< Previous East Midlands Business Link www.eastmidlandsbusinesslink.co.uk ENGINEERING SPOTLIGHT Has our engineering levelled up? Much was said about how levelling up would improve our engineering and manufacturing and turn us into a northern powerhouse, but has that happened? 20-23.qxp_Layout 1 06/02/2023 12:40 Page 1www.eastmidlandsbusinesslink.co.uk East Midlands Business Link ENGINEERING SPOTLIGHT T he Midlands – and the East Midlands in particular – have always had a strong manufacturing and engineering base. The Midlands produced much of what the country has consumed in the past and was instrumental in wartime production as well. Yet, in current years, the industry has been in trouble. A dearth of skilled engineers in the UK has meant that nationwide progress has stalled, causing great concern over the financial viability of the industry. As a result, the Department of Levelling Up, Housing, and Communities has pledged a Levelling Up fund, designed to provide a cash injection to worthy projects across the UK. The second round of funding was announced in January 2023, with 111 projects to be bolstered with £2.1 billion collectively. So, how is this scheme helping Midlands-based businesses and the engineering sector? The Levelling Up Fund invests in infrastructure projects that will improve everyday life across the UK. The total fund constitutes £4.8 billion, to be spent before the end of 2025. The fund will support town centre and high street regeneration, local transport projects, and cultural and heritage assets. Funding is allocated upon a successful bid made from the applicant (usually these are local authorities, but can also be universities, voluntary and community sector organisations) but what we are most interested in are business benefits, not heritage. We’ll also take a look at how the East Midlands compares to the West Midlands in terms of funding. Currently, two tranches of the fund have been announced. The first was announced in Autumn 2021, and the second in January 2023. The second round of funding has seen 11 East Midlands schemes, and 8 West Midlands 22 Á © stock.adobe.com/Andrei Merkulov 20-23.qxp_Layout 1 06/02/2023 12:40 Page 2 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk ENGINEERING SPOTLIGHT schemes receive funding. Successful projects include £20M to build two new bridges in Lincoln to traverse the East Midlands Railway and £3.1M to develop a science discovery centre and planetarium from an underground Victorian reservoir in Sutton-in-Ashfield into a science discovery centre and planetarium. The differences between first and second round allocations for the Midlands are obvious. The Round 2 projects are larger scale, have higher budgets and will have a higher implementation value. Particular attention seems to be being paid to road infrastructure projects. This is particularly prescient, as the Midlands was named the worst area for traffic delays and potholes in January 2023. Furthermore, it has been found that delays caused by A50 congestion alone are costing the economy £8 million in lost work hours and fuel costs. This also means that perishable stock (like food and medicines) is sitting in transit longer than it should, reducing shelf life. In light of this, improving the roads across the Midlands will certainly improve the quality of life for Midlands residents, furthering the overall goal of the fund. Whilst this does demonstrate that the funding is being allocated appropriately, it also highlights the vast and ongoing issues with Midlands infrastructure. The cost estimate to fix Midlands’ roads issue extends into the billions, and this would require targeted investment, with ring fencing for fund allocation. However, when the cost of repairing potholes is costing the country £12 billion annually, the work to genuinely improve road systems seems like a worthy investment. Road infrastructure (and transport in general) is key to the success of the engineering industry. In a report labelled “Regional Rebalancing” by the Northern Powerhouse Partnership and the University of Durham, it was stated that transport and skills should be top priorities for the north of England, and that these factors are tied to the success of the manufacturing and engineering sectors in our region. Simply put, our engineering sector needs more skilled workers and better transport access, and it’s hoped that the levelling up fund will go toward enabling that. These concerns have been directed at the Levelling Up fund itself. Experts believe that the funding is not being strategically directed so as to meaningfully tackle regional inequality. For example, road maintenance in London is already more efficient (due to the population density and cultural significance of the city), than in the Midlands (where populations are smaller, more spread out, and the landscape is largely rural). This means that more money is required to raise it to the standards of other areas of the country, which the fund is not able to provide due to funds having to extend nationwide. Currently, independent Midlands- based engineering firms are experiencing healthy growth. Van Elle, who’s headquarters are based in Nottingham, have reported “strong trading momentum” during the latter half of 2022. The company reported revenue of £80.8 million from April – October 2022, which was a significant improvement on £60.1 million during the same period in 2021. Van Elle has 20-23.qxp_Layout 1 06/02/2023 12:41 Page 3www.eastmidlandsbusinesslink.co.uk East Midlands Business Link ENGINEERING SPOTLIGHT attributed this to increased visibility from securing high level contracts in highways and rail. This serves to demonstrate the long-term business impact on appointing local firms to high level contracts. However, Van Elle stressed that this success is in spite of a difficult macro environment. This is likely to be in reference to skills shortages. The company expect to experience challenges well into 2023. This is particularly regarding their ability to fulfil new build housing contracts (due to high materials costs, labour shortages and quick turnaround expectations). The way they intend to overcome these is to diversify their consumer base, thus identifying opportunities for contracts with higher budgets and scope, making orders easier to complete. There has been a shortage of skilled workers due to the Covid pandemic and Brexit, as well as delays caused by supply chain issues and rising material costs. Yet, the funding from various schemes has shown some signs of changing the fortunes of the industry. Admittedly, nothing is yet certain. Companies remain concerned about meeting demand, and the skill gap widens, but projects are now able to be scheduled and costs can be met. The next step for the industry is likely to be investment in people rather than projects, bringing true “levelling up” to the engineering sector. Experts agree that the best way to resolve the lack of skilled engineers is to invest in reach out programs, to encourage school leavers into the sector and foster interest through stable and financially appealing apprenticeships. Ultimately, seeing the Levelling Up Fund extended to human resource procurement would mean a great boost to the industry. © stock.adobe.com/Gorodenkoff 20-23.qxp_Layout 1 06/02/2023 12:41 Page 4 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk APPRENTICESHIPS AND TRAINING CLOSING THE GAP A dearth of skilled workers is causing chaos in the employment market but this problem has existed for a while, and waiting will not make it go away. Businesses are going to have to act if they want to fill positions. 