The Employment and Skills Partnership and Heart of the

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Transcript The Employment and Skills Partnership and Heart of the

The Employment and Skills Partnership
and
Heart of the South West Local Enterprise Partnership
Supporting Manufacturing in the Heart of the South West
RACHEL DAVIES
LEP Board Member
And
Principal – Somerset College
The outlook for manufacturing and the
economy
Lee Hopley
EEF Chief Economist
OVERVIEW
• Manufacturing sees decent start to recovery.
• But outlook becoming more mixed across the sector.
• Companies planning to invest and recruit, but confidence has
begun to slide.
• Wider UK economic outlook much more uncertain.
• A raft of external factors raising the risks to growth.
• 2012????
• Any reasons to take a glass-half-full view of manufacturing?
CURRENT CONDITIONS
Manufacturing growth outpaces wider
economy and drives export-led recovery
Data revisions provide new info on recession
and recovery, % change in output
4
%
First Estimate
Revision
%
First Estimate
Revision
8
2
4
0
0
-2
-4
-4
-8
-6
-12
-8
-16
Peak-trough
Trough-current
GDP
Peak-trough
Trough-current
MANUFACTURING
Source: National Statistics
Q3 GDP brings a little relief,
% quarter on quarter change
%
2011q1
2011q2
2011q3
2
1
0
-1
-2
rv
ic
P
se
se
he
r
s
G
vt
&
ot
in
es
B
us
G
D
es
es
rv
ic
m
co
m
rt
&
sp
o
Tr
an
tn
,h
tr
ib
D
is
s
.
et
c
el
s
ot
st
C
on
M
an
u
fa
ct
u
rin
ru
ct
io
g
n
-3
Source: National Statistics
Manufacturing still growing,
% balance of change in past three months
%
Output
Orders
20
04
q
20 3
05
q1
20
05
q
20 3
06
q1
20
06
q
20 3
07
q1
20
07
q
20 3
08
q
20 1
08
q3
20
09
q
20 1
09
q3
20
10
q
20 1
10
q3
20
11
q
20 1
11
q3
40
30
20
10
0
-10
-20
-30
-40
-50
-60
Source: EEF Business Trends Survey
Exports drive manufacturing orders,
% balance of change in orders in past three months
40
30
20
10
0
-10
-20
-30
-40
-50
-60
%
Domestic
Export
q2 4 q4 5 q2 5 q4 6 q2 6 q4 7 q2 7 q4 8 q2 8 q4 9 q2 9 q4 0 q2 0 q4 1 q2
4
0
0
0
0
0
0
0
0
0
0
0
0
1
1
1
20
20
20 20
20
20
20 20
20
20
20 20
20
20 20
Source: EEF Business Trends Survey
Non-EU economies provide a boost,
goods exports by destination, 2008q1 = 100
Non-EU
EU
China
Germany
France
US
170
150
130
110
90
q
20 3
08
q4
20
09
q1
20
09
q2
20
09
q3
20
09
q
20 4
10
q1
20
10
q2
20
10
q3
20
10
q4
20
11
q1
20
11
q2
q2
20
08
20
08
20
08
q1
70
Source: National Statistics
..but these markets still not on the agenda for
some, % of companies with involvement in emerging markets
Currently exporting
Considering exporting
Not currently considering
Middle East
India
China
Asia (exc China)
Russia
Brazil
%
0
20
40
60
80
Source: EEF Export Survey
100
Sector differences becoming more marked,
% balance of change in output in past three months
Output
%
60
Orders
40
20
rt
er
O
th
ot
o
rv
tr
an
eh
ic
sp
o
le
s
al
El
ec
tr
on
El
ec
tr
ic
s
ca
l
an
i
ec
h
M
ic
M
M
et
a
M
lp
ro
du
et
a
ct
s
ls
0
Source: EEF Business Trends Survey
Recruitment plans ease,
% balance of change in employment
hs
on
t
m
q3
N
ex
t3
20
11
q2
20
11
q1
20
11
q4
20
10
q3
20
10
q2
20
10
q1
20
10
q4
20
09
q3
20
09
20
09
q1
20
09
q2
%
40
30
20
10
0
-10
-20
-30
-40
-50
Source: EEF Business Trends Survey
SMEs more cautious in forecasting growth,
% balance of change in orders in next three months
50
Small
%
Large
40
30
20
10
0
-10
-20
-30
Output
Export orders
Export margins
Investment
Source: EEF Business Trends Survey
Manufacturing growth to continue,
% annual change in output
4
Manufacturing
%
GDP
3
2
1
0
2010
2011
2012
Source: EEF
RISKS, CHALLENGES AND
OPPORTUNITIES
Where will the global economy go from
here?
Downside risks … and more of them
• government spending cuts;
• deteriorating labour market prospects;
• access to finance;
• other lingering UK business environment concerns;
• disorderly eurozone debt default;
• weaker outlook for US economy;
• emerging markets must navigate soft landing.
UK outlook more challenging
 Investment outlook – Investment intentions not translating into
increased capex. Credit cost remains elevates and BoE credit
conditions suggests worsening in Q4.
