UK sub-contract manufacturers are recording strong post-pandemic order levels but remain concerned around the ongoing impact of supply chain disruption and shortage of skilled operators, according to a new report.
Based on an in-depth survey of stakeholders working across the UK sub-contract manufacturing industry, commissioned by
MSC Industrial Supply Co UK, 58% have limited or no capacity to take on further work, while a further 28% are operating at 50% capacity.
However, according to
The Subcon Report: What next for the backbone of British industry? a combination of inflationary pressures, disruptive supply chains and a challenging employment market all risk impacting the sector’s potential to truly capitalise on healthy order books.
In a bid to boost post-pandemic output, 44% of sub-contractors have diversified into new markets over the past two years, while four in five have signalled their intention to invest in new equipment over the next 12 months.
Despite an evident appetite to invest, engineering talent remains a major operational challenge for the sector, with 80% of those surveyed currently recruiting for at least one machine operator and only a third (34%) feeling they have sufficient in-house technical support.
Worryingly, significant time is lost dealing with a volatile supply chain. 77% of sub-contractors are spending up to four hours a week sourcing industrial supplies, and three quarters of those surveyed are having to deal with as many as five different industrial suppliers. As a result, nearly a third of UK sub-contract manufacturers (30%) feel their single biggest challenge is a lack of time to effectively manage their business.
Talent developmentJames Howarth, director of operations – MSC Industrial Supply Co UK, said: “The optimism and resilience of the UK sub-contract manufacturing sector is incredibly encouraging to see. However, our report also reinforced the need for new ways of thinking around talent development and supply chain management.
“The next 12 months will be critical for both the sector, and UK manufacturing as a whole. Yet, there are strategies sub-contractors can deploy today to help provide short and long-term support. Whether it be consolidating their own supply base and rationalising on and off-machine consumables, or partnering with organisations that go beyond transactional relationships and can help with outsourcing tool selection and design, programming, and process improvement; ultimately, the support sub-contractors need to more effectively manage the business may be closer than they realise.”
Charlotte Horobin,
Make UK’s region director – Midlands and East of England, added: “Sub-contractors are a fundamental part of the manufacturing sector, providing vital support and technical expertise right across the UK. It is clear they have the potential to grow further with demand being so strong but, in order to do so, they will need to invest to make the step change in capacity.
“Given the subdued nature of overall business investment, Government has a key role to play in providing a competitive tax system which encourages companies to invest and grow. With such a system in place it is clear that sub-contractors will continue to build on their success.”
Adam Tipper, managing director at
Next Gen Makers, added: “With a well-documented shortage of time-served engineers, it is no surprise to see so many sub-contractors recruiting for machinists and having to look for external technical support. Significant opportunity exists for sub-contractors to bridge skills gaps by growing their own talent through apprenticeship schemes. This would require following the lead of OEMs or established Tier One suppliers by taking a longer-term strategic view on skills, including skills gap analysis and succession planning."