Manufacturing Trends in 2022 - Part 1 - With Make UK

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For this 2-part series, I’m joined by Jim Davison and Fhaheen Khan from Make UK, who represent manufacturers in the United Kingdom. 

In the first episode of this series, we look ahead to some of the key trends that are going to affect manufacturing in 2022 and discuss the results of Make UK and PWC's annual executive survey.

Despite the effects of the pandemic and Brexit, what is so great to hear is how positive manufacturers are feeling about the opportunities that lay in front of them in 2022 of which there are many as Jim and Fhaheen mentioned.

One big opportunity for manufacturers is encouraging more women into the industry. It was inspiring to hear Jim’s example of a UK manufacturer, who are already leading the way by ensuring half of their apprentices every year are female.

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Transcript

Key topics covered (click to jump to the section)

  1. Executive survey findings
  2. Attracting talent to manufacturing
  3. Example of attracting females to manufacturing roles
  4. Look back at the key manufacturing trends from 2021

Niall Sullivan, Senseye: So maybe Fhaheen, you could start by explaining this report, what it is involved, who you spoke to and the sources of data kind of thing.

Fhaheen Khan, Make UK: The report is called the Executive Survey. It's an annual publication that we produce at Make UK where we survey senior level professions at manufacturers across the membership, mainly it would be the CEOs and the MDs.

And it's essentially looking at the opportunities and the risks and what their businesses plan to do over the coming year ahead. We are looking to publish here in early January.

So we always publish that report in January, and we try to get a sense of what are the main issues, what the challenges, but actually what are manufacturers going to be doing about those challenges.

One of the statements we ask in that survey is, do you think the opportunities will outweigh those risks in 2022? Just to get an overview census of actually how manufacturers feel in terms of their confidence.

Interestingly, we got about 70% of manufacturers from that survey who said that they do feel that the opportunities in 2022 outweigh the risks of 2022. So that is outstandingly high.

And it shows that despite all the challenges that we've already mentioned from 2021 and before then, despite all those issues that manufacturers are facing, they're very, very optimistic and forward-thinking about actually how the rest of the year is going to go for next year, so that's really good to see.

In terms of the opportunities area, what we see is manufacturers are looking to invest a lot more in upskilling staff. So that sort of relates to what we mentioned on the Green Skills area, that actually the priority is to focus on skills.

Skills has been identified as a major issue this year, not just a shortage of labor, but the access of skills has been a huge issue. And it seems that manufacturers are keen to address that themselves by investing in their people as much as possible.

60% of manufacturers, or just 59% specifically said that they'll be developing new products. So we're looking to see actually a focus on innovation again. Manufacturers are very innovative and R&D intensive industry. And actually very interestingly about half of manufacturers said that they would be investing in green technologies and energy efficiencies.

So again, we're seeing the priority of sustainability and green are actually rising up the agenda when historically, you wouldn't have seen that in the top 10, but actually now you're seeing it in the top three or top four opportunities that manufacturers are thinking about at the start of the year.

If I had to break down the 2022 into three goals this based on this survey, it would be number one is going green. Number two would be securing skills. And number three would be building a more agile and adaptable industry or supply chain. So actually being able to respond to changes much faster because what we've seen over the last two years is that you can't predict any of these crises that we keep coming up against.

Even something as Brexit, which is what we planned since 2016, has created many, many issues along the road. And so manufacturing has historically been very fixed in what it does, but now it's looking to become more adaptable to crises that may show up on nowhere so that we more easily able to weather the storm.

And then on the other side of that is what we looked at, what were the risks. It was a long list of issues that we suggested to them. It was about 30 different risks because we knew that there were many, many issues. What we found in terms of the main things that topped, again, skills was the top issue highlighted. But interestingly, it was skills in domestic market. It's skills in the UK that manufacturers are worried about not having access to, which indicates why they're investing in upskilling.

And second to that was actually input costs. We talked a little bit about this already, but actually the biggest challenge that manufacturers are worried about right now is rising costs from the materials that they're paying for. Jim mentioned the 400% rise in some materials. It's that type of magnitude that we're concerned about, and that's what manufacturers are worried about.

And in general, what the risks tell us is manufacturers are generally just worried about the increasing cost of running a business. It's becoming more expensive to stay open, and that's what they're worried about. And what we're hoping to see, there's going to be an increase in investment and there... But even if you increase investment, that increases your costs in the short term much further. And there may be a while, maybe many years, if you actually see a return to that.

What are manufacturers going to be doing about those risks? At the moment, what they say is that their emphasis or their priorities will be on trying to control those costs, or be trying to recruit skills where they can. And they're also doing things like adopting additional measures, like cyber protection, because that's become a bigger issue as well in manufacturing as it becomes more digitalized.

So it's going to be an interesting report. I think the positive side of that story will more outweigh the negative side of those stories, but it does highlight as just some couple of things that we need to watch out for. Skills is a issue that's been in the industry for a very, very long time now, but input costs is something that actually manufacturers haven't had to deal with at this level for quite a while. So some of the issues they're facing are actually a little bit new to them.

