Science and TechnologyWritten evidence submitted by The Society of Motor Manufacturers and Traders (SMMT)

Introduction

1. The Society of Motor Manufacturers and Traders (SMMT) is one of the largest and most influential trade associations in the UK. It supports the interests of the UK automotive industry at home and abroad, promoting a united position to government, stakeholders and the media. The UK automotive industry is dynamic and globally competitive. Our sector is a vital part of the UK economy with £50 billion turnover and £10 billion value added. With over 700,000 jobs dependent on the industry, it accounts for 11% of total UK exports and invests £1.3 billion each year in R&D. The industry plays an important role in the UK’s trade balance, with vehicle manufacturers exporting almost 80% of production. The UK is home to the world’s largest number of low volume vehicle manufacturers.

2. SMMT welcomes the opportunity to respond to the Science & Technology Select Committee’s inquiry into engineering skills. SMMT and the automotive industry is committed to ensuring that engineering skills provision within the UK meets the ever-changing and increasing demand of the sector, and calls on government to ensure that this provision is supported through sustained support and incentives for investment and an effective and comprehensive skills infrastructure. In this response, SMMT outlines some of the key challenges and opportunities for the industry in relation to engineering skills, in summary:

High-quality engineering skills are critical to the sector’s competitiveness and growth.

The industry employs a workforce with a range of levels of skills and itself invests and supports widespread up-skilling to meet present and future needs.

A shortage of engineering skills is present in the UK, automotive supply-chain companies find recruitment of engineers particularly challenging.

In addition, engineering graduates often lack the practical “hands-on” engineering skills applicable in a working environment.

The sector welcomes initiatives to encourage more engineers and to improve the image of engineering based careers.

Government ambitions for increased apprenticeship numbers are welcome and critical.

The National Curriculum must, from an early age, encourage the uptake of STEM subjects and communicate the related career opportunities , including practical experience through, for example, D&T.

The sector must not be inhibited from recruiting the best talent from abroad, whilst in the process of upskilling its domestic capabilities.

Engineering skills—critical to automotive

3. The UK automotive industry provides 719,000 jobs to the UK workforce, with approximately 139,000 employees directly involved in the manufacturing process. Engineering roles in the automotive sector are incredibly diverse, including positions in R&D, the supply chain, low and high volume manufacturers, through to positions in the aftermarket and retail sectors. The sector employs technicians and engineers with different qualification levels and specialisms (for example electrical or mechanical engineers), and is committed to training and up-skilling its workforce.

4. The success of the automotive industry in the UK is therefore heavily dependent on having access to a large, highly-skilled, and flexible talent pool that can cater for a diverse array of complex manufacturing processes. In addition, the fast pace of technological development within the automotive sector, particular with regards lower carbon technologies, requires a constantly evolving skills base in order for the UK to remain internationally competitive. In the last 18 months, the sector has committed over £5.5 billion worth of investment in the UK, supporting growth and creating jobs where skilled workers are critically needed. Whilst many of these large global companies who have committed this investment need skills, their extensive and growing supply-chains in the UK also need to ensure they have the engineering and other skills to be competitive and support a global industry.

5. The Automotive Council has set out strategic investment priorities for the move to lower carbon technologies, identifying five “sticky” or priority technology groups, where the UK has the potential for a significant return on investment, and which industry, government and R&D funding bodies should strategically exploit and support. The “sticky” technologies are: energy storage and management, electric motors and power electronics, internal combustion engines, lightweight vehicle and powertrain structures, and intelligent mobility.1 Ensuring that the mechanisms are in place to meet the ever-changing engineering skills requirements that these emerging technologies demand is of vital importance to exploit the UK automotive industry’s opportunities for growth. This is particularly pertinent for the UK’s ambitions to be at the forefront of the potentially high-growth ultra-low carbon vehicle market and low-carbon economy.

6. The automotive industry works closely with academia, Sector Skills Councils (SSCs)—SEMTA & IMI—and other bodies to seek to ensure future engineering needs are met. An example of this is SMMT’s work with the IMI to develop hybrid-electric vehicle technical qualifications.2 Whilst these initiatives can address some skills shortages, they do not address the fundamental issues around the strength of the UK’s engineering supply-base.

Engineering Skills—Addressing Skill Shortages

7. At present the engineering skills base in the UK does not meet industry needs, creating a real barrier to growth in the sector. 24% of companies within the SEMTA footprint recorded skills gaps in 2009,3 and over 60% of employers in the science, engineering and IT sectors have difficulty recruiting individuals with STEM skills. In addition, the science, engineering and IT sectors were the least confident of accessing highly-skilled employees in the future, with 66% of employers reporting they were not confident. Employment projections developed by the 10 SSCs that make up the UK engineering footprint estimate the requirement for employees over the next 5–10 years as an additional 2,217,500, highlighting the importance of addressing the shortfall in skills immediately.4

8. For many supply chain companies, the availability and quality of skills in the UK is a critical issue. A recent SMMT survey of automotive suppliers as part of the BIS mid-sized business growth review (companies with a turnover of £25 million—£500 million) revealed that 50% of mid sized supply chain companies surveyed felt that government did not assist their businesses enough in improving their capabilities and skills. Industry is keen to work with government to address this trend.

9. As aforementioned, the Automotive Council has developed key technology priorities for the UK industry. In addition, work has been done to develop strategies for growing and strengthening UK supply-chains. The demand for this shift to local suppliers was heightened by international tragedies, such as the Japanese tsunami and Thai floods. The increasing opportunities for suppliers already present in the UK to grow, or for new businesses to start or open sites in the UK, are very positive, but these businesses face major challenges with engineer recruitment, an issue which becomes ever more difficult further down the supply-chain.

