20 DEBATE
Roy Barry
Christine Hart
Andrew Jack
There is a need to
look for new supply chains as we move from petrol and diesel into electric and hydrogen
John Woodruffe Paul Jones
Nadeem Memon Continued from page 19
We hear a lot of about the cost of living crisis. There is a cost of manufacturing crisis that we don’t hear about. UK car production has halved in the last five years. In 2017 we made 1.7 million vehicles or passenger cars. Last year we made just over 850,000, so that shows the scale of decline.
There are real challenges. The semi-conductor shortage has a real knock-on effect down the supply chain. The further down the more ‘stop-start’ it is. Some of the Tier One, Tier 3 companies are really struggling. The workforce comes in in the morning and suddenly they hear, ‘we don’t need these parts today’.
However, let’s be positive, there are some real opportunities as well. We’ve had a bit of a perfect storm. Brexit has undoubtedly made things more difficult, more expensive. There is increased friction, we are seeing it and people are having to be creative to find solutions around it as we heard earlier,
Nobody foresaw Covid coming and the impact of that, but what it has done is make people prioritise supply chain security over ultimate piece part price. Something may be a couple of pounds cheaper the other side of the world but it is academic if you can’t get it.
We’ve also got this huge disruptor in our industry, the drive to net zero. There is a need to look for new supply chains as we move from petrol and diesel into electric, into hydrogen.
Professor Allan Rennie
In the future we’ll be looking at the carbon footprint of vehicles and that also drives you to a shorter supply chain.
Put all these things together and there have to be opportunities going forward to grow the supply base in the UK. We’ve got a real hotbed of activity in Lancashire. It is right at the forefront of the fourth industrial revolution. There are companies here doing great things.
CH: We’ve found our manufacturing clients have had to be a lot more creative in terms of their labour and their recruitment processes. It’s recognised throughout industry that there is a labour crisis and a skills gap in relation to manufacturing in particular. Agile working has become much more important. Employees need to be skilled in wider areas of work.
JW: A lot of our clients are buying thousands of components from all over the world. They can’t wait for them all to arrive on site before they start to build and assemble.
They are looking at some parts coming in on a six or nine-week lead time. Six or nine weeks later they ring up the supplier and are told it is going to be another couple of months before they will arrive.
Suddenly they have so much work in progress, cash tied up and they can’t invoice. There is a major concern a lot of these companies are going to run out of cash.
David Gorton
DG: There is also the interest rate problem with current rates hitting people who have got cash flow tied up. Energy costs are also very significant. People are saying their energy cost rise is greater than their profit for last year and asking what on earth are they going to do.
AR: On the skills shortage side, we have seen that there are more jobs available than there are graduates coming onto the market, so employability stats are extremely high. This afternoon we’ve got 85 employers on campus for a careers fair. That’s higher than we’ve ever had before, and they’re all coming in looking for engineers.
Our graduates tend to migrate to some of the larger organisations, so they’re missing out the SMEs. From what I see they would get a more rounded experience of the market in an SME. The thing that is missing is the research and development.
We are seeing a lot more degree apprenticeships and organisations are supporting them through their own processes and developing that talent directly.
There are reports that £2bn of the apprenticeship levy is unspent and that needs to be put into the supply chain to bring on the skills development of SMEs as well.
JW: Net zero is a massive challenge. The biggest opportunity to reduce your net zero contribution is to source all your products from the UK. To re-shore we need to bring skills back into the UK, that must be long-term, it has got to be a bigger plan.
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