Our latest research reinforces the urgency for a multifaceted approach to skills development, and the importance of industry, government and educational institutions working together to meet the evolving demands of the sector.
Head of Manufacturing, Transport and Logistics, Barclays Corporate Banking
This report, produced in partnership with The Manufacturer, explores the ongoing skills shortage in UK manufacturing, its impact on growth and the strategic responses manufacturers are employing to mitigate these challenges. What are the biggest barriers to growth, and how can businesses confront this? As the industry continues to shift towards smart manufacturing and automation, the need to address the skills shortage becomes increasingly vital.
Our research shows:
According to the latest Office for National Statistics (ONS) figures, there are currently 61,000 manufacturing job vacancies in the UK, as of September 20241. While this figure has dropped considerably since its peak of 96,000 between March and May 2022, it is still significantly higher than it was in April to June 2020, when there were just 24,000 open vacancies.
But why are UK manufacturers struggling to recruit the talent they need at home and what impact is this having on their businesses? Our research reveals that manufacturers’ top three barriers to growth are all personnel related, be it not having the skills they need to succeed, difficulties finding the right talent and then struggling to retain it when they do.
What are UK manufacturers citing as their biggest barriers to growth?
| Shortage of skills | 75% |
| Recruitment | 36% |
| Talent retention | 32% |
| Supply chain disruption | 30% |
Our conversations with manufacturing leaders revealed consistent challenges in hiring and retaining skilled labour across the manufacturing sector. Several themes emerged, including difficulties in attracting young talent, competition with other industries and the need for more strategic recruitment and retention practices.
The perception of manufacturing as a less desirable career path was also a recurring theme. Efforts to reframe the industry’s image and engage younger generations were seen as crucial for addressing the skills gap. This reality is also highlighted by our survey, which found that 10% of manufacturers are not engaging whatsoever with the next generation of potential manufacturing talent.
Despite these challenges, some manufacturing organisations have found success by investing in local education systems and internal growth. One leader highlighted their partnership with local schools and universities, stating: "We are heavily invested in the local education structure”, which sees students spending time in our facility learning about the different roles within a manufacturing business, from the shop floor to R&D to sales.
Multiple manufacturers pointed to competition for digital skills with higher-paying industries such as finance and technology as a challenge. One respondent said: "We're battling against financial companies who are looking for the same skills as us but will potentially pay a lot more.” This is compounded with the perception of manufacturing as a less attractive career option, described by a participant as having a "stigma of being dirty, sometimes dangerous, when the reality is quite the opposite.”
of manufacturing organisations said they currently do not use the Apprenticeship Levy.
of respondents said apprenticeship schemes are their number one strategy to recruit skilled labour.
of respondents collaborate with education providers using apprenticeships.
The Apprenticeship Levy sees employers with wage bills larger than £3m a year paying a monthly levy of 0.5% of their payroll to fund apprenticeship training. Despite differing experiences, several recurring themes emerged from respondents, particularly around the challenges of the levy. Our research shows the biggest challenges for manufacturers are:
Despite these challenges, our research shows that there has been reported success in tailoring apprenticeship programmes to meet specific business needs, particularly from larger organisations. These companies have worked closely with educational institutions to shape the content of their apprenticeship offerings, ensuring that the training aligns with their operational requirements.
The apprenticeship levy was designed to address skills gap, but many manufacturers feel it has fallen short, failing to deliver sufficient value for their investment. However, it’s great to see that there have been examples of successes and positive experiences, largely due to organisations tailoring apprenticeship programmes to meet their specific needs.
Head of Manufacturing, Transport and Logistics, Barclays Corporate Banking
Our research shows varied experiences and perspectives on the role of smart technologies and automation in response to the manufacturing skills shortage. While some companies cite the skills gap as a primary factor for their increased reliance on automation, others attribute their adoption of advanced technologies to broader factors such as technological advancements, efficiency improvements, and operational safety requirements.
As a result of implementing new technology solutions, some manufacturers have also had to upskill existing staff. Technology could be seen to be creating more of a skills gap, rather than serving to plug the existing one.
Companies operating older manufacturing equipment face specific challenges when it comes to adopting automation and smart technologies. For such businesses, automation remains limited unless significant investments in new equipment are made.
While technologies, like automation, can resolve some skills shortages by taking care of basic or repetitive tasks, it often creates new demands. This underscores the shifting nature of skills needed in modern manufacturing, where expertise in digital and maintaining advanced equipment becomes increasingly important.
With 44% of manufacturers surveyed admitting the skills shortage has accelerated their transition to smart/advanced manufacturing, here at Barclays Corporate Banking we understand the importance of increased efficiency in a competitive environment. We offer a range of financing solutions that could support your business with adopting the advanced technologies needed to continually upskill your workforce – find out more below.
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Key takeaways
Manufacturers top barriers to growth: Skills shortages (75%), Recruitment (36%) and Talent retention (32%).
97.5% of those surveyed agree (48.1% strongly agree) that hiring and retaining skilled labour presents a challenge to the growth of their business.
91% of those surveyed agree (37% strongly agree) that their business is taking on more responsibility to train its workforce due to the scarcity of skilled labour.
80% agree (30% strongly agree) that digital skills are harder to acquire because of competition from other sectors.
75% are reskilling to address people/skills shortage, while 62% are undertaking shop floor efficiency drives and 49% are using automation more.
44% say the skills shortage has accelerated their adoption of smart/advanced manufacturing technologies.
About the research
This report, commissioned by Barclays and produced by The Manufacturer, explores the ongoing skills shortage in UK manufacturing, its impact on growth and the strategic responses manufacturers are employing to mitigate these challenges. The findings are based on an online survey of manufacturing professionals from a range of industry verticals conducted between June and July 2024, with additional qualitative insights gained by The Manufacturer through follow-up interviews.
1Department for Levelling Up, Housing & Communities. (2023, July 13)
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