21 January 2022

Survey highlights skills challenge for manufacturing sector

Tracey Dawson

Results from the latest West and North Yorkshire Chamber quarterly economic survey indicate that a combination of inflationary pressures and recruitment headaches is slowing the pace of recovery. And, while global supply chain disruption is set to persist well into 2022, this is offset against a silver lining of growing sales and demand.

Despite a challenging overall picture, the further growth in markets both domestically, and now also in some international markets, is welcome news for manufacturers.

The survey polled 405 Yorkshire businesses including businesses of all sizes and in diverse sectors of industry. Manufacturers reported UK sales growth of 37% this quarter, up 20% since Q3, and export sales improving but still down on pre-pandemic levels.

Survey results point to ongoing challenges around supply of raw materials, rising costs from energy and labour shortages, and inflation increasingly coming into play this year.

Almost three-quarters of respondents expected to see rising prices in the coming quarter, up from 60% in the previous survey, and confidence of profitability remains on a knife-edge, down significantly from just 6 months ago (when it reached 60%) with just less than half (46%) of all manufacturers confident of breaking even in some part due to the inflationary pressure of supply chain cost rises.

“Underlying domestic demand does appear to be remaining strong, but in addition to increasing prices in Q1 2022, we’re as yet unsure just how much impact the Omicron variant, and the drag that ‘Plan B’ restrictions will have had on GDP, as this data predates these measures by a few week,” said Tracey Dawson, managing director of Daletech Electronics and chair of Leeds Manufacturing Alliance (pictured left).

Almost 80% of manufacturers in the region reported difficulties in attracting talent, a significantly larger proportion than in the services sector (68%). Intention to invest in training was also increasing, in part due to stalled or delayed training programmes reported in previous surveys.

 “Skills and recruitment challenges have been a key issue long before Covid came along. But we’re seeing labour shortages alongside record job vacancies; this is a major barrier to economic recovery with manufacturing businesses reporting hiring difficulties at all skill levels,” she said.

Despite the difficulties many firms report, West and North Yorkshire Chamber respondents to the survey were the most confident nationally, marginally ahead of wider Yorkshire area, and the Northern Powerhouse, and significantly up on the national averages.


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