 Labour market – Labour market prospects look very weak;
claimant count is rising, and outflows have fallen. Proportion of
temporary workers wanting permanent job growing.
 Consumer – Confidence is shaky, indictors heading towards 2009
lows. Economic situation weighing on consumers, household belttightening set to continue.
ay
-0
Ju 8
lSe 08
p
N -08
ov
Ja 08
nM 09
ar
M -09
ay
-0
Ju 9
lSe 09
p
N -09
ov
Ja 09
nM 10
ar
M -10
ay
-1
Ju 0
lSe 10
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Ja 10
nM 11
ar
M -11
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Softening across the board,
index of activity, 50 = no change
%
65
US
Germany
France
UK
Eurozone
China
60
55
50
45
40
35
30
25
Source: Markit Economics and ISM
Global outlook….
The good, the bad and the ugly
GOOD
• Greek political wrangling
– an end in sight?
• US Q3 better than
expected.
• US manufacturing
activity still positive
• Emerging market engine
not spluttering yet.
• Commodity prices
should head lower.
• Monetary authorities still
have a bit of fire power.
UGLY
BAD
• European activity
indicators signal
contraction.
• ITALY?
• German output sees
consecutive monthly falls.
• Business confidence
across ez tumbles.
• US consumers aren’t too
cheery either.
• US labour market
conditions have
deteriorated.
Where will we go from here?
% annual change in GDP
10
Jan-11
%
Oct-11
Worst case
8
6
4
2
or
ld
W
di
a
In
na
C
hi
U
K
ce
Fr
an
an
y
G
er
m
e
ro
zo
n
Eu
-2
U
S
0
Source: Oxford Economics
But opportunities in new markets remains,
% of UK exports and % annual GDP growth, 2010
60
%
% of exports
%
GDP growth
12
10
50
8
40
6
30
4
20
2
0
-2
• Scope for greater gains through
collaboration
• Re-thinking sourcing and supply
chain management – everything
to gain?
G
C
• Societal and environmental
challenges also bring new market
potential
er US
m
a
Fr n y
Eu an
ro ce
zo
ne
N
et
he Ita
rl a ly
nd
s
Sp
ai
n
0
hi
na
In
d
M B ia
id ra
dl zi
l
e
Ea
R st
us
S s ia
K
or
ea
10
• Scope for greater in-roads into
emerging markets
Source: National Statistics and Oxford Economics
A wider range of innovations,
% of companies introducing innovation in past three years
70
%
2008
2009
2010
• Strategies focus on value-addition
and new market entry.
60
• Competition on the basis of
research and design.
50
40
• Innovation across all activities a
growing priority.
30
• Global look at locations of activities.
But innovation/production link not
easily severed.
20
10
rv
ic
e
• Service provision provides revenue
potential – and cushion in difficult
times.
Se
t
Pr
od
uc
es
s
Pr
oc
d
m
et
ho
O
rg
M
&
D
0
Source: EEF Innovation Monitor
Conclusion
• A more challenging period
• The recovery in the economy and manufacturing has entered a
more challenging period since the start of the year growth flat in
H1.
• A more uncertain environment
• Diving consumer confidence, euro-shakes, US wobbles and
spreading global growth concerns – all increasing sources of
uncertainty
• But still a more sustainable platform for growth
• Over the longer term, growth founded on higher investment and
net exports offers a more sustainable platform for growth.
Manufacturing is at the heart of this.
The Employment and Skills Partnership
and
Heart of the South West Local Enterprise Partnership
Supporting Manufacturing in the Heart of the South West
BEN NEILD
Assistant Director –
Marchmont Observatory and SLIM
Manufacturing in the Heart of the South West
Employment & Skills Issues
14th November 2011
Ben Neild
Assistant Director, SLIM
www.swslim.org.uk
Presentation
Contents
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
www.swslim.org.uk
Source: ONS
Manufacturing in HoSW
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%.
Manufacturing as a % of GVA in leading industrial countries, 1990-2009
This fall has been
faster in the UK than
in many other
industrialised
nations.
Due to factors like:
-off-shoring
-out-sourcing
-falling prices
www.swslim.org.uk
Source: UNCTAD
Manufacturing in HoSW
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
25%
20%
% of GVA
15%
Heart of the South West
SW
GB
10%
5%
