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Future skills needs in the York, North Yorkshire and East Riding Local Enterprise Partnership Area

Transitional Area: East Riding

Engineering:Manufacturing Engineering

Beyond 2030 has produced this Report on behalf of Calderdale College and as part of the College’s delivery of the 2017-18 ESF funded Skills Support for the Workforce programme across the York, North Yorkshire and East Riding Local Enterprise Partnership Area.

June 2018

YNYER Future Skills Needs – Engineering Sector. Manufacturing subsector

Executive Summary

York, North Yorkshire and East Riding Local Enterprise Partnership (YNYER LEP) has commissioned a series of research reports, which will allow key decision makers to understand more fully the future skills needs of the YNYER LEPs eight identified priority sectors.

Engineering is extremely significant to the UK economy, contributing £433 billion in 2015, about 26% of total GVA. There are nine key industries in which engineering skills are fundamental. To note is that the built environment, manufacturing and IT and communications sectors have the greatest number of firms using engineering skills.

This report considers the manufacturing subsector within the wider engineering sector. This subsector of the engineering sector employs 47% of the sector workforce across the LEP.

Beyond 2030 spoke with 14 subsector employers across the area and relevant stakeholders such as the Institute of Engineering and Technology (IET), EngineeringUK, the Construction Industry Training Board (CITB), the Lifting Equipment Engineers Association (LEEA) and East Riding Council to inform this report, in addition to drawing on the sources mentioned in the bibliography.

Transitional Area of East Riding

East Riding has a resident population of 337,700 of which nearly 160,000 individuals are employed. Employment rates stand at 76.2%.

The East Riding economy is mainly based on agriculture and this, along with tourism, has contributed to the rural and seaside character of the area.

Large employment sectors include health and social work, manufacturing and retail.

Manufacturing engineering, East Riding

This report considers manufacturing engineering firms. Manufacturing engineering is a branch of professional engineering concerned with the

understanding and application of engineering procedures in manufacturing processes and production methods.

There are 1,220 manufacturing businesses in the area, that require engineering skills, employing nearly 14,000 individuals.

83% of the firms employ less than 10 individuals. Just 17% of those working in an engineering role are female, although there is variation

across the industries. The technical engineering roles have longer learning pipelines, which could account for the

fact that only 8% of those working in an engineering role are aged under 25. 21% of the workforce are over 55. With an ageing workforce and a poor pipeline of young people, the subsector could face

significant challenges in filling engineering vacancies moving forward. Firms are recruiting for a range of positions within the subsector, including a graduate design

engineer, welder/fabricators, CNC miller programmer and others. Skills gaps reported included production personnel, CAD designing and workshop engineer. A key area of training in the subsector is health and safety.

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Employment in the subsector is expected to decrease 16% between 2014-2024, largely because of increased automation. However, replacement demand means the subsector will have 30,000 job openings.

With a national shortage of engineers there is concern about the ability to attract skilled workers in the future. Young engineers seeking employment may not consider some of the industries in manufacturing particularly given that some of the sub-sectors are seen as glamorous and attractive.

Acknowledgements

Beyond 2030 would like to extend thanks to the employers in this subsector across the area and both local and national stakeholders such as Institute of Engineering and Technology (IET), EngineeringUK, the Construction Industry Training Board, East Riding Council and Green Port Hull programme, who provided their time and assistance in giving us valuable insights into the issues facing the subsector.

Beyond 2030 are indebted to Calderdale College for their guidance and support in completing this report.

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ContentsExecutive Summary...............................................................................................................................2

Acknowledgements...............................................................................................................................3

1 Introduction to the LEP and the research......................................................................................5

1.1 Engineering sector.................................................................................................................5

1.2 East Riding TA........................................................................................................................6

2 Engineering in manufacturing, East Riding....................................................................................7

2.1 Introduction...........................................................................................................................7

2.1.1 Subsector definition.......................................................................................................8

2.1.2 Engineering in East Riding..............................................................................................8

2.2 Engineering in manufacturing economy and employment....................................................8

2.2.1 Jobs people do...............................................................................................................9

2.2.2 Workforce characteristics............................................................................................10

2.3 Skills needs – Primary research testing the data..................................................................11

2.3.1 Recruitment.................................................................................................................11

2.3.2 What are the current skills needs and skills gaps?.......................................................12

2.3.3 Training........................................................................................................................13

2.3.4 Apprenticeships...........................................................................................................14