Niall Sullivan, Senseye: Yeah. So there's a lot of really good themes in there that I think I'd like to sort of explore further. So I could be uncertain about generating the talent to... I mean, what I'm thinking is, is it still difficult to attract talent to manufacturing? Is that still a big hurdle for manufacturers at the moment?

Fhaheen Khan, Make UK: Well, it's very interesting. And Jim, you might have something to add onto that idea as well, but we actually ask one specific question about,

I guess, the anxiety about people leaving the industry, or even not just attracting talent, but actually current talent leaving the industry. And about 87% of manufacturers said that they were worried about people leaving the manufacturing industry for another industry or other types of jobs.

I think manufacturing it has its tools that make it very attractive. It's a high wage industry. It pays very, very well. In terms of the average salary is about £34,000 in the UK. I mean, in London, that's not a high salary, but in the rest of the UK, that's actually very, very good. And many, many other industries don't compete at the level that manufacturing jobs do.

I think there is maybe perhaps a marketing issue. So we talked a little bit about flexible working earlier on. Actually manufacturing traditionally is a very flexible industry already. Most of the type of work that people do tends to be on shift patterns.

I mean, it's not easy to give people the four days a week type of scenario, but it is more flexible than people often realize. And I think it's just more about putting that out there. Actually manufacturing is very much pro flexible working. It's just it's not marketed in that way.

I think that we are thinking about some issues right now in terms of the perceptions of manufacturing. I think there is historically a view that it's like this old kind of dirty industry, but actually what we'd like to do is try to emphasize the technological aspects of the sector is usually digitalized, it's modern.

It's going to be the sector that's probably going to deliver on the issues around climate change because all the innovation comes from there. So there are challenges when it comes to attracting staff and talent, but I think that's also down to the supply of talent also being low, because we're not really targeting people maybe from a younger age as well as we should be, that's what I would say.

Niall Sullivan, Senseye: Yeah. So actually with that challenge of actually attracting new, and you referred to it Fhaheen, is actually retaining talent becomes more important. So maybe Jim, you could explain how manufacturers might go about doing that. What do they need to do to in order to put that in place?

Jim Davison, Make UK: Yeah. The availability of skills and the challenges that manufacturers face, there is a decades old demographic challenge. So in lots of factories I go to see, you'll see guys like me with grey hair and edging towards retirement.

And then what you see is a gulf and then suddenly very young faces. And what I mean by that is it's so obviously demonstrates the investment in new talent. So young apprentices and graduate engineers that are starting their manufacturing and engineering careers. But it just so obviously shows those decades where as an industry, we under-invested in that next generation.

So retaining people, often once people get into their careers within manufacturing and engineering businesses, they stay. So there can be long term employees. So one of the challenges is to make sure that you can invest in your current workforce to make sure that they are fit and able and have the skills for the future opportunities that we've spoken a bit about already.

But the fundamental challenge right now is there are not enough people that are available to work fundamentally. And actually it's the availability of people in addition to having the right skills.

So I think opportunities and strategies need to include re-skilling people from other industries. For example, high street retail. Those kind of industries have been massively impacted by COVID, they have fundamentally been impacted far more than other types of industry. Hospitality clearly has challenges as well.

And yeah, the reality is making sure that those people, we can re-skill them, we can retrain them, we can articulate the fantastic careers that they can have within engineering and manufacturing.

So this is a longstanding, very complex issue, but actually the positive part of me thinks actually with the future it does look green. It does look exciting. It does look digital. And combining that with a fundamental manufacturing and engineering career will mean that as a sector we can attract the brightest talent from every kind of cross section of society within the UK.

We've just got to rebalance the fact that historically, for the last 20, 30, 40 years, we've seen manufacturing decline. So actually what you've seen is people displaced from factories that closed into other manufacturing operations, which meant that you didn't necessarily have to train the next generation of workforce.

But that situation disappeared 15 years ago. And the reality is actually now we're really seeing the impact of that under investment.

And then perception wise, lots of people don't think the UK manufactures anymore. And speaking very specifically about the south and London part of the UK, we definitely don't make anything and that's wrong and wrong.

The reality is there are really exciting dynamic companies that are developing the sort of electric clean drive trains for future transport systems, hydrogen fuel capabilities, both distribution, but also the items that go into the car. So things like heat exchangers and other components, they are being designed and manufactured right now in the UK, which is really exciting.

We've just got to make sure that we clearly articulate that message, encourage the young people that are starting their careers to inspire their peers, because it's all very well if somebody like me talking about how great manufacturing is, the reality is what will sell it to a young person, is somebody that looks like them, was at school with them the year before and can say, "Wow, I've just started my exciting career and I'm learning about Green Skills.

I'm learning about digital capabilities and we're making amazing products in the factory that I'm now a part of. So it's definitely work in progress. It's not going to be easy, but I think there's some great opportunities is what I'm trying to say.