0%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
www.swslim.org.uk
Source: LFS
Manufacturing in HoSW
There were approx 67,200 manufacturing employees in HoSW in 2010
Equivalent to 10.2% of total employment in HoSW (8.8% nationally).
14%
Variations within
HoSW are significant.
% of employment
12%
10%
4.2% in Torbay
13.2% in Somerset
8%
6%
4%
2%
0%
Devon
Plymouth
Somerset
Torbay
HotSW
South West
Low-tech Manufacturing
Medium-Low Tech Manufacturing
Medium-high tech manufacturing
High tech manufacturing
www.swslim.org.uk
England
Lower than average
prevalence of hightech. More mediumhigh tech and lowtech.
Source: BRES
Manufacturing in HoSW
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
Sector
Chemicals and nuclear fuel
Food, drink and tobacco
Electrical and medical equipment
Manufacture of transport equipment
Textiles, clothing, leather goods and footwear
Non-metal products
Manufacture of machinery
Printing and publishing
Metal products
Wood and paper products
All Manufacturing
All sectors
GVA per FTE (£000s)
Heart of the
South West
Great Britain
71.4
116.4
56.4
56.1
50.5
55.0
41.1
54.7
38.3
32.7
32.0
41.6
31.9
46.2
29.8
53.9
27.7
36.0
22.6
35.5
40.2
53.1
34.2
49.7
Between 1998 and 2009 manufacturing productivity in HoSW rose by 34%.
Nationally it rose by 58% in the same period.
www.swslim.org.uk
Source: SW Regional Accounts
Manufacturing in HoSW
Manufacturing Businesses by sizeband, 2009
90%
80%
% of business units
70%
60%
50%
HOTSW
40%
SW
30%
England
20%
10%
0%
1-10
11-49
50-199
200 or more
Employee Sizeband
www.swslim.org.uk
Source: SW Regional Accounts
Product Innovation
Policy
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
www.swslim.org.uk
Source: Going for Growth – Treasury / BIS
Product Innovation
HotSW Strengths
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
www.swslim.org.uk
Source: LFS
Business Support
A complex and quite crowded landscape, involving providers that are:
National / Government backed
•
Business Link
•
MAS / SW MAS
•
UKTI
Sector focused
•
EEF
Membership based
•
FSB / CBI
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.
www.swslim.org.uk
Planning
•
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
www.swslim.org.uk
Source: LFS
Higher Level Skills
Employment in manufacturing is becoming more skills intensive.
Employment by Occupation (% of employment), SEMTA, SW, 1987 & 2017
35%
30%
1987
2017 (proj)
25%
20%
15%
10%
5%
0%
www.swslim.org.uk
Source: Working Futures
Higher Level Skills
‘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%.
www.swslim.org.uk
Source: LFS
Higher Levels Skills
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 nongraduate 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
www.swslim.org.uk
Source: LFS
Higher Level
Skills
So how do we make better use of these skills?
•
Graduate Internships
•
Knowledge Transfer Partnerships
•
Student Business Partnerships
www.swslim.org.uk
Source: LFS
Workforce Skills
The manufacturing workforce is gradually becoming more highly qualified.
Manufacturing Employees by Qualification Level, South West, 2006 & 2011
30%
% of manufacturing employees
25%
20%
15%
2006
2011
10%
5%
0%
NQF Level 4 and
above
NQF Level 3
NQF Level 2
NQF Level 1
www.swslim.org.uk
No qualifications
Source: LFS
Workforce Skills
But…. it remains less well qualified than the workforce as a whole
Employees by Qualification Level, Manufacturing vs All, South West, 2011
40%
35%
% of employees
30%
25%
20%
Manufacturing
All Sectors
15%
10%
5%
0%
NQF Level 4
and above
NQF Level 3
NQF Level 2
NQF Level 1
www.swslim.org.uk
No
qualifications
Source: LFS
Workforce Skills
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.
www.swslim.org.uk
Source: NESS 2009
Leadership &
Management Skills
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.
www.swslim.org.uk
Source: LFS
The Employment and Skills Partnership
and
Heart of the South West Local Enterprise Partnership
Supporting Manufacturing in the Heart of the South West
TIM JONES
HoTSW LEP CHAIRMAN
The Employment and Skills
Partnership
and
Heart of the South West Local
Enterprise Partnership
Supporting Manufacturing
