Examination of Witnesses (Questions 360-379)
MR VIC EMERY AND MR IAN MCMAHON
1 APRIL 2008
Q360 Mr Davidson: Would you like to speculate?
Mr McMahon: My suggestion would be that most companies, if they want to stay in business, will find ways of trying to do more civil work to compensate for it, but if defence contracts disappear, a lot of companies will have difficulties. That would be my speculation, but I am afraid I am unable to quantify that. We have done no survey work which says to what extent defence related jobs are dependent, other than the SBAC work, which says that there are about 17,000 people involved in that, but it is difficult to bottom out to what extent defence contracts make up the workforces. It will vary from company to company.
Q361 Chairman: There is a lot of talk about flexible skills and transferable skills from one industry to another, that if people are getting a job in one place, then it should be easy for them to move to another job, but can you tell us how easy it is for workers with naval engineering skills to convert those skills for use in another engineering sector?
Mr McMahon: I mentioned earlier the current HNC in shipbuilding which we are sponsoring with the seven colleges involved in writing it, in fact the companies are involved in writing it. Our support is dependent on the fact that the skills which would be going in to making up the HNC in shipbuilding will be transferable into any other engineering industry. In other words, the units which will be studied will be ones that will be able to be used in other sectors. If I can give you some examples: welding principles, design analysis, fab-forming, fab-preparation, welding procedures and mathematics for engineering. While I am selecting from a large list of the units here which will make up an HNC in shipbuilding, all of those will be transferable into other industries and, as I say, our support for that is dependent on that. The fact that there will be a downturn after the peak loading for future aircraft carrier in the Scottish yards is not a surprise to us. Indeed the Scottish Marine Technologies Training Project, which we are working on, is virtually banking on it because what we are attempting to do is use shipbuilding as an entry route into the general engineering industry. In other words, the skills which are trained in shipbuilding will be maintained in the long-term to support the shipbuilding industry, but any excess workers in that industry will be able to find jobs in other industries. I think some of you may have seen the graph which explains that. I am happy to circulate copies of that if you wish.
Q362 Mr Devine: One of the interesting comments which was made to us yesterday was people were saying there is a severe skills gap in Scotland and if it was not for the fact of immigrant workers, the influx of Polish workers and such like, things would be much, much more acute. The point was made that as government we do not have joined-up thinking between schools, colleges, Further Education, universities and yourselves and I wonder if you agree with that. We had a superb example from Govan High School, basically they were targeting individuals not to sit highers or go and have five highers, but they were giving people skills and sending them out to apprenticeships and sending them out for training. They were concerned about this concentration on the number of people in fifth year who got five highers type strategy that they were running. I wonder what your thinking is on that.
Mr McMahon: My personal view, and what I am basing a lot of the work we are doing here on, is precisely that. Not everyone will want to go to university. They can focus on that and I think they should always have the aspiration to go to university.
Q363 Mr Devine: They should do.
Mr McMahon: What I am saying if is people have the capability to do it they should go in and have general training in industry, but then when they decide and become a bit more mature, they may want to move their way up the value chain. I am involved in the Marine Sector Skills Group for SEMTA, which is a sector skills council. The whole sector skills action plan is based on the ability for someone to come into the industry at the lowest level and make their way right to the top. You are sitting here with a prime example of Vic Emery who 40 years ago was a welder in the yard and is now the managing director of the company. That opportunity should be open to absolutely everybody.
Q364 Mr Devine: Was he any good as a welder?
Mr McMahon: I have no idea. I was not around 40 years ago!
Mr Emery: No, I was terrible!
Q365 Mr Devine: That is why you have moved on!
Mr Emery: Absolutely!
Mr McMahon: You can see what we are trying to do in terms of the skills action plan. We are trying to make it so that people can join the industry at different stages and make their way up through it and the companies do support them in that.
Q366 Mr Devine: Yes, but are we not getting to a situation—we are probably to blame for this as well as government—where if you do not go to university and you do not aspire to the top job, in some way you are a failure and yet what we had yesterday were people on the shop floor, cutting the first sheet of metal, seeing the ship being launched, great pride in what they were doing.
