1. www.swslim.org.uk Manufacturing in the Heart of the South West Employment & Skills Issues 14 th November 2011 Ben Neild Assistant Director, SLIM

2. www.swslim.org.uk Presentation Contents Source: ONS Overview of manufacturing in the Heart of the South West Five issues for discussion during the workshop 1.Product Innovation 2.Business Support and Planning 3.Higher level skills & graduates 4.Workforce skills 5.Leadership & Management

3. www.swslim.org.uk Manufacturing in HoSW Source: UNCTAD In 2009, UK manufacturing sector generated some £140 billion in GVA. However, between 1990 to 2009, manufacturing’s contribution to UK GDP has fallen from 22% to just over 11%. This fall has been faster in the UK than in many other industrialised nations. Due to factors like: -off-shoring -out-sourcing -falling prices Manufacturing as a % of GVA in leading industrial countries, 1990-2009

4. www.swslim.org.uk Manufacturing in HoSW Source: LFS Locally, the decline in manufacturing GVA follows the national trend, declining from 20.5% in 1998 to 12.8% in 2009. Share of Total GVA accounted for by Manufacturing (%), 1998 - 2009

5. www.swslim.org.uk Manufacturing in HoSW Source: BRES There were approx 67,200 manufacturing employees in HoSW in 2010 Equivalent to 10.2% of total employment in HoSW (8.8% nationally). Variations within HoSW are significant. 4.2% in Torbay 13.2% in Somerset Lower than average prevalence of high- tech. More medium- high tech and low- tech.

6. www.swslim.org.uk Manufacturing in HoSW Source: SW Regional Accounts Although there are areas of high productivity, overall manufacturing output per full time employee (FTE) is significantly lower in HoSW than it is across GB as a whole. Productivity per FTE, Manufacturing sub-sectors, HoSW & GB, 2009 Between 1998 and 2009 manufacturing productivity in HoSW rose by 34%. Nationally it rose by 58% in the same period.

7. www.swslim.org.uk Manufacturing in HoSW Source: SW Regional Accounts Manufacturing Businesses by sizeband, 2009

8. www.swslim.org.uk Product Innovation Policy Source: Going for Growth – Treasury / BIS Supporting particular industries / sectors was anathema to Mrs Thatcher. Things changed little under Labour, until the recession, the collapse of financial services, the call for ‘rebalancing’ and a new ‘industrial activism’. This activism focused on ‘new’ industries that would support jobs growth post recession – New Industries / New Jobs. This has resulted in a range of small scale initiatives. Examples include: Technology and Innovation Centres (TIC) – ‘will draw on excellent university research to accelerate the commercialisation of new and emerging manufacturing technologies’ EPSRC funded centres for Innovative Manufacturing to ‘combine inventive research and business acumen to develop the sorts of innovative ideas taken forward to commercialisation through TICs’ Manufacturing Fellowships - Providing exceptional engineers from business to lead a £1 million programme of research within HEIs

9. www.swslim.org.uk Product Innovation HotSW Strengths Source: LFS Plymouth University - 'the enterprise university’ offering help to businesses in entrepreneurship, research, knowledge transfer. Completing a £19m marine facility w/ state-of-the-art research facilities, including the most advanced wave tank and testing facilities in the country. University of Exeter – investing £230m in a science strategy w/ 5 themes, including: Climate Change, Systems biology & Functional materials. Investing £2.6 million Centre for Additive Layer Manufacturing (CALM) to help businesses, entrepreneurs develop prototypes. Also offer Knowledge Transfer Partnerships, joint EU research proposals Further Education - e.g. Petroc’s ‘Business Innovation Service’ / South Devon College ‘Innovation Escalator’ etc

10. www.swslim.org.uk Business Support National / Government backed Business Link MAS / SW MAS UKTI Sector focused EEF Membership based FSB / CBI A complex and quite crowded landscape, involving providers that are: Institutionally based University Plymouth’s ‘Enterprise Solutions’ South Devon College’s ‘Business Advantage’ ‘Local’ North Devon Plus Torbay Development Agency The emphasis, with the disbanding of Business Link, is on LEPs and Local Authorities taking increasing responsibility for ensuring business support meets local business needs.