in the Heart of the South
West
AgustaWestland Ltd – At the heart of
Advanced Manufacturing in the UK
AgustaWestland Ltd – Investing in all our
futures
OUR TECHNOLOGY:
OUR SUPPLIERS:
•
•
•
•
•
•
80% of value-added is bought out
£750m annual spend with UK Suppliers
845 UK Suppliers
650 UK SMEs
Over 300 suppliers in the South West
–
–
–
–
•
•
•
OUR PEOPLE :
•
•
•
•
•
•
•
•
3000+ employees living in the South
Somerset Area
35% at Graduate or above level
5% in full-time education or training (175 full
time trainees and apprentices)
60 young people sponsored through further
education each year
9 MSc sponsorships in 2011
Working with 29 local schools on STEM and
Imagineering
75 local schoolchildren through work
experience every year
1st Industrial organisation to receive
“Oustanding” rating from Ofsted.
World leaders in:
advanced rotor systems
Transmission/Gearbox Design and manufacture
Optimal matching of engine, rotors and
transmissions
Active Vibration management/control systems
£30m investment in Research and innovation in
2011
Strategic relationships with 15 UK Universities
45 Live R and D programmes
OUR CUSTOMERS:
•
•
•
60 Years experience of helicopter design,
development and manufacture
Over 1100 Helicopters in service with 40
Customers around the world
UK MoD remains our major customer:
•
Ca 70% of current business
•
£800m projected revenue for 2011
•
Outstanding orderbook of 2.3Bn
Today’s Business Environment
• Public Sector Spending Cuts
• Advanced Manufacturing Growth Strategy
• EU Procurement Directives and State Aid
• Skills and Training/Education
My LEP agenda
• Advanced Manufacturing Growth Strategy – Time is money
• Access to Finance
• Connectivity and Infrastructure Links
• Support for Exports – Nationally and Internationally
• Public Sector Procurement – Price versus value – Time is money
• Skills and Personal Competencies
• Bureaucracy – Time is money
The Employment and Skills Partnership
and
Heart of the South West Local Enterprise Partnership
Supporting Manufacturing in the Heart of the South West
NICK AMES
LEP Board Member
And
Managing Director - Supacat
Supporting Manufacturing in the
Heart of the South West
14 November 2011
Heritage
1981-1996 – The beginning
1997-2004 – HMT launched
2004-2011 - Diversification
 Supacat Ltd established on
ATMP and Glider winch
programmes
 UK MoD business
channelled through Primes
(Fairey, Alvis)
 Utility vehicle ‘Capability Gap’
recognised – HMT concept
 RNLI relationship established
based on trailer products
 First HMT4x4 order (UK MoD) for
65 won in 2001 with Supacat as
Prime Contractor
 Wider markets identified and
exports achieved – USA,
Denmark, Australia
 HMT 4x4 taken into UK
Regular Army
 First Renewable Energy
contract
 15 Staff
 £2m Turnover
 60 Staff
 £10m Turnover
 100 Staff
 £20m Turnover
Our Challenges
• Planning for an uncertain future, very lumpy sales (UK
and export), resource levels, property requirements
• Competing with large corporates with deeper pockets
• High cost of product development
• Staying up to date with H&S, Environmental, Bribery &
Corruption, Export, ITAR
• Recruiting good engineers
• Current Banking environment
• Feeling as though non one really cares as much
• High cost of trade events
Reflections on UK Government support
Positive
“Could be improved”
• Good work of Business
Link
• More recent good export
support
• Good tax relief to support
development investment
•Clarity of UK industrial
support especially in relation
to competing for export
orders
•Better visibility and
relevance of grants
•Export compliance process
What can the LEP do to help?
Listen – are your
experiences the same?


Provide feedback to BIS
on areas for national policy
improvements

Seek to initiate local
responses (Beacon, Skills
and training)

Work with local finance to
signpost to appropriate
finance
Summary

Supacat is committed to providing
engineering excellence in the
region

Supacat wishes to work with
partners in achieving its goals

The LEP is the right mechanism to
have the voice of the regional
manufacturing businesses heard in
Westminster