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An Assessment of Skill Needs in Engineering

Connor H, Dench S, Bates P
Skills Dialogue SD2, Department for Education and Employment, February 2001

a DfEE Skills Dialogue Report

Despite the long-term decline in much of engineering manufacturing, there continues to be strong demand for engineering skills in the UK economy, especially in the fast-growing electronics and telecommunications industries. A number of engineering employers are experiencing difficulties in filling vacancies, mainly because of a shortage of people with relevant skills and experience. Skill shortages are apparent at all levels but especially at the higher end of the occupational spectrum, among professional engineers, and also in skilled (craft) trades, and in electronics/IT skills. The main skill gaps are in specific technical and practical skills areas but personal and generic skills are also in demand.

These are some of the key messages produced by the Engineering Skills Dialogue and presented in this report. The Dialogue is principally concerned with the demand and supply of skills in the engineering industry, though it also addresses engineering skills across the economy, but not in as much depth. It is recognised that the representation of engineering skills outside of the engineering industry is growing and that some of the issues relating to demand and supply of engineering skills in other sectors may be different from those in engineering manufacturing. This Dialogue provides some information on the broader picture but because of a lack of detailed statistical information in places, does not provide a full analysis. Also, there are noticeable differences between different engineering occupations and different engineering sectors, for example between electronics and mechanical engineering, which mean that specific supply and demand issues have more significance to some parts of the engineering industry than to others.

Engineering demand - a changing but diverse picture

Engineering skills are required across the UK economy in a variety of sectors and are used in many and diverse ways. It is estimated that around 2.5 million people are in occupations that have some engineering component, about half of which (1.3 million) are in substantially engineering occupations. The majority of those are found in engineering manufacturing, though a number of other sectors have substantial numbers.

The engineering industry as a whole has shrunk in size and, at the same time, experienced enormous structural change over the last few decades. One and a half million jobs have been lost since 1971, though the rate of decline slowed during the 1990s and a small increase of five percent was seen between 1995 and 1998. It is now a ‘leaner but fitter’ industry, and both productivity and output have been increasing in the 1990s. Despite all the upheaval it has experienced, engineering continues to make a significant contribution to the UK economy and to exports in particular.

The shape and structure of the industry has changed in many ways which have implications for skills. There has been a shift in the occupational balance towards the more highly skilled and educated. Jobs have become more demanding at all levels, and there is an increased use of cell and team working. There are now fewer large firms because of downsizing and more out-sourcing. Small firms in supply chains are taking on more responsibility for higher level and more complex work, which in turn is changing their skill mix and relationships with suppliers and customers. The trend towards mergers and the internationalisation of many large engineering businesses mean that operational and investment decisions are now taken more at a global level.

While there has been a lot of change there has also been continuity: the industry remains predominantly male, with very little part-time working or self-employment, and this is not expected to change much in the foreseeable future.

Engineering is a world of contrasts. It comprises one of the fastest growing and best performing sectors of the UK economy (the electronics sector) and also one of the weakest performers (the metals manufacturing, moulding and fabrication sector). The skill requirements and pattern of employment of electronics are notably different from that of many other engineering sectors. So too is the pattern in the engineering construction industry with its increasing focus on managing contractor organisations. Different engineering sectors are subject to different pressures, which in turn have implications for skills. Analyses of overall trends can mask important differences.

At a regional level, there are also considerable contrasts due to the varying composition of engineering, in terms of sectors, size breakdowns and occupation patterns, though all regions have some representation of all sectors of engineering. Key issues of strategic importance for engineering at a regional level, and priorities for regional organisations, will vary accordingly.

While, overall, engineering employment levels are broadly stable at present, the future is less optimistic on the whole. A reduction of 13 per cent in employment levels in the engineering manufacturing sector is forecast between 1998 and 2004. This will be felt differentially across the sector, and some sectors, such as electronics, are likely to continue to grow. In the wider economy, employment of engineering professionals is forecast to grow by over two per cent per annum to 2009 while a two per cent annual reduction is forecast in employment of engineering craft and metal working skilled trades.