2.4 Future requirements............................................................................................................15

2.4.1 Sector growth..............................................................................................................15

2.4.2 Replacement need and total demand..........................................................................16

2.4.3 Qualifications...............................................................................................................17

2.4.4 Future roles and skills..................................................................................................17

2.5 Drivers of change.................................................................................................................18

2.5.1 Political........................................................................................................................18

2.5.2 Economic.....................................................................................................................18

2.5.3 Social............................................................................................................................19

2.5.4 Technological...............................................................................................................19

3 Annex...........................................................................................................................................21

3.1 Manufacturing SIC codes.....................................................................................................21

4 Bibliography.................................................................................................................................22

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1 Introduction to the LEP and the research

The York, North Yorkshire and East Riding Local Enterprise Partnership (YNYER LEP) has commissioned a series of research reports which informs key decision makers as to the future skills needs of eight identified priority sectors. These sectors are:

• Visitor Economy. • Food Manufacture.• Voluntary, Community and Social Enterprise (VCSE). • Health and Social Care. • Construction. • Engineering. • Agri-tech.• Bio Renewables.

As the economic and political situation changes, it is almost universally acknowledged that improved skills, not least because of the link to enhanced productivity, is a key way by which to improve economic well-being. Consequently, LEPs across England are looking at how best to support sectors with growth potential and which therefore may generate future wealth and prosperity.

In this research Beyond 2030 seek to understand fully the future skills needs required to ensure that within the YNYER LEP area, priority sectors can recruit and develop world class employees.

As well as wanting to understand the characteristics and future needs of the eight sectors, the LEP hopes to develop an understanding of the most significant subsectors in each priority area by geography.

1.1 Engineering sector

Engineering cuts across many industries including manufacturing, construction, information and communication, and energy. It plays a vital role in the UK’s economy, providing large-scale employment and physical exports, as well as implementing solutions to many challenges.

Engineers use skills such as science, maths and practical knowledge to design and build machines, systems, processes and structures. Engineers will generally specialise in one area, although many eventually further their knowledge to become a multi skilled engineer.

2018 is the Year of Engineering, which is a national campaign celebrating the world and wonder of engineering (HM Government 2017). Over the course of 2018, the campaign wants to shake-up people’s ideas about engineering, inspiring the next generation of innovators, inventors and problem solvers by showing them what engineers do.

This report considers the manufacturing subsector within the Transitional Area (TA) of East Riding. The subsector accounts for 47% of the engineering sector workplaces across the LEP, which is the largest subsector in engineering.

In this report Beyond 2030 sets out the skills and productivity of the area to provide context, before considering the subsector in further detail.

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1.2 East Riding TA

East Riding is located in the wider region of Yorkshire and Humber. It borders North Yorkshire, South Yorkshire and Lincolnshire and covers over 900 square miles. The Humber Estuary and North Sea mark its southern and eastern limits. There are few large settlements, with Beverley, Bridlington and Goole being amongst the best known. Around half of the population live in rural communities.

The economy is mainly based on agriculture and this, along with tourism, has contributed to the rural and seaside character of East Riding. The area has many historic buildings, nature reserves and the Yorkshire Wolds Way long-distance footpath.

The open and maritime aspects and lack of major urban developments have led to the county being allocated relatively high targets for the generation of energy from renewable sources. Easington Gas Terminal, owned and operated by Centrica Storage, is one of three main terminals that process gas from the UK Continental Shelf.

Goole is a significant dock area which serves as a significant employer in logistics and related sectors.

Bishop Burton is home to Bishop Burton College, a further education and higher education college specialising in agriculture and equine studies.

East Riding has a resident population of 337,700, which equates to 30% of the LEP’s total resident population (ONS 2017). Nearly 160,000 individuals are employed in the area. Employment rates stand at 76.2% (Table 1). The area has a growing and increasingly ageing population and deprivation is evident in some areas (East Riding Council 2016).

Using YNYER LEP as the standard, differences in the productivity, skills and employment across East Riding can be seen. Table 1 illustrates where the area performs better (green) or worse (red). For example, the job density is much lower in East Riding, as is the employment rate compared to the YNYER LEP area.

The economic inactivity rate is also much higher in East Riding (20.6%). While many of these are either retired, students, or looking after the home/family, it is worth noting that 24% (9,800) would like employment (ONS 2017).

