It reported that 71% of respondents planned to increase spending on developing their people in a bid to unlock the ‘productivity puzzle’.
This outstripped the desire from companies to achieve productivity gains through increased investment in new capital and machinery (62%) or implementing computer software and systems (56%).
Stephen Peacock, head of the Business Growth Service, said: “The race to improve productivity has been widely discussed over the past twelve months and the findings of the Manufacturing Barometer clearly show that the majority of smaller manufacturers are prepared to increase spending to gain better performance.”
He added: “What is perhaps a little surprising is that increasing investment in skills is seen as a greater priority than capital and machinery. This shows the importance firms appear to be placing on ensuring they have the right people to grow their business and this spans from retaining key staff and employing apprentices, to continuously improving existing employees.”
The Manufacturing Barometer reflects the views of 529 senior leaders running SME manufacturers across England, employing approximately 16,000 people.
Half of firms reported increased sales over the last six months, with 47% saying they planned to take more staff on between now and the end of the year. The appetite for new machinery and premises fell by 4%, while spend on new technology remained cautiously steady with 46% of firms expected to increase spending in the next six months.
Peacock concluded: “There is a lot of global uncertainty at the moment, with exchange rate fluctuations, the falling price of oil and China’s economic performance posing significant questions over economic growth.
“This naturally cascades down the manufacturing supply chain and the smaller firms need to plan ahead to make sure they can cope with all scenarios, whether there is a general slowdown, delays on orders or sudden increases in volume as market confidence returns.”