However, despite these downward trends overall, there will continue to be a strong demand for training and job opportunities in engineering, as estimates of ‘replacement demand’ (ie to replace workers leaving due to retirements, career change, etc.) outweigh the negative expansion demand forecasts, at all occupational levels. Some of the largest numerical net requirements to 2009 in occupations of relevance to engineering are forecast to be in the corporate manager, science/tech professional and skilled metal/ electrical trade groups.

A change in skill needs too

A numbers of drivers of change are acting in unison to change skill requirements in a range of jobs. These include the increased use of technology, new materials and new processes throughout industry, an increasing emphasis on customers and meeting their requirements, new working practices, and the globalisation of many aspects of business. These demand higher level skills and education, and also greater breadth of skill and greater flexibility in the applications of skills.

A range of new and specific technical skills are required to meet the demands of technology and of the business, but also of importance is the greater emphasis employers put on personal and generic skills in all work areas. The key role of managers and supervisors, and the importance of their generic skills, are increasingly being recognised, though perhaps not sufficiently within many small firms. The role of first line manager/team leader has become increasingly critical, and requires a different mix of skills (both technical and communication skills).

Companies are having to change their skill mix, through upskilling of existing employees and recruiting at higher levels, at a time when some are experiencing job losses in areas where more traditional skills have been deployed. Several issues have been identified in the Dialogue as needing to be addressed including:

• the ability of the education sector to meet this need in terms of producing the ‘raw material’ that industry requires

• the ability of engineering to attract the highly qualified people it needs though offering appropriate employment packages, training schemes and satisfying career opportunities

• the development of the qualifications framework further, especially at NVQ level 3, to help meet industry’s needs better at the intermediate level.

While a lot of change is happening there is also continuity, and though declining, craft skills continue to be needed (in large numbers), along with the underpinning knowledge that goes with them.

Is supply adequate?

The number of engineering employees who hold a vocational qualification or at least a GCSE Grade C has risen significantly over the last decade, and now represent over 80 per cent of the engineering industry’s workforce. This compares with 66 per cent in 1988. 46,000 NVQ awards in engineering were made in 1998/99, a growth of 80 per cent over the previous five years. Annual output of first degree graduates in engineering and technology is just over 22,000, a similar level to 1995 though substantially higher than in 1988.

International comparisons show that, despite the growth in output from further and higher education, the UK is still deficient numerically at the intermediate level though on a par with most countries in terms of university engineering graduate output.

While the supply of engineering qualified people has been growing over the last decade, engineering has clearly not been getting its share of the growing student population. Engineering also has had problems in attracting people of sufficient calibre onto Modern Apprenticeship programmes Several reasons lie behind these supply problems, including:

• a failure to attract enough of the right quality of young people to study engineering, partly due to a poor image

• a declining interest in taking maths and physics at ‘A’ level

• continuing low take-up by women on engineering courses

• attractions of alternative options (especially studying IT)

• more encouragement given to young people to stay on at school than follow vocational routes which involve workplace training.

Engineering is also criticised for not developing personal and transferable skills sufficiently among graduates, losing too many of the most able students to other jobs (eg in IT, City) and also failing to utilise some of the engineering graduates appropriately and develop their skills.

Although a number of changes have been introduced to improve engineering education and put more emphasis on broadening skills and flexibility of provision, more could be done, for example in improving work placement opportunities available to graduates and undergraduates. However, an issue identified as having a negative effect on the quality of higher education is the difficulty many universities face in recruiting young engineering staff.

In-company training activity is varied: half of small engineering firms do not provide any training to their employees; and engineering employees at higher levels are more likely to receive training from their employers. The main barriers perceived by employers to providing more training are cost and access.