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Table 1 Productivity, skills and jobs:

Measure East Riding

North Yorkshire

York YNYER LEP

England

Gross Weekly pay full time (£) (place of residence, 2016)

£498.30 £489.10 £509.60 £504.70 £544.70

Job density (the ratio of total jobs to population aged 16-64, 2015)

0.69 0.96 0.85 0.86 0.84

Employment Rate (Apr 16-Mar 17) 76.2% 80.7% 77.5% 78.8% 75.6%Self-Employment (Apr 16-Mar 17) 10.4% 13.9% 9.7% 12.0% 10.9%Full-time workers (employees) 66.1% 63.1% 62.7 63.8% 69.1%Unemployment Rate (Apr 16-Mar 17) 3.7% 2.9% 3.0% 3.2% 4.4%Economically Inactive (Apr 16-Mar 17)

20.6% 16.8% 20.0% 18.5% 20.9%

Level 4+ (Jan 2016-Dec 2016) 36.5% 35.9% 42.7% 37.5% 37.9%No Qualifications (Jan 2016-Dec 2016) 6.2% 6.5% 6.1% 6.3% 7.8%

Source: Office for National Statistics: LEP and National Labour Market Profiles; GVA for Local Enterprise Partnerships

2 Engineering in manufacturing, East Riding

2.1 Introduction

Manufacturing is one of the UK’s largest economic sectors. It accounts for 7% of the LEP’s workplaces, employing over 49,000 individuals. It has well established strengths in sectors such as engineering machinery, pharmaceuticals, aerospace, automotive and marine products, chemicals and electronics.

Manufacturing is a heterogeneous sector encompassing activities from those which require skill inputs of the highest order, to more mundane, more labour-intensive activities (Manufacturing Consortium 2012).

Manufacturing engineering is a branch of professional engineering concerned with the understanding and application of engineering procedures in manufacturing processes and production methods.

A manufacturing or production engineer’s primary focus is to turn raw material into an update or new product in the most effective, efficient and economical way possible.

Manufacturing engineering is based on core industrial engineering and mechanical engineering skills, with the added elements of mechatronics, economics and business management. The area is also involved with the integration of different facilities and systems to produce products. Manufacturing engineering is a very broad area which includes the design and development of products.

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2.1.1 Subsector definition

EngineeringUK, have defined the engineering sector using the Standard Industrial Classification (SIC) of Economic Activity and Standard Occupational Classification (SOC). SIC and SOC are a standard measure of activity used by government (ONS 2009).

Within the wider engineering sector, EngineeringUK have identified key subsectors, one being manufacturing (EngineeringUK 2017). For the following report, Beyond 2030 has used the same SIC and SOC definition. These are set out in the Annex.

2.1.2 Engineering in East Riding

East Riding are looking to adopt a strategic approach with key partners, such as the LEP, to help businesses achieve their potential (East Riding Council 2018). Manufacturing and engineering is considered to be a key sector in the area. In addition, the economic assets of East Riding also present opportunities in new sectors such as energy and the bioeconomy.

Offshore wind projects, such as Hornsea, have meant that the Humber area has seen significant investment. Siemens has invested in Hull to build its offshore wind turbine blade manufacturing, assembly and servicing facilities (Green Port Hull 2018). These investments have seen opportunities for growth in firms along the supply chain.

Engineering is seen as a growth sector in the East Riding and wider LEP area over the next decade (East Riding Council 2016, York, North Yorkshire and East Riding LEP 2014).

2.2 Engineering in manufacturing economy and employment

Across East Riding there are 1,220 firms working in manufacturing which require manufacturing engineering or engineering skills. Overall employment stands at 13,815 across these firms. (ONS 2017). This includes both engineering and non-engineering roles.

37% of the businesses in the subsector across East Riding are involved in engineering activities and related technical consultancy (ONS 2017). 13% manufacture fabricated metal products, 8% manufacture wood and wood products and a further 7% repair and install machinery and equipment. The remaining 36% of firms cover areas such as printing and service activities, manufacture of machinery and equipment, furniture manufacture, beverage manufacture and manufacture of chemicals and chemical products.

