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Amid growing discussion around industrial strategy, automation and productivity, two new reports suggest UK manufacturers are facing a more immediate challenge: finding people with the right skills to support future growth.
Recent reports from engineering and manufacturing skills charity Enginuity and manufacturing network Made in Group offer a snapshot of how SMEs across the sector are navigating a difficult landscape. While both reports reveal businesses that are ambitious and increasingly optimistic, they also highlight a long-running disconnect between employers’ workforce needs and the talent pipeline available to them.
A widening skills gap
Enginuity’s latest SME Snapshot, based on responses from 252 engineering and manufacturing businesses employing more than 10,500 people, found that six in 10 businesses had recruited within the previous six months. Of those, 80% struggled to find suitable candidates.
But the issue is not simply one of numbers. Employers are looking for technical capability, as well as for people who can communicate effectively, solve problems, work collaboratively and adapt to fast-moving environments. Six in 10 businesses said a lack of industry-relevant technical qualifications was the main cause of skills gaps, while 40% highlighted missing employability skills such as teamwork, self-management and communication.
Made in Group’s 2026 Industrial Strategy Report echoes many of the same concerns. Surveying 248 manufacturing leaders, it found that skills shortages are now seen as the single greatest barrier to growth, ahead of access to finance and technology adoption. More than half of respondents cited workforce and skills challenges as their most immediate obstacle.
Growth ambitions constrained by talent shortage
Despite these pressures, both reports point to a sector that is continuing to invest.
Enginuity found business confidence rising, with more than half of SMEs optimistic about the year ahead and growing investment in automation, capital equipment and productivity improvements.
Made in Group found that nearly three-quarters of manufacturers are already investing, or planning to invest, in automation and digital technologies over the next 12 months. Many also said they would invest further in growth, recruitment and workforce development if wider operating costs, and in particular energy costs, stabilised.
Taken together, the findings challenge outdated perceptions of manufacturing as a static or declining industry. Modern manufacturing is increasingly digital, data-led and innovation-focused, with careers spanning robotics, product design, digital systems, aerospace, advanced engineering and sustainability.
Yet while employers are investing in technology, many remain less confident in their ability to recruit the people needed to support that growth.
Beyond apprenticeships
Apprenticeships remain an important route into the sector, but neither report suggests they are a standalone solution.
Enginuity found that government plans to fully fund apprenticeship training for under-25s in SMEs would encourage only one in five businesses to recruit more apprentices. A third said it would make no difference, while almost a quarter do not currently employ apprentices at all.
Made in Group’s research points to wider frustrations with training systems that many smaller employers view as too rigid, bureaucratic and poorly suited to the pace of SME businesses. Just 3% of respondents described current training and apprenticeship programmes as flexible and accessible.
The picture that emerges is of a sector willing to train, invest and grow, but still facing significant challenges in developing a sustainable pipeline of future talent.
Enginuity will soon be launching its third SME Snapshot Survey, opening on the 24th June and running until 15th July 2026, and is encouraging SMEs to contribute to further the understanding of how skills challenges are being experienced in UK supply chains.
Building the future workforce
This is where early careers engagement becomes less of a “nice to have” and more of an economic necessity.
Both reports underline the importance of stronger links between education and industry, with Made in Group explicitly calling for earlier engagement to help address what it describes as a “leaking skills pipeline”. Too many young people, its report argues, leave education without a clear understanding of what modern manufacturing looks like or the opportunities it can offer.
That gap in awareness is exactly what Leeds Manufacturing Festival is designed to address.
By bringing employers, schools and young people together, the Manufacturing Festival gives students direct insight into the sector through employer events, workplace visits, careers panels and other industry-led activity. In doing so, it helps young people build a clearer understanding of what engineering and manufacturing careers involve, and the routes available to access them.
For manufacturers, recruitment challenges are no longer simply about filling vacancies; they begin much earlier, with awareness, aspiration and perception.
Manufacturers are clear that they are ready to invest in the future. The challenge now is to ensure that more young people can see themselves as part of it. Leeds Manufacturing Festival plays an important role in making that possible – opening doors to new careers while helping strengthen the talent pipeline the region’s future growth depends on.