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Steel yourself for dramatic changes

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Fears over Tata Steel highlight a deeper problem in UK manufacturing – a shortage of highly-skilled workers

The UK’s steel industry is balanced on a knife-edge. At the time of going to press more than 5,000 jobs could be gone in a matter of weeks, depending on the decision of Tata Steel as to which bidders will go forward in the sale of its UK steel operations.

Workers have marched in London holding ‘Save Our Steel’ placards, the Daily Mirror has launched a petition calling for government intervention, and Unite warns that the wrong decision could cause the UK’s entire steel production industry to fold within a year. There is no doubt that the choices to be made will affect the economy massively.

The manufacturing industry employs around 2.6 million people in the UK. However, as a contributor to economic performance it has declined dramatically since the 1970s, when it made up 30% of GDP. Now it only makes up 12%.

Steel industry setbacks could have an effect on the entire British economy, according to Owen Goodhead, MD of Randstad Construction, Property & Engineering. “How will we have a car industry without steel? How can we have aircraft carriers without steel? How will oil and gas jobs and rail jobs be sustainable without steel?” he asks.

“This country produces too little steel and too few skilled people to feed our industrial economy, and this combination is forming a growing skills crisis,” he adds.

There are fears of an upcoming ‘skills crunch’, where there will not be enough individuals in the UK with the skills required to work skilled manufacturing roles. Increased automation means more low-skilled workers could find themselves out of work, and a lack of STEM (science, technology, engineering and maths) talent threatens the ability to find highly-skilled workers.

This lack of necessary skills is already negatively affecting the manufacturing sector, according to assistant director of research for UKCES, Carol Stanfield. “This includes the complex project management required to manage factory-to-site planning and delivery; marketing skills to grow the market; design and IT skills; and collaborative skills to enable staff of different disciplines to work together for the first time,” she tells HR magazine. “While automation may decrease the number of jobs in some areas, it also offers opportunities if the skills and strategies are there in other areas.”

The middle of the labour market has not disappeared in the face of technology, it has just become more skilled, according to Neil Carberry, director of employment and skills policy for the CBI. “Skills are the currency of the 21st century labour market,” he says. “The jobs themselves have changed, and a ‘new middle’ has formed. In manufacturing it’s technicians, and we have a massive shortage.”

Jason Mackerness, personnel manager at Vauxhall’s Luton van plant, warehouse operation and customer call centre, says that the skills crunch is an issue affecting all of the manufacturing industry, beyond steel. “For a long period of time in the UK we haven’t had the right focus on the skills we need when it comes to training,” he explains. “We have had to concentrate on recruitment for a number of years to maintain our market position.”

Another manufacturer dealing with the skills crisis is Rolls Royce. The business employs more than 23,000 people, which is around one in every 300 jobs in the UK. Paul Broadhead, its head of community investment and education outreach, explains that companies should be focusing on building skills needed for their entire industry, not just for themselves. “We go into primary and secondary schools and universities to encourage children into STEM subjects, in order to mitigate the skills gap in the future,” he says.

“There’s no point in us just creating talent and building skills for Rolls Royce if our supply chain doesn’t have the people it needs too,” adds Broadhead. “Our success is dependent on theirs, and when they experience setbacks so do we.”

While the government talks of devolving power to cities outside London, the economic future of such places is in jeopardy when manufacturing is threatened. The number of manufacturing jobs is highest in the East Midlands, where it accounts for 12% of employment. This means any decline in manufacturing in the UK hits the north far harder than it affects the capital.

Nowhere is this exemplified more than in the steel industry. Randstad’s research found that the sector employs 34,500 people, of which 54% work in Yorkshire and the Humber or Wales.

Chris Murray, director of Core Cities (an advocacy group of large cities in England outside Greater London) explains that local economies can become dependent on a large employer if their area does not have a diversity of industries.

“If there is one major employer in an area dominating the skills and labour market the population might not be able to adapt to economic changes,” he warns, citing Detroit as an example. Between 2000 and 2010 Detroit’s population fell by 25% due to industrial restructuring and loss of jobs in the automotive industry.

Murray suggests that allowing regional cities greater freedoms could help mitigate this risk. “These cities control almost none of the policy that affects them,” he says. “Ideally the top 10 or so cities in a country should outperform the national economic average, but in the UK the only city that does is London. Our cities are not empowered to make decisions about economic policies.” Therefore, chancellor George Osborne’s plans for a ‘Northern powerhouse’ could be a step in the right direction.

There should be a two-way relationship between the business and the local community, according to Mackerness. “We have an obligation to ensure we have a skills base in the local community. We hold community days where people can look around and see the places their family might work. That’s just one way of encouraging people to consider manufacturing as a career.”

Tata Steel was approached for comment, but had not responded at the time of this article going to press. Time will tell whether the protestors will have an impact on the government’s approach to mitigating the industrial skills emergency, but it is clear that employers have a powerful and pivotal role to play in the future of the UK manufacturing industry.

“Progress can’t just be a word consigned to our history books,” warns Goodhead. “We [the UK] can continue to lead the world in expert science jobs and engineering jobs, and enjoy world-class infrastructure. But all this depends on the inseparable issues of steel and skills.”