UK manufacturing can fill public sector growth gap but skills shortages remain major barrier to growth

The report, from manufacturers’ organisation EEF, says the UK’s manufacturers are well placed to respond to the Prime Minister's call to "create and innovate; invest and grow". However, it added that the sector would benefit from a government strategy that helps to overcome the growth barriers companies face and to grow the next generation of large global players.

According to the survey, growth-oriented companies are more likely to see finding employees with the right skills, their ability to innovate and management capability as the key barriers to growth.

EEF chief executive, Terry Scuoler, said: "Manufacturing is well placed to make the investments in innovation and skills that will drive our economy forward and create new jobs. But this will only happen if there is a genuine partnership with government that helps companies of all sizes and growth stages to overcome the barriers they face to growth.

"While the current attention on young businesses and start ups is helpful, we must not ignore the wider benefits to the economy that larger companies bring. The UK doesn’t just need a handful of larger companies over the next decade; we need hundreds of them with the scale and muscle to tackle our economic challenges. Otherwise we risk placing a speed limit on our growth potential."

‘The Shape of British Industry’ survey, published in partnership with RBS, comes ahead of the government's forthcoming Growth White Paper and its Manufacturing Framework.

It portrays a successful sector that is growing at the fastest rate since 1994 and whose growth strategies are centred on innovation and investment. Some 76% of companies state that their growth strategies will be achieved by increasing innovation in the UK and 69% by increasing capital investment. It is also highly export driven, with exports accounting for more than half of turnover in 40% of companies and one third having production facilities outside the UK.

EEF believes these figures demonstrate the potential of manufacturing to lead private sector growth and rebalance the UK economy. But it recommends that manufacturers need to promote themselves and their sector at every opportunity to customers and help address skills shortages and that government should continue in the direction it is heading to implement a simpler and demand-led skills training system.

EEF will front an industry- led campaign designed to bolster the image of manufacturing in the run up to the 2012 Olympics.