Mr McMahon: I can only agree with you wholeheartedly. As you have probably figured out by now, I have a reasonable passion for this industry, even though I have only been associated with it for three years but, at the end of the day, I sincerely believe in the opportunity that people should have to come in at their skill level but have the opportunity to learn right the way through the industry. It is not wrong that people are criticised for not going to university.
Q367 Mr Davidson: Can I follow that up because one of the points made to us when we met a number of the education providers was that with the emphasis on the Government target of 50% of youngsters going to university, the implication was if you did not you failed and having that target, and constantly trumpeting it, was in itself a disincentive to youngsters to look at skills and trade and so on, and having that target is unhelpful to recruitment in things like engineering and maybe ought to be revised in that sort of context. Does that seem unreasonable to you?
Mr McMahon: I suspect that is a decision which is way above my pay grade, but what I would urge is that there is a range of opportunity provided to people to come in at their capability level.
Q368 Mr Davidson: As somebody where part of your role is to try and get people interested in engineering, would you agree with that assessment that this emphasis on 50% going into university to some extent devalues alternative outcomes and is unhelpful? We were quite struck yesterday by how strongly that was expressed by the education providers and I wondered whether or not that was a shared view because obviously we will have to make recommendations in due course and we want to take some soundings about this.
Mr McMahon: Again, my view would be that it is not unhelpful in that Scottish Enterprise is also looking for people to come in through a university entry route. Naval architects are not going to start on the tools in the yard, they are going to start at university and do four years' training with the likes of the naval architecture and marine engineering department at the university. I think I am looking for a range of skills in terms of this particular industry, but getting the general message out that all work is good and by showing a range of job opportunities, we have the ability to go out and tackle some of the more difficult markets where there has been chronic under employment. I think it is valuable that we send out a message that effectively all work is noble and you should join the industry where you think you can add value.
Q369 Chairman: How are Scottish Enterprise and the Scottish Marine Technology Training Project supporting people to retrain and re-skill?
Mr McMahon: SMTTP is a catch-all title for a range of work we do within Scottish Enterprise. It includes the recruitment work, an example of which you saw at the beginning of the meeting, a tiny example because it is going to get a lot more vociferous than that over the next two or three years. It is through encouraging and recruiting people into the industry, to up-skilling the existing workforce and that is where we are going to bear, within Scottish Enterprise, our workforce development activities. The main companies are all being supported at the moment through our workforce development programmes and we are able to make grants towards their training activity in a variety of different ways and have done so and will continue to do so. In the new Skills Development Scotland there will be a budget set aside for training apprentices. In fact, there was an announcement yesterday which showed that more money was spent and directed specifically towards engineering and construction. Beyond that, the intention is after the peak carrier—again, the graph in front of you shows this—we would seek to get involved in the re-training of those workers, for long-term business in the shipbuilding industry as skills and techniques improve, business improvement techniques, but also retraining into other sectors as necessary. We tackle this. What we are effectively trying to do is create a skills pipeline, the ability to bring people into the industry, take them up to the maximum level of their ability, or if they choose to move to another sector, continue to support them there, a conveyer belt of skills from the ground level upwards.
Q370 Chairman: There was concern shown by BAE Systems and Thales about the shortage of qualified engineers with degrees for project management roles. Can you tell us what Scottish Enterprise is doing to fill that gap?
Mr McMahon: Again, that would fall into our workforce development-type activity. If they have people in the existing workforce capable of being trained up, then we can find ways of supporting that. That has already happened in Babcock and is something we would consider if approached to do this in BAE Systems as well. It is back to what I was saying earlier, we need people who are coming the university route as well as coming off the tools and learning to be frontline engineering workers. We need people to go to university, so I regard it as part of my role to excite people to join this industry. We still have a reputation for having an available workforce. We have had inward investments coming into Scotland to take advantage of the fact that we do have designers here. There is one sitting in the Pentagon Building you see over there, a Dutch company called Orca Marine who have set up and are now designing five ships from their office in Glasgow because they know they get the design talent here more easily than they can in the Netherlands.
Q371 Chairman: Is Scotland as proactive as England in generating these skills, if I asked you to draw a comparison?
