27
businesses the ability to blend UK
and international talent at all levels.
Whilst most businesses do not want
a UK exit from the EU, some feel that
there will always be potential exposure
for investors to companies whose
clients are overseas, but, for Best in
Class Businesses, there is a protection
against any UK withdrawal in that they
will continue to be required for the
manufacturers reliant on them.
on them.
INCREASED
COMPETITION
Exit from the EU could make UK
companies less competitive in the
international market because of trade
barriers and tariffs making pricing
higher and less attractive and this is
an obvious concern. However, the case
for the UK government supporting
British engineering and continuing
to make beneficial arrangements for
it in the face of foreign competition,
would likely be very strong.
In terms of the national picture, although
large companies could enter new
sectors of the Precision Engineering
market, in practice, they have tended
to outsource the very specialist, niche
work which is frequently done by
the SMEs which make up over half of
the Precision Engineering companies
in the UK, as it is simply easier.
The likelihood of a substantial
number of smaller new entrants to
the market is limited by the high costs
and expertise required to establish
businesses in this field. Established
businesses in the sector also benefit
from embedded supplier relationships
which tend to engender very loyal
customers who rely on the quality and
efficient delivery of tried and tested
partners doing very specialised jobs
at which they are extremely skilled.
RESEARCH &
DEVELOPMENT
The Campaign for Science and
Engineering has recently stated that
“…one of the most important levers for
attracting private investment in R&D is
investing public funds in research…The
UK science base performs well in spite of
underfunding, but it is widely agreed that
this situation is unsustainable and that
investment is required to ensure future
strength.” Its recommendations for
improvement are that there should be
more, “public investment and improving
the environment and incentives for
private investment, collaboration and
efficiency.”
48
As part of the UK science
base, although Precision Engineering
is mainly concerned with refining and
production of parts that enable new
technologies, it would not be helpful to
UK Precision Engineering to be affected
by any decline in the reputation of the
UK for innovation and the development
of new technologies in the arena.
SKILLED LABOUR
According to the Royal Academy of
Engineering, “the demand for people
in Science, Engineering and Technology
(SET) occupations exceeds supply”. The
Academy calls this demand, “pervasive
across the economy”
49
and it has been
predicted that, “Engineering employers
are projected to need 1.82 million people
with engineering skills from 2012-2022.”
7
A 2014 CEBR report states that,
“Engineering enterprises are significantly
more likely than average to have hard-
to-fill vacancies at both professional
(31.7% compared to 17.6%) and skilled
trade level (24.8% compared to 12.6%).
These problems with hiring are having
deleterious effects on engineering
firms’ activities, with nearly half
(48.3%) of engineering enterprises
saying that hard-to-fill vacancies
meant they had delayed development
of new products or services.”
8
To meet the demand, recommendations
include; either a doubling of the number
of engineering graduates, or a 50%
increase in the number of engineering
and technology and other graduates
who are known to enter engineering
occupations and a doubling in the
number of advanced apprenticeships.
7
As part of a programme of items
designed to meet these demands, the
government is taking action such as
the extension of the Apprenticeship
Grant for Employers scheme and the
provision of £85 million in the financial
years 2014/15 and 2015/16 which will
fund over 100,000 additional incentive
payments for employers – particularly
small and medium-sized businesses
– to take on young apprentices.
2
Nevertheless, the consensus is that
more action is needed, although the
access of individual companies to
expertise and skilled labour depends
on their location, their in-house training
facilities and their success in projecting
their appeal as an employer to talent
in the industry. Those companies
who recognise these requirements
will have a head start in attracting
and keeping well qualified workers.
OBSOLESCENCE
New innovations and product
developments require regular upgrades
of machinery to stay efficient, to meet
timelines, standards and remain
profitable. New machinery may be
required up to every five years and
it can be costly at several hundred
thousand pounds a time, but without
it, competitiveness is reduced and
the possibility of the production of
inferior quality products or machinery
breaking down causing missed
deadlines and leading to reputational
and order loss becomes greater.
One new innovation which is quickly
becoming a reality is 3D printing, which
is a process for building complex, solid
objects by tracing out thin layers of
material.
50
In this field, it is actually UK
high value engineering companies that
are leading research and development
into meeting current challenges such
as limits on the size and geometry of
parts that can be made
50
and whilst
this would appear to be a technology
most suited to low quality, bulk
production, full prototype aeroplanes
have already been built using it.
This highlights the vital importance of
Precision Engineering companies keeping
pace with technological developments,
some of which could require adapting to
new business models. The significance
“The likelihood of a substantial number of smaller new entrants to the market is limited by the
high costs and expertise required to establish businesses in this field”
