Addressing key topics within the manufacturing sector.
The manufacturing industry is crucial to the economic wellbeing of the country. It accounts for 10% of total employment, generates 50% of UK exports and contributes 13% of GDP. The importance of the industry should be reflected in both the continued application of the Government’s manufacturing strategy and in the promotion of the positive aspects of manufacturing to the population as a whole.
Sustainable manufacturing can provide new opportunities for manufacturers to innovate in order to gain a competitive advantage in a difficult financial climate. The Department for Business, Innovation and Skills (BIS) estimates that the market for low carbon goods and services is worth over £3 trillion. There are new opportunities for businesses to develop low carbon manufacturing processes and low carbon technologies in order to develop the products, services and components that will reduce carbon emissions in the UK and across the world.
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The UK government should aim to create a sustained, export-led recovery. Supporting the manufacturing sector and particularly Small and Medium Sized Enterprises (SMEs) will be critical to this. Many SMEs need support to ‘move up the value chain’ in order to be more competitive in the global economy. There is much that government can do to support this. At a macro level, government can invest in infrastructure and work towards securing a low and stable exchange rate. At the micro level, government can use incentives to encourage SMEs to access supply chains, and support the development of strategically important industries.
The German Government’s Feed in Tariff (FIT) scheme is good example of this. The FIT has contributed towards the development of Germany’s globally competitive solar electricity industry. It pays individuals and businesses a fixed price for every unit of energy generated from solar PV, wind or hydro energy. Key to its success is that it supports a national market, which is in turn fed by a national supply chain and this has led to advances in the supply chain in terms of its size and technology.
In contrast, UK incentive schemes for offshore wind has been separated from the development of a supply base, and early projects suggest lower use of the UK’s offshore wind content than projected.
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The Government spends an estimated £220 billion in public procurement. Making the best use of this spending through more effective procurement arrangements will contribute towards reinvigorating manufacturing and technological industries, and help to deliver public services at a reduced long term cost.
Evidence from the National Audit Office shows that procurement is not used effectively to stimulate innovation. There are concerns that government procurers are ‘risk averse’, preferring to purchase tried and tested products and services. Procurement innovation requires a level of technical expertise to fully comprehend the innovations in development. The IET is concerned that too often procurers do not have, or are unable to easily access, this level of technical expertise.
SMEs can struggle to access public contracts. There are a number of positive initiatives across government to support procurement including the Small Business Research Initiative and the Forward Commitment Procurement Initiative. Early evaluations suggest that these programmes are having a positive impact on the procurement process. Government must continue to monitor the proportion of public contracts that are awarded to SMEs to ensure that SMEs have the support they need to compete for public contracts.
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The UK engineering and IT sectors suffer from significant skills shortages, particularly at the technician level. The IET’s survey of four hundred employers consistently finds that many employers find it difficult to fill engineering vacancies, yet it is predicted that the emerging sectors of the economy which will serve as a catalyst for economic growth will require STEM skills.
The IET considers that the perception that academic routes into engineering are necessarily superior to vocational routes must be challenged as this contributes to the shortage of engineering technicians. Achieving parity of esteem between vocational and academic routes is therefore crucial, and everyone working in education and skills should seek to promote the value of vocational routes.
Apprenticeships are an important route into the engineering profession. It is necessary to monitor progression rates from apprenticeships to ensure that they indeed provide a route into the profession – and not a dead end. Studies show that around 50% of Advanced Apprentices aspire to higher level skills training, but only around six per cent of these Apprentices progress to higher 1.
While apprenticeships are established in large engineering companies, they are much less established in SMEs, which face considerable obstacles to offering apprenticeships including excessive bureaucracy and cost. Government focus on training in SMEs should not be restricted to levels two and three, but also focus on higher levels of progression. Without capacity for progression, SME apprenticeships will not be as attractive as other routes.
For further information see IET submissions