Firms in the area include:

SG Technical Systems Ltd http://www.sgtechsys.com/ Paul Kitchen Agricultural Ltd http://www.paulkitchen.co.uk/ DNA Products http://www.dna-products.co.uk/ Ecoframes Energy Savings Solutions Ltd http://www.ecoframeshull.co.uk/ Romica Engineering Ltd (UK) http://romica.co.uk/ Eco Engineering Installations Ltd http://www.eco-eng.co.uk/

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http://www.eco-eng.co.uk/

http://romica.co.uk/

http://www.ecoframeshull.co.uk/

http://www.dna-products.co.uk/

http://www.paulkitchen.co.uk/

http://www.sgtechsys.com/


83% of establishments employ less than 10 individuals in the subsector. This is an obvious issue when it comes to raising skills levels. This in line with the East Riding all economy where 85% employ less than 10 individuals. The subsector has few (4%) medium firms and no large employers. This is very important to any future work aimed at engaging with the subsector.

Figure 1 Size of establishments in the manufacturing engineering subsector

73%

10%

13%

4%

Micro (0 to 4)Micro (5 to 9)Small (10 to 49) Medium (50 to 249)

Source (ONS 2017)

2.2.1 Jobs people do

These manufacturing engineering workplaces include engineering jobs but also none engineering roles. Therefore, when considering the occupational groups of those employed in the subsector in Yorkshire and Humber and at the UK level, it is evident that individuals are employed across a range of positions.

The greatest difference in the proportion of employment for the subsector compared to the all economy occurs in process, plant and machine operatives. This occupational group accounts for a 21% of the workforce compared to 6% in the whole economy. The subsector also has a greater proportion of skilled trades occupations.

Table 2 Occupational groups in manufacturing engineering firms

Manufacturing (Y&H)

Manufacturing (UK)

All economy (Y&H)

Managers, Directors and Senior Officials 13% 12% 11%Professional Occupations 14% 18% 20%Associate Professional and Technical Occupations

16% 16% 14%

Administrative and Secretarial Occupations 7% 8% 10%Skilled Trades Occupations 17% 19% 11%Personal care services * <1% 9%Sales and Customer Service Occupations 2% 3% 8%Process, Plant and Machine Operatives 21% 17% 6%Elementary Occupations 10% 8% 10%

Source (Office for National Statistics; Social Survey Division; Northern Ireland Statistics and Research Agency. 2017)

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The job roles which have the greatest number employed in the manufacturing subsector across Yorkshire and Humber are shown below. Just two roles, elementary storage occupations and sales accounts and business development managers (highlighted) are not considered to be engineering roles by EngineeringUK.

Table 3 Top five jobs roles in manufacturing engineering firms, Yorkshire and Humber

Occupation Number employed 1121 'Production managers and directors in manufacturing' 22,0008111 'Food, drink and tobacco process operatives' 14,0009260 'Elementary storage occupations' 8,7005223 'Metal working production and maintenance fitters' 8,5003545 'Sales accounts and business development managers' 8,3005221 'Metal machining setters and setter-operators' 7,9009134 'Packers, bottlers, canners and fillers' 6,0008121 'Paper and wood machine operatives' 5,9009139 'Elementary process plant occupations n.e.c.' 5,7008133 'Routine inspectors and testers' 5,200

Source (Office for National Statistics; Social Survey Division; Northern Ireland Statistics and Research Agency. 2017) * not elsewhere classified

2.2.2 Workforce characteristics

The subsector has few women working in it, with just 24% of the Yorkshire and Humber manufacturing workforce being female.

Considering just engineering occupations in these firms, the proportion is even lower, with just 17% of those working in an engineering role being female. However, there are some variations across the industries. For example, 31% of the engineering roles in the manufacture of food products are filled by female workers, compared to just 8% in the manufacture of basic metals and manufacture of machinery.

Young people are underrepresented in the subsector compared to the whole economy. Only 8% are aged under 25, and 21% are over the age of 55 in the subsector. This compares to 13% and 18% respectively in the whole economy of Yorkshire and Humber.

Where the roles are more technical, the longer learning pipelines involved in the acquisition of the detailed skills might be one cause of low levels of young people in some of the industries.

But with an ageing workforce and a small proportion of young people entering the subsector, there are set to be significant challenges in future recruitment of engineers.

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Figure 2 Age profile of manufacturing engineering firms, Yorkshire and Humber

Under 25 25 to 34 35 to 44 45 to 54 55 to 64 65+0%

5%

10%

15%

20%

25%

30%

Manufacturing Workplaces All economy


2.3 Skills needs – Primary research testing the data

2.3.1 Recruitment

The majority of micro firms Beyond 2030 spoke with were not currently or were not expecting to recruit in the near future.