Engineering Skills—Routes to Industry

10. The UK automotive industry welcomes engineers from both academic and vocational routes, and supports government’s recent focus on improving and developing the Apprenticeships scheme and uptake. However, industry believes more attention is needed to ensure that engineering students are equipped with skill-sets that are directly applicable for UK businesses. Anecdotal evidence from industry has illustrated that this issue is most widespread amongst engineering graduates, who often do not have hands-on experience with the right technologies/equipment and therefore require additional training. This skills deficit acts as a significant barrier to growth, particular for SMEs—many of whom are within the supply chain—who do not have the resources, either financial or otherwise, to support such training.

11. Industry believes that many undergraduate degrees would benefit from a work experience/vocational element. Providing engineering undergraduates with up to a year in industry as part of their course would be highly beneficial to the quality of engineers being produced, and their ability to be “ready-for-work” once their studies are completed. Feedback from members has shown that the students themselves often find this aspect the most valuable part of their degrees, providing them with “real-world” challenges for their academic studies.

12. If government is committed to revitalising and strengthening manufacturing in the UK, it should investigate the feasibility of incentives to encourage the take-up of engineering careers. For example, a reduction in an engineering graduates’ student loan, reliant on the satisfactory completion of a number of years of relevant work within the engineering sector, could be one such option.

13. Industry has a number of concerns over recent and proposed changes to the National Curriculum. The downgrading of the engineering diploma from five GCSEs to one is a retrograde step, out-of-sync with government’s stated intentions to rebalance the economy towards manufacturing. The downgrading of the diploma is likely to discourage its uptake, further decreasing the number of students studying engineering. The possible removal of D&T as a compulsory subject in the upcoming National Curriculum Review has also raised concerns within the automotive industry. Early exposure to engineering disciplines, such as those experienced within the study of D&T, is crucial in engendering enthusiasm for careers in manufacturing, and therefore for developing and sustaining a strong engineering base in the UK. SMMT supports the Design and Technology Association’s “Believe in D&T”5 campaign to keep Design & Technology as a subject on the National Curriculum, and as an option under the baccalaureate system. Industry calls on government to ensure that their ambition to rebalance the economy is communicated and applied consistently across departments, ensuring that positive initiatives from the Department of Business, Innovation and Skills are complimented by actions elsewhere.

14. The Apprenticeship scheme is another vital tool that must be utilised to increase the UK’s engineering skills base. It is critical that these schemes provide business with highly skilled, ready to work employees at all levels, and therefore increasing and improving the frameworks at Advanced and Higher level Apprenticeships is a must. SMMT and industry welcome recent government announcements committing additional funding to the programme, and call for continued long-term investment to ensure that the Apprenticeship scheme continues to grow in both quality and quantity.

Image of Manufacturing—Promotion of Engineering Careers

15. Careers within engineering and manufacturing have suffered from perception issues in recent decades, in part contributing to the current skills shortfall in the UK. Addressing the perceptions of learners, careers advisers and teachers at all levels of the education system is critical to increasing the uptake of engineering studies and apprenticeships, and ultimately growth in the manufacturing industries.

16. The “See Inside Manufacturing” initiative, introduced in 2011 by the Automotive Council and the Department of Business, Innovation and Skills, is one such scheme that has been effective in raising awareness of engineering and manufacturing careers. This scheme saw manufacturers across the UK opening their factory doors to students and careers advisors to showcase the variety of careers available in the UK automotive sector. Feedback from the initiative showed positive outcomes, with 95% of those surveyed stating that their knowledge about the careers and opportunities available in the automotive sector improved through attending the event, 82% stating that their perception of the career opportunities within the automotive industry has become more positive, and 82% of those surveyed stating that they are more likely to advise their students/contacts to consider a career in the automotive sector.6 Continued and long-term strategic government investment on such initiatives is crucial to attract the best and brightest into careers in engineering.

17. Ensuring that those that enter engineering studies stay within the discipline is a key issue that needs to be addressed in order to grow the UK’s engineering skills base. The Talent Retention Solution scheme is a positive programme that facilitates the recruitment and redeployment of those with engineering skills. However, more must be done to ensure that careers within engineering are available and attractive to those with the necessary skills. This is a particularly issue for women who study engineering. In 2009–10 nearly two thirds (64.2%) of men who graduated in engineering and technology disciplines entered employment within engineering and technology, whilst for women this figure is much lower at 45.8%. This trend is echoed amongst those who obtained a postgraduate qualification (59.7%—43.9%).7 Addressing the shortage of women who take up engineering careers will be a positive move in diversifying and upskilling the UK’s engineering talent pool.

18. As the UK takes steps to address shortages in the engineering skills base, increased recruitment from abroad will be critical to fill skills gaps and continue the growth of the sector. In 2009, 31% of high-tech manufacturing firms had to recruit people from outside the UK, owing to a lack of suitably qualified people within the UK.8 SMMT and its members have raised with government its concerns over the possible impact of immigration policy changes to the skills capabilities within their businesses, including highly-skill positions, such as engineering roles. The global scope of the automotive industry means that the UK is reliant on foreign investors, and these investors are reliant on their ability to recruit widely and stay competitive through such means as intra-company transfers, which should not be included within migration limits.

19. In order for the UK automotive industry to remain globally competitive, government must ensure provision for the building up of domestic engineering capabilities, to encourage more people into careers in engineering, and ensure that the UK stays open to transfers and recruitment across the globe. The £5.5 billion that has been invested in the UK automotive industry in the past 18 months provide a unique growth opportunity that must be utilised and exploited now, and ensuring UK companies have access to the widest talent pool is critical in fulfilling this aim.

June 2012