Niall Sullivan, Senseye:  I think it's interesting you said an untapped market and actually what falls into that, and I'd be interested to hear if you've got any stats around it, but women in manufacturing as well. There's clearly a lot of tons of women who could do great things within manufacturing. And my perception from the outside would be that there's probably not a huge percentage of women working in manufacturing, but I'm happy to be corrected on that. But if that isn't the case, how do you go about, I guess, attracting women into what's traditionally perceived as a male dominated environment?

Fhaheen Khan, Make UK: I mean, I'll just start with a couple of the stats that we have, and maybe Jim can actually talk about some of the members. But I mean, we did a study on equality, diversity and inclusion last year to get a sense check of what the breakdown of diversity was in the manufacturing workforce right now.

And what we found specifically from the female male ratio is about 29% of the manufacturing workforce is currently female. And about 18% of the senior board member level is female in the manufacturing industry. So not as high as maybe we would've liked to have been at the moment.

If you compare that to official statistics. So the 29% is based on our own surveys, but official statistics puts that figure at 27%. So we are pretty close with what we do in our own research.

And compare that 27%, which is a 2020 figure to 2010, that figure was about 24%. So in terms of the actual how much it's improved just in the decade, it's perhaps not the level that we would've liked to have seen, but that's also down to the labor shortage issue.

I think in terms of... There's plenty of female apprentices coming through into the manufacturing workforce, I think we have an award ceremony and usually a female apprentice I think, Jim, you can correct me if I'm wrong, from what I can see wins almost every single year in terms of the best apprentice that are coming through.

But I would also caveat this issue of the representation. I mean, at the moment, there is a labor shortage and manufacturers can't be too picky when it comes to hiring. I mean, you could argue that maybe the solution is to increase female participation and maybe we can improve that labor shortage supply.

But at the moment, what I have found from discussions from members is that they often say that they don't get applications from females. They would love to hire a female if they find somebody with the right skills.

Maybe it's just down to the way that manufacturers advertise the jobs because female employees tend to look for different characteristics in jobs. They might be more looking for flexible work more so than male employees are. And it's just about attracting those.

It's solution, but I think it's something that the industry definitely needs to work on, but 29% is perhaps not as bad as people might think it is. I think most people would guess it'd be less than 10% and it's not as bad as that.

Niall Sullivan, Senseye: Oh, no, you're right. And that is actually higher than thought. And again, you're right to say that it's not as simple as, we're just going to go out there and hire more women. They have to have the demands for that as well. So I can appreciate that. I mean, Jim, is there anything you can add from a member's perspective?

Jim Davison, Make UK: Yeah. I think attracting women to roles within manufacturing is really important. Fhaheen's already mentioned our yearly awards ceremonies, and the fact that yeah, you're spot on, some of the most exciting apprentices and the most dynamic apprentices are young women. And those aren't just back office roles that they're being trained for. These are engineering type apprentices as well.

So those are our future role models. They're the people that can sell an apprenticeship, an engineering apprenticeship, or a manufacturing apprenticeship to their peers. And we need to just showcase more and more of those young people.

I think that this is one area where potentially the pandemic and the change in organizations' approach to how much time roles need to be in the office, in the factory has changed.

I think the flexibility that that therefore offers women and other minorities within society, roles within manufacturing, I think is something that is an opportunity. And there is a lot of work to do, but actually unlocks careers within our sector for people that probably didn't think that that would be possible.

I think that of that 29%, probably a lot of those are currently in back office functions, in finance and not necessarily on the shop floor. However, having said that, lots of organizations that you go into assembly areas do tend to be quite heavily populated with female employees. So I think we've just got to get smarter at raising the profile of those opportunities, those roles.

I think Fhaheen's point about how you highlight the opportunities and the key elements of a role is key. If I wrote a job description and an advert for a role, it would reflect kind the things that I value.

And I think that the point Fhaheen made about, well actually, yeah, you probably wouldn't be able to sell it to a female. So yeah, I think there's some simple things that organizations can and have started to do that can actually transform this.

And one great example is a company based in east of England. They have a simple way, they are envied by many other employers because they have literally half of their apprentices every year are female versus male. And the question was, "How on earth did you achieve that?" Because lots of apprentice schemes have about 10 to 15% of females on them.

And the response was flippant, but actually really, really obvious. It was, "Well, the deal is, when we go to speak to a school or an audience, we say, 'Listen, the deal is for every girl that starts an apprenticeship, there's a free place for a boy or a male. And yeah, it sounds, but the reality is they have transformed the kind of profile and demographic of their apprentice opportunities in schools.

So, yeah, there's some simple things that we can do as a sector to address that. And the reality is manufacturers want to access the best, and the reality is, traditionally, as Fhaheen said, we've probably been targeting to a very small relative segment of society. And we can open that up because the kind of roles that now exist within the sector are very different and we just need to showcase those.

Niall Sullivan, Senseye: Yeah, no sounds really positive, look forward into next year and beyond. 

Podcast series: A look back at the state of manufacturing in 2021

In this 2 part series, we looked back at the biggest challenges manufacturers faced in 2021. You can listen to episode one below.

Listen here