Tight profit margins and skills shortage are biggest challenges for UK Manufacturers

A major skills shortage, tight profit margins and the threat of low cost offshore manufacturing are the top three challenges for the UK Manufacturing sector this year according to a survey of 400 Interims Managers specialising in manufacturing, commissioned by Interim Management provider, Russam GMS.

86% of Interim Managers claimed there was an industry-wide skills shortage and over half believed that the greatest skills gap was in general management. One in five also thought that employees with change management skills were needed, and 18% felt there was a lack of good project management skills in the industry.

When asked what issues are worrying managers working in manufacturing the most at present ñ 35% stated that it was tightening profit margins; whilst 34% said that low cost off-shore manufacturing was the most significant threat. Increased EU regulations, a lack of skilled employees, rising interest rates and reliance on export markets were also causes for concern.

Interim Managers are however pretty optimistic about the future of UK manufacturing, a third of Interims are more optimistic about the industryís prospects in 2008 than 2007, 45% feel as positive as they did last year, whilst just 22% believe that the outlook looks worse this year.

Interestingly, this positivity could be attributed to the fact that 75% of Interims worked on projects in 2007 that helped business start ups or existing businesses grow and develop. This is a far higher percentage than Interims who worked on downsizing projects (36%) or in off shore or outsourcing projects (33%).

In terms of industry sectors, 51% of respondents felt the aerospace was particularly buoyant; 49% predicted that the pharmaceutical industry would experience strong growth; whilst 40% of Interims stated that both the food industry and the chemical industry were set for excellent growth in 2008.

John Wilson, Head of Manufacturing practice at Russam GMS comments, ìWhilst there are clearly challenging times ahead for UK manufacturers in terms of dealing with tough competition from overseas manufacturers and tight profit margins, Interim Managers are highly confident about the outlook for the sector and the fact that two thirds of their projects last year focused on business growth speaks volumes.î

ìOne cause for concern however, is the significant skills shortage which appears to be particularly pronounced at managerial level. Whist this is good news for Interim Managers in terms of generating good employment prospects, it is an issue that needs addressing now if UK manufacturing companies want to retain their competitive edge in the future,î he added.