF and EMTA aim to encourage companies that do not invest in their people to match the levels of investment of those that do. We are stressing that investment in the skills and training of their workforce is not a luxury, but a critical factor in improving business performance and competitiveness. If we are to increase the number of world-class companies in UK engineering, there is no alternative.
Graham Mackenzie is director general of the Engineering Employers Federation