11. www.swslim.org.uk Planning Source: LFS A ‘presumption in favour of sustainable development’ Increasingly localised decision making Retention of growth in business rates Enterprise Zones Highly contested area, with tensions between ‘development’ and ‘environment’. Role of the LEP, as a voice for the business community. Already used, in relation to support for the South Devon Link Road

12. www.swslim.org.uk Higher Level Skills Source: Working Futures Employment in manufacturing is becoming more skills intensive. Employment by Occupation (% of employment), SEMTA, SW, 1987 & 2017

13. www.swslim.org.uk Higher Level Skills Source: LFS ‘Access to a skilled workforce, particularly science, technology, engineering and maths (STEM) skills, is vital for the sector'. Plan for Growth, BIS / HM Treasury Exeter and Plymouth universities provide c.30% of all STEM provision in the South West - over 20,000 students in total. 50% of all Plymouth & 40% of Exeter students were studying STEM subjects in 2009/10. Since 2002/03, the number of STEM students at the two universities has risen by around 18%, faster than either regional or national growth. The proportion of all students studying STEM subjects at Exeter has risen v. rapidly, from 26% in 2002/03 to its current level of 40.1%.

14. www.swslim.org.uk Higher Levels Skills Source: LFS In 2008-09, nearly 43% per cent of first degree graduates from UK HEIs were in STEM-related subjects. However, of these graduates, less than 5% entered employment in the manufacturing sector, despite average wages in engineering comparing favourably to other professions. Plan for Growth, BIS / HM Treasury Nearly a quarter of UK engineering graduates are working in non- graduate jobs or unskilled work such as waiting and shop work. 46% of 2009 engineering graduates were in jobs directly related to their degree subject six months after leaving university. Prof Emma Smith, Uni Birmingham

15. www.swslim.org.uk Higher Level Skills Source: LFS So how do we make better use of these skills? Graduate Internships Knowledge Transfer Partnerships Student Business Partnerships

16. www.swslim.org.uk Workforce Skills Source: LFS The manufacturing workforce is gradually becoming more highly qualified. Manufacturing Employees by Qualification Level, South West, 2006 & 2011

17. www.swslim.org.uk Workforce Skills Source: LFS But…. it remains less well qualified than the workforce as a whole Employees by Qualification Level, Manufacturing vs All, South West, 2011

18. www.swslim.org.uk Workforce Skills Source: NESS 2009 Skills-shortage-vacancies (vacancies that employers cannot fill because applicants lack the right skills) are uncommon - less that 0.2% of total employment. Skills gaps (where staff are not being fully proficient in their current job) are common – reported by 20% of employers and as affecting 200,000 employees nationally. Skills missing are most commonly practical / technical & job-specific. Team-working and communication skills are also cited. They are most prevalent in Skilled Trades and among machine operatives. They can have significant impacts – e.g. increase in the workload for others (51% of employers); increased operating costs (37%); difficulties w/ quality standards (24%). But (good news) 70% say they are due to people lacking experience and / or having been recently recruited. Points to issues around recruitment, induction and initial VET – rationale for Apprenticeships etc.

19. www.swslim.org.uk Leadership & Management Skills Source: LFS Are generally acknowledged to be critical to the success of all enterprises. However…. managers are also identified as the occupational group where the need to upskill was greatest. “There remain situations where “cheap labour and a shortage of capital to invest in automation sees workers taking items off one belt and placing them on an adjacent conveyor system all day long”. Training individuals in these roles is unlikely to impact on the profitability, growth or survival, unless accompanied by a review of “work organisation, job design, how employment relationships are managed and conditions are achieved whereby employee motivation, commitment, and discretionary effort are maximised”’. Keep, Mayhew & Payne, From Skills revolution to productivity miracle – not as easy as it sounds? cited in B. Neild, Training and business survival during recession, SLIM, Nov 2008.