A medium sized manufacturing firm reported that they expected to be recruiting for HR management in the future. They operate in the rail and energy sector, with both areas experiencing growth. When Beyond 2030 asked them to consider how the skills of the workforce will change in the short term (5 years) they reported that they needed to consider the skills of older people. They see the need for older people to work but recognise that they may not be as fast as younger people doing the same role. Consequently, they are considering introducing flexible contracts for 3 and 4 day weeks.

Investigations on the British Engineering Jobs board (British Engineering Jobs 2018) showed roles in the following positions advertised across the area:

Graduate Design Engineer. Electrical Commissioning Engineer. Mechanical Commissioning Engineer. Welder / Fabricator. CNC Miller Programmer. Multi Skilled Maintenance Engineer. Applications & Sales Engineer (CNC Milling). CNC Centre Lathe Turner.

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Data suggests that once a vacancy is filled, the manufacturing sector does not have a problem retaining staff. In 2015, only 9% of UK manufacturing firms reported retention issues (UKCES 2016). Where there are retention issues it tends to be in skilled trade occupations and machine operatives and seems to be because there are not enough people interested in doing the type of work.

2.3.2 What are the current skills needs and skills gaps?

2.3.2.1 Skills levels Just 30% of the subsector workforce in Yorkshire and Humber hold a level 4 or above compared to 38% in the whole economy. 19% of the subsector do not hold a level 2 qualification.

Figure 3 Qualifications levels of manufacturing engineering firms

NQ

F Le

vel 4

and

abo

ve

NQ

F Le

vel 3

Trad

e ap

pren

tices

hips

NQ

F Le

vel 2

Belo

w N

QF

Leve

l 2

Oth

er q

ualifi

catio

ns

No

qual

ifica

tions

0%

20%

40%

Manufacturing in Y&H Manufacturing UK All economy Y&H


The variety of industries within manufacturing means that there are differences in the production processes and workforce skills requirements, including engineering skills. For example, the manufacture of pharmaceuticals or chemicals uses different processes than are evident in the operation of a food production line and consequently requires significantly different skills.

2.3.2.2 Skills needs / gaps At UK manufacturing sector level, 19% of firms report having skills gaps (Vivian, et al. 2016). This is greater than national average of 14%. Overall it is estimated that 7% of the manufacturing workforce have skills gaps.

Firms Beyond 2030 spoke with reported skills gaps in:

Production personnel. CAD designing. Workshop engineer level. Welding, turning, milling.

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Since manufacturing businesses depend on expertise in the technology of the product and of its production, technical competence is probably more strongly demanded in this sector than some others (hence the strong focus on STEM expertise).

2.3.2.3 Skills required From our work, Beyond 2030 suggests that the following occupations and skills are particularly needed and valued by employers in the area:

Technical skills (many cases as a time served apprentice or degree level qualification / accreditation).

o i.e. Mechanical Design Engineer.o i.e. BOAS (Boiler Operation Accreditation Scheme) accreditation for Electrical

Commissioning. Ability to work from drawings. CAD/CAM (Computer Aided Design & Manufacturing) applications. CNC (Computer numerical controlled) Milling. Working in confined spaces. Team worker. Health and safety training is a necessity for many roles working in the subsector, including:

o SMSTS (Site Management Safety Training Scheme).o SSSTS (Site Supervisor Safety Training Scheme).

2.3.3 Training

Across all sectors in the LEP, 65% of firms had funded or arranged training for staff in the previous 12 months, while across the UK manufacturing sector 63% of firms had done so (UKCES, 2016).

As a high compliance sector, employers are obliged to ensure that their staff undertake a range of training and development to ensure the safety of manufacturing sites. These are often around core areas such as health and safety and ensuring compliance with legislation (i.e. site operator’s licence).

Our primary research found similar conclusions in this area. A key area of training for employers in the subsector was health and safety.

Most firms Beyond 2030 spoke with, preferred providing on-site training. One firm reported that no-one external was able to do the type of production training required, so they have internally organised and delivered training.

Cost and time were the main drag factors on engaging non- mandatory training. In a robustly regulated sector, non-mandatory training is often overlooked.

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However, the solutions to these potential issues lies not just in training the existing workforce but also future workers. There are a number of initiatives aimed at specific sectors such as engineering to encourage future workers. For example, Women into Manufacturing and Engineering (WiME) is an initiative by Green Port Hull, Siemens Gamesa, Airco and Jobcentre Plus to encourage women to choose a career in these industries.

