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Recruitment expected to fall among SME manufacturers

Manufacturing recruitment is set to plummet as companies turn to investment in premises and machinery to maintain growth, a new report predicts.

The number of small and medium British manufacturers planning to increase staff numbers in the coming months has fallen to 30% – its lowest level for a decade – according to the latest national Manufacturing Barometer.

This comes against a background of flat sales expectations and profit predictions in the sector over the next six months. However, 44% of respondents reported that they have increased investment in new premises and machinery in the last six months, up on the previous quarter’s 37%.

Simon Howes

“We are seeing a 10 year low in plans to recruit new staff,” said South West Manufacturing Advisory Service (SWMAS) managing director Simon Howes, whose organisation published the findings alongside Midlands-based Economic Growth Solutions. Both are privately-funded organisations advising manufacturers on efficiency and productivity.

This trend, Howes suggested, could be down to uncertainty surrounding Brexit. However, he added that a struggle to recruit meant manufacturers faced the prospect of managing growth and meeting increasing customer demands with fewer people. “In this context their plans to focus on investment in new machinery, equipment, and premises ahead of creating new jobs, makes sense,” he said.

Results of the survey show that, while the number of manufacturers wanting to increase investment in their business will hold steady in the coming months, by this time next year half of small and medium UK manufacturers seek to have increased investment in machinery and premises. And in three years, 56% anticipate investing more than they currently do in their businesses.

Howes added: “If investment in automation and smarter equipment delivers more output with the same number of employees, a constrained labour market becomes less of an issue in the short to medium term.”

The Manufacturing Barometer also shows that in a year from now the number of smaller manufacturers expecting sales to increase stands at 59%. Twelve months on, 73% anticipate sales increases and three years from now the figure rises to 77%.

Economic Growth Solutions regional director Dean Barnes commented: “The pragmatic investment strategy of the UK’s SME manufacturers implemented while they weather the Brexit storm carries some risk.

“During this period, Brexit has stunted growth. However, some are also seeing new opportunities, taking advantage of this time to invest in new facilities and improve efficiency. As a result, the sector is looking towards a potential leap in the health of their businesses once we know the direction Brexit will take and confidence returns to their customers and distributors.”