SMEs threatened by growing skills shortage

While apprentice recruitment was predicted to increase among 64% of companies, the shortage of skilled and experienced engineers and graduates was becoming an increasing challenge, with 65% of companies experiencing problems. This was described as "a national scandal" by Chris Coopey, head of MHA's Manufacturing Group. However, the survey also revealed growing optimism among SME manufacturers, supported by continuing investment in R&D and capital expenditure and an increase in recruitment, including a 13% rise in the numbers due to take on apprentices. An overwhelming 92% predicting growth over the next 12 months, almost half of these anticipating an increase of more than 10%. And more than half (59%) said they expected to see an increase in staff numbers in 2014 and 64% said they intended to take on apprentices or trainees. But MHA added: "Despite nine in every 10 small and medium-sized manufacturers predicting growth in 2014, more than half of these businesses [almost six in 10] still feel unable to pass on any increased costs to customers." The survey also revealed that 36% of the same businesses were unsure how they would meet the upcoming cost of pension auto-enrolment. MHA said: "Unsurprisingly, given the level of administration involved in auto-enrolment, almost six in 10 also say that 'red-tape' is getting worse, despite government pledges to reduce regulation." Coopey said: "The underlying trend is very positive for those small and medium-sized businesses operating in the manufacturing sector. It's possible that many had to restructure during the economic downturn and now they are reaping the benefits of improved productivity. For the time being most are looking to absorb any cost increases rather than passing them on, however, this is unlikely to be a sustainable option for the long term." For a copy of the full survey, contact Hannah Fish on 0207 429 4147 or Hannah.fish@mhllp.co.uk