2.3.4 Apprenticeships

Engineering sector subject areas for apprenticeships include ‘engineering and manufacturing’, ‘information and communication technology’ and ‘construction, planning and the built environment’.

For this subsector report, Beyond 2030 have considered the starts on the subject area of ‘engineering and manufacturing’.

650 individuals started an ‘engineering and manufacturing’ apprenticeship across East Riding in 2016/17. This was in line with previous years’ performances.

Starts in this sector subject area accounted for 12% of all starts in the TA area: the fourth most popular framework.

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East Riding College With the help of £225,000 from the YNYER LEP, the Mechatronics Centre at East Riding College Bridlington campus opened in October 2017.

The Centre supports the innovative engineering pathway established through the HEAD into Engineering partnership – a collaborative agreement between Headlands School in Bridlington, East Riding College, A B Graphic International (a Bridlington-based multinational), and Derwent Training Association.

The Centre gives young people the opportunity to develop the practical and problem-solving skills that employers in manufacturing and engineering want.

Students obtain hands on experience in things such as programming Computer Numerical Control (CNC) Machinery.

Source (YNYER LEP 2017)


Table 4 Apprenticeship starts in East Riding

Subject Sector Area 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17Engineering and Manufacturing Technologies

820 550 580 660 630 650

ALL 6,040 5,010 4,830 5,360 5,070 5,390Source (DfE, SFA and E&SFA 2017)

In our primary work Beyond 2030 found support for the principle of Apprenticeship. However, no firms spoken with employed apprentices with just a third indicating they would like to employ or considered one.

However, micro firms report challenges relating to a lack of time, cost and finding interested candidates. This is not unusual and relates as much to the size of the firm as it does to the particular subsector.

2.4 Future requirements

2.4.1 Sector growth

Future workforce projections for the subsector1 are available at the wider region of Yorkshire and Humber rather than the North Yorkshire area but this still provides a useful indication of changes in the workforce moving forward.

Employment in the Yorkshire and Humber engineering: manufacturing subsector is expected to decrease by 16.0% between 2014 and 2024 – or by 29,000. This contrasts to the region’s all sector economy where growth of 3.9% is anticipated (UKCES 2016).

Employment will decrease across all occupational groups but particularly for skilled trades and transport and machine operatives (Figure 4).

1 Working Futures ‘Rest of Manufacturing’ SIC 13-25,29-33

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Figure 4 Engineering: manufacturing subsector occupational change, 2014 -2024 (000s), Y&H

Elementary OccupationsTransport and Machine Operatives

Sales and Customer Service OccupationsPersonal Service Occupations

Skilled Trades OccupationsAdministrative, Clerical and Secretarial Occupations

Associate Professional and Technical OccupationsProfessional Occupations

Managers and Senior Officials

-12 -10 -8 -6 -4 -2 0

Source: UKCES Working Futures VI

2.4.2 Replacement need and total demand

Despite net employment decreasing, the subsector will still have job openings. Replacement demand of 59,000 means that overall the subsector will have 30,000 job openings.

22% of all job openings will be within skilled trades occupations and a further 21% in managerial roles (Figure 5). Professional occupations, and associate professional and technical occupations, both account for 17% of job openings.

Figure 5 Job openings in the engineering: manufacture subsector by occupation 2014 - 2024 (000s) in Y&H

Man

ager

s and

Sen

ior O

fficia

ls

Prof

essio

nal O

ccup

ation

s

Asso

ciate

Pro

fess

iona

l and

Tec

hnica

l Oc

-cu

patio

ns

Adm

inist

rativ

e, C

leric

al a

nd S

ecre

taria

l O

ccup

ation

s

Skill

ed T

rade

s Occ

upati

ons

Pers

onal

Ser

vice

Occ

upati

ons

Sale

s and

Cus

tom

er S

ervi

ce O

ccup

ation

s

Tran

spor

t and

Mac

hine

Ope

rativ

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Elem

enta

ry O

ccup

ation

s-15

-5

5

15

Expansion demand Replacement demand Job openings


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2.4.3 Qualifications

The change in qualification levels of the workforce shows that there will be a shift towards more people holding higher qualifications (Table 5).

By 2024, 40% of people employed in the manufacturing subsector are expected to be qualified at level 4 and above (less than Yorkshire and Humber region all sector proportion of 47%), whilst the proportion of people with no formal qualifications or level 1 is expected to fall to 15%.