Skill deficiencies

The evidence from engineering employers shows that significant numbers have problems filling vacancies due to a shortage of people with relevant skills and experience, and that there are also areas of skill deficiency within the existing engineering workforce. These are at a range of levels, though more so in the higher skill occupations where demand is much greater.

It is estimated that around one in six engineering employers have hard-to-fill vacancies and these are found more commonly in the engineering areas: craft, technician, professional and managerial occupations. Two-thirds of all vacancies at craft and skilled operative level are hard-to-fill ones, and just over half of all vacancies at engineering professional level. Particular areas of difficulty identified include: design engineers, CNC programmers, electrical engineers, fitters, pattern makers and CNC setter/operator.

Difficulties are greater for engineering firms in filling vacancies at engineering professional level and in some engineering craft trades than for firms in the wider economy, with the exception of the construction industry which has the greatest difficulty. However, recruitment difficulties in engineering are more likely to be due to a shortage of people with the relevant skills and experience than to other reasons. Three-quarters of the hard-to-fill vacancies in professional and technician occupations reported by engineering employers were due to skill shortages.

Within engineering, electronics has greater recruitment difficulties at professional engineer level and in electrical/ electronic trades than other engineering sectors, though the picture is more similar in respect of shortages in other occupations.

Engineering employers find it more difficult to recruit people with technical and practical skills than other skills. These technical skills cover a wide range and often fairly generic terms are used, eg electrical, design. Limited evidence is available which explores the nature of these difficulties in detail. It would be beneficial in helping to understand more about skill gaps and their causes if they could be unpacked more, at a sectoral or local level.

Other areas of skill shortage are in generic and inter-personal skills, again covering a wide range. For technicians, IT and software skills are frequently mentioned, while among managers, there appear to be difficulties finding management skills. For craft, manager and sales occupations, communications skills are a problem.

Skill deficiencies in the existing engineering workforce are also evident, in particular in the engineering occupations cited above as causing recruitment difficulties. One in four engineering employers consider there is a gap between the skills of their current workforce and those needed to meet their business objectives. The nature of these skill gaps also mirrors those experienced in recruitment difficulties, with an emphasis on practical and technical skills, but the personal and generic skills are also mentioned. In particular, people management skills are seen to be very important at all levels and it is here that deficiencies are commonly reported.

Finally, skill deficiencies impact on engineering companies in different ways: primarily in the bringing of new products to market, and developing businesses, but also in their ability to meet customer service and quality objectives and operating costs. Around one-quarter to one-third of engineering employers are experiencing difficulties of these kinds because of skill deficiencies in their employees.

Conclusions

These findings have wide-ranging implications, many quite detailed and specific to particular sectors or skill levels. However, there are some important conclusions for engineering as a whole:

• There is a continuing, substantial need for training provision in engineering. Despite the long-term decline in much of the sector, there continues to be strong demand for engineering skills

• Within the broad picture, though, provision needs to match changes in demand, reflecting for example, the growing demand at engineering professional level and in electronics/telecommunications. However, even where employment is falling, such as in craft and lower-skilled occupations, replacement demand (to replace those retiring or changing careers) is strong. There is no justification for reductions in the overall level of provision.

• It is important that course content, curriculum and qualifications reflect the way skill needs are changing. A range of new and specific technical skills are required but education and training provision needs to reflect also the importance employers attach to personal and generic skills in all areas of engineering. This applies both to initial training of new recruits to the industry and to upskilling needed by those already working in it.

This has clear implications for publicly funded education and training and for providers. However, the industry itself needs to respond - for example, by improving work placement opportunities, by improving in-company training (particularly in small firms) and by continuing to work on improving the attractiveness of the industry.

An Assessment of Skill Needs in Engineering, Connor H, Dench S, Bates P. Skills Dialogue SD2, Department for Education and Employment, 2001.
ISBN: 978-1-84185-400-7. £free

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