Examination of Witnesses (Questions 974
- 979)
MONDAY 10 MAY 2004
MR MARTIN
TEMPLE AND
MS JANET
BERKMAN
Q974 Chairman: May I welcome Martin
Temple and Janet Berkman to our proceedings? You will know that
we have been conducting an investigation into the skills agenda,
because there is, as you know, a working party on 14-19 education
under Mike Tomlinson, a Government White Paper on skills, and
we are very interested in taking some of those main themes in
the skills area and developing them. It is very important to us
to have the Engineering Employers' Federation coming to the Committee
to answer some questions. You are, I always think, the authentic
voice of the manufacturing sector in terms of employers and so
it is very good for you to be here. Again, thank you. I wondered,
Martin, if you wanted to say a few words about where you see skills
heading at the moment from an engineering perspective or do you
want to go straight into questions? The option is yours.
Mr Temple: Good afternoon. We
would certainly welcome the opportunity to express our views and
thoughts on the issues for 14-19 year olds. I could make one or
two points. The whole education and skills agenda has really come
to the forefront now as an issue for manufacturing companies.
When you talk to our members, of whom there are over 6,000 and
we are dealing perhaps with 10,000 companies in terms of other
parts of our business, it does not take very long for the whole
education and skills agenda to come up in the conversation as
one of the key areas. At the heart of this is the issue of competitiveness
in a very tough global economy. One can look at all sorts of things
but the one theme that comes out is that it is the education and
the skills of our people that actually will deliver or not a competitive
business. Therefore, it is fundamentally important to us. Perhaps
beyond that statement, one could probably get into it and draft
the other issues that we would like to make in this area.
Q975 Chairman: What sort of sector
do we have these days? Is engineering in steady decline or has
it stabilised? What are we talking about in terms of the vigour
of the engineering sector at the moment?
Mr Temple: That is a remarkably
tough question in that we still have in the UK a very good manufacturing
sector but it is changing dramatically. For example, whilst companies
will still make products, building a business round those products
in some form of service is becoming as much a part of adding value
as making the product itself. There is a real metamorphosis taking
place in manufacturing, which sometimes makes people lose sight
of the fact that apparently service companies are very often at
the heart of making something as well. We are seeing a changing
world. There is, however, truth in the fact that it is under tremendous
pressure. We are losing jobs to overseas countries; we are importing
a lot of products. There are some real issues which relate to
the degree to which our manufacturing sector can thrive in the
future and the jobs it can sustain. I would like to think that
it is still good and strong and worth pursuing and supporting,
but it would be silly to ignore the fact that there are some very
big issues.
Q976 Chairman: It is a very diverse
industry, is it not, in terms of size and the different sectors?
It covers a multitude of production companies and units and so
on. By and large, deviating for a moment from British engineering
skills, do you think employers in the engineering sector have
been proactive enough in looking at future skills needs and going
out there in partnership or on their own and training for the
competitive conditions that you described?
Mr Temple: As usual, the answer
is both yes and no. We have a very large number of companies which
I think totally appreciate the need to develop the skills of their
people and, frankly, not surprisingly, those are typically the
most successful companies. The evidence shows that to be so. Regrettably,
there are companies that still do not fully appreciate and value
the benefits of good training, development of skills—ongoing
development of skills—and their own involvement, not only
in their workforce but in the community around them. These could
contribute a lot to the way in which skills, for example, and
FE colleges as well as group training organisations, can work.
They probably do not contribute enough to that. Hence, you can
see that those companies are probably going to be struggling in
terms of getting the quality of workforce they need to innovate
and thrive in the future. The answer is: there are a lot of very
good ones but, unfortunately, there are also too many that are
not good enough.
Q977 Chairman: The statistics that
I was given recently on employment in the engineering sector showed,
and correct me if this is wrong but I would like to get it on
the record correctly, that by 1970 there were 3.4 million people
working in the sector; by 1980, that had halved to 1.7 million,
but that it had stabilised around that figure, and so we still
have about 1.7 million people working in the engineering sector.