Table 5 Change in qualification profile of the engineering manufacture subsector, Yorkshire and Humber

No qualifications and level 1 Level 2 Level 3 Level 4 – 6 Level 7 – 8

Qualification example

GSCE (grades D – G)BTEC level 1

GCSE (grades A* - C) NVQ Level 2

AS & A level BTEC National

Certificate of higher education (L4)Foundation degree (L5)Bachelor’s degree (L6)

Master’s degree (L7)Doctorate (L8)

2014 level 2024 level

44,95523,351

41,56733,344

48,30434,529

38,51551,539

6,6828,532

2014 – 2024 % change -48% -20% -29% 34% 28%2014 % share 25% 23% 27% 21% 4%2024 % share 15% 22% 23% 34% 6%


2.4.4 Future roles and skills

The above Working Future projections demonstrate that there will be decline in the sector. But replacement demand means new workers will still be required. This workforce will become more highly skilled and with fewer low skilled roles.

Development of the ‘energy estuary’ in the Humber and its associated supply chain and infrastructure requirements will be a significant driver of this growth.

Employers have not necessarily identified any new roles developing in the next 6 years, rather they expect to be recruiting for the same sorts of positions as currently exist.

With a national shortage of engineers there is concern about the ability to attract skilled workers in the future. Young engineers seeking employment may not consider some of the industries in manufacturing as they may not be as attractive as some of the other sub-sectors. Industries with a greater proportion of older workers have concerns about replacing these skilled workers.

Firms moving towards greater autonomy/robotics and digitisation will see a reduction in monotonous jobs, but employees will be required to oversee control and supervision of the processes, while there will also be demand for new kinds of skills among engineering and technical employees.

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2.5 Drivers of change

2.5.1 Political

Leaving the European Union

Plans to leave the EU, following the UK European Union membership referendum in June 2016, has left the engineering sector facing an uncertain future.

The effect on inward migration particularly from EU countries could affect the sector’s ability to recruit and retain skilled staff and is by far the biggest issue employers have raised with us.

When the future regarding leaving the EU is clearer, companies will feel in a better position to make investment decisions. However, it is worth noting that most firms are small and so the impact of the referendum is not being felt at these macro levels relating to investment decisions, however skills shortages is a very big issue and will be a real challenge for future policy makers.

Legislation / Regulations

Regulation and Governance issues are particularly significant for industries involving potentially dangerous or polluting materials – e.g. Chemicals, Oil and Gas, Pharmaceuticals, etc.

Employers are not expecting there to be significant new legislation in the next few years, rather they are anticipating many current standards to move from EU legislation into UK law.

Government Policy

2018 is the year of engineering (DoE, et al. 2018). Ministers from across government are joining forces with engineers, industry experts and hundreds of businesses to change perceptions around engineering – and highlight the scale of opportunity that careers in the industry hold for young people in the UK.

2.5.2 Economic

Rising Costs

The whole subsector is affected by rising operating costs, for example raw products and materials are almost universally rising in price. Consequently, resource management and budgetary controls are important and will become more important in future years.

Interest Rates

November 2017 saw the first interest rate rise in over a decade from 0.25% to 0.5%. While this this interest rate increase will have little to no immediate impact on the sector, any further future raises will have an impact.

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Wage levels

The National Minimum Wage (NMW) was first introduced in the UK in April 1999 at a rate of £3.60 per hour for over 21-year-olds. Prior to that there was no statutory minimum. In April 2017 the National Living Wage (NLW) was £7.50 per hour for those over 25 years old, increasing to £7.83 in April 2018. It is expected to rise to at least £9 per hour by 2020. The impact of this is likely to be significant on some industries in this subsector that employ a greater employer of lower skilled occupations, such as food manufacturing.

Labour availability

Following the recession, the economic situation across the UK and North Yorkshire has been improving. Unemployment rates in the area have declined from a high of 7.5% in 2011 to 2.3% at the end of 2016 (ONS 2017).

Demographic changes mean that there are fewer younger people entering the job market, which has an adverse effect. Employers need to find ways to attract and then retain staff. Recruitment is an important issue across the subsector.

