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To meet the challenge posed by a chronic shortage of suitable recruits coming into the UK manufacturing sector 鈥� a key factor hampering growth 鈥� bosses are increasingly 鈥渦pskilling鈥� their existing employees.

At the same time a rapidly increasing number of manufacturing firms are seeing turnover and profits nosedive compared to this time last year.

These are two headline findings of the latest SME Manufacturing Barometer, a quarterly survey of the sector鈥檚 leading decision makers compiled by SWMAS (South West Manufacturing Advisory Service) and Economic Growth Solutions.

When asked whether it was more difficult now to find skilled and motivated people than it was 12 months ago, 54% reported it was either 鈥渕uch more difficult鈥� (24%) or 鈥渟omewhat more difficult鈥� (30%).

Just 4% responded that they found it easier to recruit now than a year ago.

In response to being quizzed about their growth aspirations, a fifth referenced an urgent need for certainty on Brexit, while worryingly 15% defined 鈥渟urvival鈥� as their 鈥渋mmediate aspiration鈥�.

Simon Howes of SWMAS said: 鈥淥verall, UK manufacturers are seeking stability in the face of this challenging business climate, and are developing people, processes and new products in order to overcome adversity.鈥�

Those who are still recruiting are finding this more difficult due to factors such as local talent shortage (26%), negative attitudes of candidates (16%) and unrealistic salary expectations (13%).

鈥淭his is a real problem.鈥� said Simon Howes. 鈥淲e are seeing some worrying signs that the lack of suitably skilled and motivated people could become the biggest shared issue for the sector in the near future.

鈥淏ut manufacturers never stand still and what we are seeing is manufacturing bosses taking a pragmatic approach and focusing internally instead, looking at what they already have by way of people, processes and products, and seeing how all three could be improved.鈥�

He added: 鈥淭his focus is reflected when you look at manufacturers鈥� staffing plans, with nearly 70% reporting that they will be deploying strategies to support the development of their existing workforces.鈥�

Turning to business performance, the Manufacturing Barometer found that while the percentage of firms reporting 鈥渕uch increased鈥� turnover and profits was broadly flat compared to previous years, the amount saying their turnover had 鈥済reatly decreased鈥� had spiralled sharply, moving from 17% to 31%.

Projected increases in turnover for the next six months revealed that just 51% believed they would see 鈥渕uch increased鈥� sales compared to last year鈥檚 64%, with 22% fearing their sales would be 鈥渕uch decreased鈥� 鈥� more than double last year鈥檚 10%.

Dean Barnes, Regional Director of Economic Growth Solutions, commented: 鈥淒raw a trend line through the reported findings across sales and profits and there is no doubt the swing in performance continues to move downward.

鈥淗owever, in unpacking the data in response to questions about staffing and recruitment, we can see that UK manufacturing business leaders overall are far from accepting doom and gloom and are deploying strategies to get their growth aspirations firmly back on track.鈥�

Back to staffing issues and the Barometer revealed that manufacturers are facing up to their recruitment challenges by investing in their existing workforces.

When asked: 鈥淲hat are your main staffing strategies for the next 12 months?鈥�, a quarter responded they would focus on 鈥渦pskilling existing staff through training鈥�.

Other strategies include 鈥淪taff retention incentives鈥� (15%), 鈥渓eadership management and training鈥� (11%) and 鈥渃oaching and mentoring鈥� (10%).

Just 12% said their main focus for the coming year would be 鈥渞ecruiting new permanent staff鈥�.

Simon Howes continued: 鈥淭he really interesting discovery here is that, to address the challenge of recruitment being limited as a principal growth strategy, manufacturers are taking proactive steps by investing in their existing people.

鈥淚n addition, they are looking at their processes to make themselves leaner as well as developing new products to boost sales and stay competitive.

鈥淲hen we include the introduction of new processes and people in review of these Barometer findings, we clearly see the importance that manufacturers must place on upskilling and retaining their current staff.鈥�

He added: 鈥淭hey know that their existing people are central to their business model if they want their growth strategies to succeed.鈥