Mr McMahon: I think we are as proactive as England, if not probably more proactive. I know our outcomes are substantially better. For instance, I am aware from some figures I was given late last week that in terms of outcomes, whereas the outcome level for Level 2 apprentices in Scotland is 75%, it is only 50% in England, and for Level 3 skills, whereas the outcome levels in Scotland are in the region of 75%, those in England are 60-62%, so we are getting higher achievement levels in Scotland than England and Wales is. I think we are every bit as proactive in terms of encouraging people into the world of work as the English are. I will make one comment and this certainly a very accurate paraphrase, from a guy called Nick Ranier, who is the outgoing HR Director for the Aircraft Carrier Alliance. When I presented to him in November what we were proposing to do he said that making sure there was adequate skills in place was one of the highest items on the risk register for the aircraft carrier and he said, "Thank God Scotland have got it sorted out because the rest of the UK certainly isn't even thinking about it yet".
Q372 Mr McGovern: Like my colleague Jim here, I was very impressed by the contribution yesterday from the Director and Deputy Director of Govan High School. He said that the percentage of people leaving Govan High School who remain unemployed had reduced from I think something like 37% to 21%. At the risk of stealing one of Ian's pet themes, why are there not more school leavers moving into jobs at BAE and Thales. Thales in particular was very surprised that they only take in something like three apprentices a year. I am sure BAE does much, much more than that, but why is it not more localised?
Mr Emery: Ian and I have had a number of discussions about this. We have a grading system for youngsters coming into our company. We have taken over 500 apprentices in the last five years. This year we are taking another 80 apprentices on. We have had applications from about 1,100 for 80 places, so there is a lot of competition. We put those through a first stage of screening and out of that we will probably get about 600 to select 80 from. We are concerned, and we have expressed this to Ian, that insufficient numbers are coming from Govan High School. It is a tragedy that school is on our doorstep and yet they are not that successful in gaining entry into our apprenticeship scheme. I believe this year there is a better strike rate than there has been in previous years, but that process is not yet over. What we have been doing is working with Govan High in order to screen the kids better, in order to get them better informed and make it attractive for them to come into our industry and move forward. We do have a better than 90% retention rate of our apprentices, so once they are in the majority of them like to stay. We would like Govan High to be high on that agenda but they need to get through the criteria to get into the system.
Q373 Mr McGovern: The reason I mentioned Govan High is because the Director was there yesterday and made a presentation, but I think St Thomas Aquinas is also in the area.
Mr Emery: Yes. On average there are about 15 schools that we draw from for our apprenticeship scheme.
Q374 Mr McGovern: Fifteen schools which are fairly local?
Mr Emery: Across Scotland, but most of them are local, yes.
Q375 Mr McGovern: Is the intake from St Thomas Aquinas equivalent to Govan High?
Mr Emery: I cannot answer that. I do not know the statistics, but I can provide that data to you. We have precise records on where all the girls and boys come from, I can provide that to you.
Mr Davidson: St Thomas Aquinas has got more in it than Govan High.
Q376 Chairman: We were told yesterday that there is more support for apprenticeships in England than is in Scotland, are you aware of this?
Mr McMahon: Yes. I can give you the precise numbers if you would like that. There is a very definite reason for it and I am happy to provide you with a briefing paper afterwards if a note of that would be useful.
Q377 Chairman: That would be very helpful when we are compiling our report.
Mr McMahon: The essence of it, however, is that in England the funding which is given for apprentices is then used to pay the college fees. In Scotland the college funding goes direct to the college, so effectively the colleges apply directly on behalf of the company and that money goes direct to the colleges, whereas the modern apprenticeship money which the companies get in Scotland goes direct to them and in England it goes to the colleges and the companies, so it is a bigger number.
Q378 Mr Davidson: We were told by somebody yesterday that they would get more money back if they were employing apprentices in England than if they were in Scotland. They way they looked at it was to say if we were just looking at the money we would take apprentices on in England rather than Scotland because we would get more support for them. They said they would not do that and so on and so forth, notwithstanding the point you have made—
Mr McMahon: That is exactly the point I am making, they would get more money but they would have to pay more money out to the colleges because in Scotland they do not give it to the college.
Q379 Mr Davidson: None of that came across to us when they were speaking to us.
Mr McMahon: I am happy to provide you with a briefing note on this because, as you would imagine, it is something which has been discussed over many years. There is a very detailed one page briefing on this.
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