2.5.3 Social

Perception

There is widespread misunderstanding of engineering among young people and their parents. But encouragingly young people’s perception in engineering has become more positive in the last 5 years. The proportion of 11-16-year olds who would consider a career in engineering has risen from 40% in 2012 to 51% in 2016 (EngineeringUK 2017). However, too few young people are deciding to continue to study STEM subjects that keep the doors open to engineering careers limiting the number who ultimately will be able to enter highly-skilled engineering careers.

Effective careers education and interventions during school are vital to develop more informed careers thinking. The engineering sector is taking strides in increasing awareness of STEM subjects and campaigns such as the ‘Year of Engineering’ will help.

Consumer needs

New product development is a massive opportunity for businesses. There are several consumer trends shaping product development, including ‘free-from’, health foods, vegan and plant-based foods, and niche specialities such as snacks and craft beers within food and drink manufacturing.

2.5.4 Technological

The growing role for digital technology in design, process control and production and the implementation of big data, cyber-physical systems, the internet of things and cloud computing represents a significant opportunity for engineering firms to evolve and compete in the future.

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The Institute of Engineering and Technology (IET) reports that 78% of businesses believe that digital technologies and automation in the sector will advance rapidly in the next ten years (IET 2017).

Industry 4.0

Industry 4.0 (the fourth industrial revolution) is the next phase in the digitisation of the manufacturing sector. It is being driven by four key areas (Baur and Wee 2015):

The rise in data volumes, computational power, and connectivity. The emergence of analytics and business-intelligence capabilities. New forms of human-machine interaction such as touch interfaces and augmented-reality

systems. Improvements in transferring digital instructions to the physical world, such as advanced

robotics and 3-D printing.

The fourth industrial revolution takes the automation of manufacturing processes to a new level by introducing customized and flexible mass production technologies. Machines will operate independently or cooperate with humans in creating a customer-oriented production field that constantly works on maintaining itself. The machine becomes an independent entity able to collect data, analyse it, and advise upon it.

Nine technology trends form the building blocks of Industry 4.0 (Scalabre 2018):

Big data and analytics. Autonomous robots. Simulation. Horizontal and vertical system integration. The industrial internet of things. Cybersecurity. The Cloud. Additive manufacturing. Augmented reality.

Smart factories are a key feature of Industry 4.0. With firms adopting Industry 4.0, the workforce will be expected to possess new skills in the domain of information technology, data analytics.

Automation

Automation will continue to have an increasing impact in the subsector. For example, in the manufacture of food, 63% of firms report having some level of automation (BDO, 2017). Some companies have been slow to adopt automation and upgrade production lines due to the downtime and retraining period needed. However, 51% of food and drink manufacturers were looking to increase their investment. Increasingly food and drink manufacturers will rely on engineers and technical skills to keep a factory working rather than filling it with lots of low skilled workers.

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3 Annex

3.1 Manufacturing SIC codes

Manufacturing 10.13 Production of meat and poultry meat products10.2 (all) Processing and preserving of fish, crustaceans and molluscs10.3 (all) Processing and preserving of fruit and vegetables10.4 (all) Manufacture of vegetable and animal oils and fats10.5 (all) Manufacture of dairy products10.6 (all) Manufacture of grain mill products, starches and starch products10.7 (all) Manufacture of bakery and farinaceous products10.8 (all) Manufacture of other food products10.9 (all) Manufacture of prepared animal feeds11.0 (all) Manufacture of beverages12.0 (all) Manufacture of tobacco products13 (all) Manufacture of textiles14 (all) Manufacture of wearing apparel15 (all) Manufacture of leather and related products16 (all) Manufacture of wood and of products of wood and cork, except furniture;

manufacture of articles of straw and plaiting materials17 (all) Manufacture of paper and paper products18.1 (all) Printing and service activities related to printing19 (all) Manufacture of coke and refined petroleum products20 (all) Manufacture of chemicals and chemical products21 (all) Manufacture of basic pharmaceutical products and pharmaceutical preparations22 (all) Manufacture of rubber and plastic products23 (all) Manufacture of other non-metallic mineral products24 (all) Manufacture of basic metals25 (all)Bar 25.40

Manufacture of fabricated metal products, except machinery and equipment

28 (all) Manufacture of machinery and equipment n.e.c.31 (all) Manufacture of furniture32 (all) Other manufacturing33.11 Repair of fabricated metal products33.12 Repair of machinery33.19 Repair of other equipment33.20 Installation of industrial machinery and equipment71.12 Engineering activities and related technical consultancy71.20 Technical testing and analysis72.19 Other research and experimental development on natural sciences and engineering

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