Manufacturers invest in training to close the productivity gap

A major skills survey of UK manufacturers indicates thatthey are closing the productivity gap with their rivals, with almost half of the 3,000 companies surveyed saying that they had improved their productivity in the past year.

But the survey - published by EEF, the manufacturers` organisation, in a report called Skills for Productivity: can the UK deliver? - also reveals that many firms are preoccupied with cutting costs and are neglecting long-term process and production innovation. According to the report, this raises questions about the companies` ability to make lasting improvements to their profitability.

The survey - the first part of a two-part analysis of current and future skills, education and training in UK manufacturing - highlights the link between training and productivity, with two-thirds of companies quizzed saying that they had increased their training activities to boost productivity.

Another finding is that almost half of the firms plan to enter new markets to generate extra revenue and 23% cite this as a top priority for the coming three years.

According to EEF, the manufacturers face several barriers to improving their performance, including rising costs, a growing regulatory burden, a lack of clear information on training courses and providers, and difficulties in releasing staff for training and funding this training. Another common problem is attracting talented staff, with more than half of the companies expressing concern over finding the talent and skills they need.

Most companies acknowledge that their workforces will need to be better skilled if they are to compete more effectively in future. Complex supply chains and increasingly sophisticated and flexible production processes, coupled with the need to tailor production to customer needs, are placing heavier demands on all levels of staff. The UK compares poorly with competitor countries in the proportion of its people with technical and practical skills, the report says.

The survey shows that most of the firms surveyed had boosted their training budgets over the past 12 months and were planning to do so again over the coming 12 months, despite their margins being under intense pressure. The survey also reveals that companies which place more importance on their business plans than their available budgets when planning training, and target the right types of training across the whole business, get more out of their training efforts.

But there is also a tendency to devote a disproportionate amount of training budgets to non-production staff, leading to possible mismatches between the skills that companies need and the training they provide.

"This report demonstrates that increasing the amount spent on training is not enough on its own to improve performance," says EEF director general, Martin Temple. "The companies that are able to steal a march on their competitors are those with a business culture which clearly aligns their investment in skills and training to their overall business goals."

The survey reveals that almost two-thirds of companies which have adopted the Investors in People (IiP) standard - a framework for linking training to the business strategy and communicating this to employees - have seen an improvement in productivity in the past year, compared to 20% without the standard. In addition, just under 30% of companies with IiP had improved their profitability, compared to just over 10% without.

"We are very excited by this report as it shows what we have already seen to be the case: that a strategic approach to people development, linked to business planning, is an integral part of improving the productivity of any workforce," says Ruth Spellman, chief executive of Investors in People UK. "The IiP standard is a strong framework for supporting organisations to achieve this.

"There is good evidence from this work and our own research to suggest that companies who invest in their staff`s training and development enjoy lower employee turnover, higher productivity and improved staff morale," she adds. "All of these elements affect a company`s financial performance and can make the difference between business success and failure."