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Automation and digitalisation could provide a route for economic success if the talent pool is limited, said Chris Coopey, head of manufacturing at accountancy association MHA.
The comments came after the release of the sixth annual MHA Manufacturing and Engineering report, produced with the IMechE and Lloyds Commercial Banking. The report found that three quarters of hundreds of manufacturers surveyed could not recruit appropriately skilled staff, while 20% have lost staff or are at risk of losing staff because of the vote to leave the EU.
The statistics show growing challenges for UK manufacturing, said Coopey. “If we as a country are going to struggle in providing our businesses with the talent they need, there has to be another solution,” he said.
“Investment in automation is one of the different routes,” he claimed. “If automation is going to take hold in the same way it has in Germany, the government should be proactive in firming up their industrial strategy to help businesses take that path.”
The “massive” skills gap issue will get worse if more EU nationals leave British firms, he said. Many workers have lost confidence in the UK or have left because of a drop in the pound’s value after the referendum, he added.
Despite uncertainty around Brexit, the survey found widespread optimism for the year ahead. In the past 12 months, 69% of manufacturers reported revenue growth, and 78% predicted growth in the next year.
However, with more than a year of negotiations with the EU remaining, businesses have not yet felt the full effects of Brexit. Some 94% of survey respondents said they expect further increases in production costs, and a growing number said customers would face rising prices.
The news came just days before the release of statistics from manufacturers’ organisation the EEF that showed that the UK climbed to number eight in the global manufacturing ratings. The 2015 data used predates the referendum but still serves as a reminder of the country’s manufacturing stature, said EEF chief economist Lee Hopley.
A brighter global financial outlook and more competitive currency are also reasons for cautious optimism, she added. However, she acknowledged the sheer number of key policy decisions still pending in Brexit negotiations and said the uncertainty could have an impact on manufacturers’ strategies.
“There is a lot that could go right and wrong in the next 12 to 18 months,” she said. “Lack of progress in negotiations would lead to concerns that we would be leaving the EU without a deal or a transition process. That would start to influence manufacturers’ decisions… that is not going to be good for the economy.”