UK Manufacturing, which makes up a tenth of the UK economy, had sales of £357.8bn in 2015 and employed 2.7m people.

Within UK Manufacturing, the UK Labelling & Packaging Manufacturing Industry (including 9 core sectors – cosmetics, drinks, food, food service, industrial, luxury, personal care, pharmaceutical & medical, tobacco) contributed annual sales of £11-12bn and employed 85,000 people, 3% of UK manufacturing’s total workforce.

Growth in 2016/2017

The global packaging market was estimated at £673bn in 2015, set to reach £800bn by 2020 and £882bn in 2024. Beauty, consumer electronics, pet food and household hygiene sectors are to record the highest growth by 2019.

The UK manufacturing industry started 2017 on a 30-month high, with jobs in the manufacturing industry up by 24% year-on-year. Furthermore over two thirds of UK manufacturing firms expecting their businesses to grow in 2017.

However, the industry is “expected to face a challenging year as energy and material costs remain high”. The impact of Brexit on manufacturing and the economy is, as yet, unknown which is straining consumer and business confidence. The skills gap still remains one of the  biggest challenges for manufacturing/label and packaging manufacturing companies in 2017.

Skills Shortages in UK Manufacturing 2017

In 2016 75% of British manufacturers say they have faced difficulties finding “the right people with the right skills” in the last three years, putting productivity growth at risk – the “quality and quantity of candidates is lacking”.

The proportion of vacancies considered hard-to-fill in manufacturing still remains high, at 35%. This has not improved since 2013 and has worsened since 2011 and in fact the demand for skilled workers is expected to rise between 2016 and 2019.

With an ageing workforce, reduced supply of young people, increasing competition from other sectors, the inability to both encourage more women into the sector and to make the industry attractive as a career of choice, Britain’s manufacturers are “struggling to recruit skilled workers and keep pace with global technology”.

The Top 3 Reasons for Recruitment Difficulties by Manufacturing Companies 2015-2016

1.     Lack of technical skills
2.     Insufficient number of applicants
3.     Lack of relevant experience

Top Skills In-Demand by Manufacturing Companies to Meet the Demands of the 4th Industrial Revolution 2016-2019

Almost 60% of manufacturers need more production-related technical skills, and more than 50% need more staff with IT skills including;

•       Increased demand for skills is particularly focused on leadership, management and line management skills in line with organisational restructuring and improving productivity
•       Production & Process Professionals including  Production & Process Engineers, Mechanical Engineers, Electrical Engineers, Welding Trades
•       Technical Skills – multi-trade skills (e.g. mechanic who is also an electrician)
•       PLC (Programmable Logic Controller) and Robotic Skills
•       Warehouse operations and logistics
•       Sales & Marketing

Engineer, technician and sales positions are seen as being the greatest challenge to fill. In addition over 40% of UK manufactures also experience problems hiring managers and 23% report “significant” struggles recruiting apprentices, although 50% do not see filling unskilled positions as a problem.

Developments in 2017 Likely To Further Impact on UK Manufacturing Skills Supply

1. Brexit. It is as yet unclear the degree to which Brexit will have on the flow on skills from the EU and outwith the EU into the UK. UK Manufacturers rely heavily on workers from within Europe to fill a variety of roles via the Free Movement of People. For packaging manufacturers, while tariffs and input costs are a concern, “by far the biggest issue is the flexibility of labour”;

•       In 2016 9% of UK manufacturers recruited non-EEA employees
•      In 2016 10% of all workers in UK manufacturing were EU foreign-born Nationals
•       In 2015 the industry with the highest share of foreign-born workers in its workforce was food products manufacturing, where about 41% of the workforce was foreign-born

2. The Apprenticeship Levy – On the 6th April 2017 the UK government will roll out The Apprenticeship Levy, a 0.5% tax on all employers which have an ‘annual pay bill’ of over £3m, but will receive a £15,000 Levy allowance. Companies with an annual pay bill below £3m will not pay the Levy – read more in our blog.  A quarter of manufacturers  think the Levy will increase the quality of apprenticeships and  a quarter also think it could attract more young people into apprenticeships.

3.  Immigration skills charge – from April 2017 Employers wishing to sponsor non-EEA workers in the UK will have to pay a new Immigration Skills Charge of £364 for small or charitable employers or £1,000 for large employers. It is as yet unclear the degree to which this will impact on the flow on skills from outwith the EU into the UK.

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