Is that right?
Mr Temple: That is right. I would
have put the figure at nearer 1.8 million. You are absolutely
in the right proportion there. Manufacturing is still a bigger
figure. It is just below 4 million, about 3.8 million being the
figure for manufacturing broadly. You find with most manufacturing
that engineering in its broadest definition tends to be at the
heart of that. It is still a very big sector. If you look at manufacturing
overall, it is still accounting for something like 60% of UK exports,
and so it is a very important part of our economy.
Q978 Chairman: Is it right that below
that there are far more smaller and medium-sized companies in
that overall total than there used to be as a proportion?
Mr Temple: Yes, I think that is
so. I cannot actually give you the statistics now but we do have
that information, should you require it. Essentially, that is
so. You are getting some very big critical mass companies, and
then you have the tail. The real problem that we have had—and
you talked earlier about the health of the industry—is that
there are the big OEMs and then the real danger area has been
the loss of the tier ones and the tier twos, which are the supply
chain to these people. We have had a growth in component purchase
over the last few years. There have been good points about that,
which have allowed these industries to be sustained in a very
competitive world, but the bad thing is that it has lost some
of those intermediate-sized companies. That does mean there are
vacuums out there which are going to be difficult to fill if we
ever need that. The question mark is over whether we will ever
need to do that and can we still keep playing in a global context.
Of course, most companies are building themselves in that way.
Q979 Chairman: The size of the industry
has stabilised in terms of 1.8 million over the sector, but it
has changed; there are many more smalls and mediums with less
ability to live off the high training performance of the bigger
companies that fed down to the smaller fish. What, as the Engineering
Employers' Federation, and indeed your training board which has
remained almost inviolate over this period, have you been doing
about getting the training right, or have you been fiddling while
these dreadful things have happened?
Mr Temple: That is a challenging
question. You talked about the stability of the workforce. In
fact, we would predict that by the year 2010 that workforce will
probably drop in what you might call the formal definition, if
you look at the standard SIC codes and the standard definitions
of employment within those. We will probably see another 200,000
drop in employment. The really interesting point about that is
that the skills requirements are consistently going up. Really,
we are going to want people with NVQ3 and above and approaching
60 or 70% of people are going to have those sorts of skills. Whilst
the numbers might go down still further, the demands on those
remaining people are going to be enormous. The point is that it
is not going to stop there; they are going to have to keep learning
and changing. It is going to be a very challenging area for those
people. I have not ducked the question. I will come back to what
we have been doing. We have been doing a lot. One key area is
that ourselves and EMTA, the name at the time, now SEMTA as the
Sector Skills Council, have had a strategic partnership over a
number of years now and we consider it absolutely imperative that
we work closely together on these issues. It was one of the stronger
NTOs in the days of NTOs. I think that is because we have worked
very carefully and closely together. We have had engineering apprentices,
if you like, for many decades, in fact centuries I suppose I should
say; it is part of the tradition. It is a fact of life that that
is still one of the best areas for apprentices, recently modern
apprentices but now no longer modern apprentices. This has still
been a very strong area of definition as to what manufacturing
industry wants. I think you also have to look what companies are
doing. In those companies to which I referred earlier that are
doing the right things in my view, you find tremendous in-house
schemes underway to train people for new skills to enable them
to take on new responsibilities. A lot has been going on. Today,
though, in the changes taking place, which in the context of 14-19
we generally embrace, we are trying to bring back, if you like,
more order and shape to a lot of those things in the modern context.
I think that is a very good thing because a lot of what has been
going on in companies has probably not been recognised in the
outside world as transferable, or even recognised as being done
at all. It is important that as people they exhibit transferable
skills as a record to others of what they have been up to and
what companies have been doing in this areaa.
Chairman: Thank you for that, Martin.
We will be coming back to many of those points in more depth.
Let us look at skills and productivity, the fact that our productivity
record compared to many of our major competitors is of concern.
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