24-27.qxp_Layout 1 06/02/2023 12:42 Page 1www.eastmidlandsbusinesslink.co.uk East Midlands Business Link APPRENTICESHIPS AND TRAINING A ccording to fresh research from the Office for National Statistics, staff shortages are everywhere, from farming to haulage, hospitality, health and social work sectors and all are causing pressure on businesses throughout the UK. With the lack of staff increasing pressure on a company’s ability to operate at normal levels due to reduced stock and supply chain disruption, nearly a third (32%) of businesses with 10 plus employees expressed a workforce shortage. Add to this strike action affecting 13% of businesses, recovery still taking place from the pandemic and an increasing number of people absent from work due to stress or long term illness - things could be bleak. David Pye, Director at Broadstone, an independent consultancy, states: “a shortage of human capital has been an increasing problem for businesses. Some sectors are affected more than others but the impact is clear to see: a growing burden on employees remaining in the workforce. And that means businesses looking after existing employees is more important than ever.” The two main solutions to combat these shortages are taking on apprentices, where an apprenticeship system is put in place at a company for the training of a new generation of tradesman, professionals or practitioners with on-site training and often some accompanying study being the main focus, or upskilling or reskilling existing staff. To up-skill current staff, which is aiding and supporting employees who hope to stay relevant in an increasingly mechanised world, entails training current employees to improve their skills, as well as boost their confidence, all of which enables employers to mould their employees into key players within the 26 Á © stock.adobe.com/Sikov 24-27.qxp_Layout 1 06/02/2023 12:42 Page 2 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk APPRENTICESHIPS AND TRAINING business who in turn boost their business performance. There are different ways to upskill valued staff. Firstly, there is peer-to-peer learning which is on the increase – this is where current staff members are willing to teach skills or create a study group of colleagues where learning sessions help employees to learn from each other and can generate enough interest in senior management that the learning sessions are organised to not only feature a senior member of staff to teach but they also help indicate what interest there is in a particular sector of the company. Similarly, a company may offer ‘stretch opportunities’ which is where a project outside an employee’s usual remit is offered and taken on, creating a great way to develop new competencies. These can include working on a project with people from new teams where important collaborations and problem- solving skills can be shared and honed. There is also reskilling, also known as professional recycling, which sets out to train employees to adapt to a different post within the company. There are many suitable courses outside of the workplace, which are a great way for staff to learn, upskill and network: Mass Open Online Courses (MOOCs) often provide free study online (although this may not provide an official, formal certificate at the end they educate workers about the latest ideas and news on a specific area and help build on existing skills to enhance a work role). Also, following industry leaders and creators through LinkedIn, You Tube, Twitter, TED Talks or any other social media platform can be another great way to obtain information and professional literature to upskill staff, as well as attending seminars, webinars or conferences online. Joining a professional work body or association can also enable employers and employees to be kept informed of prospective developments in their line of work too. Both upskilling and reskilling all aim to keep current staff fulfilled and prevent them from moving on, which naturally saves the company the cost of advertising, retraining an employee from scratch and maintains motivation at the workplace. Career mapping can also aid a company by providing a plan between an employer and employee to focus on future training and upskilling. This planning provides routes and goals to be achieved and consists mainly of a clear, complete job description and © stock.adobe.com/Monkey Business 24-27.qxp_Layout 1 06/02/2023 12:42 Page 3www.eastmidlandsbusinesslink.co.uk East Midlands Business Link APPRENTICESHIPS AND TRAINING specification, the required competencies needed, personality profiling and details regarding the training and development required. Putting career mapping procedures in place helps identify which employees are suitable for various roles within the company and can help any organisation prepare for the future including employers, employees and apprentices. According to the Institute for Apprenticeships, an apprenticeship is an ideal and effective way for a business to grow their talent and develop a skilled, motivated, qualified workforce, with employers who have an established apprenticeship programme reporting that apprenticeships improve the quality of their service or product or both through reducing staff turnover and recruitment costs and increasing employee satisfaction. Also, the Government will help pay for apprenticeship training: an employer will pay only 5% of the apprentice’s training and assessment fees and the Government contributes the other 95%. If a company has less than 50 employees and the new apprentice is aged between 16-18 years old, the Government will even waive the 5% contribution, covering 100% of training costs. With an apprenticeship there must be a genuine job available with a contract of employment long enough for an apprentice to complete their apprenticeship, usually a year or more, and employers must pay an apprentice’s wages according to their age, work hours and off-site training and study hours. Apprentices often stay on after training is completed as they gain valuable experience and licence to practice in many regulated occupations from something hands-on like engineering, nursing or construction, to a career in law, marketing or project management. The Register of Apprenticeship Training Providers (www.gov.uk/guidance/register-of- apprenticeship-training-providers) offers a choice of programmes for the apprentices and lots of advice for both employers and apprentices and works alongside the Education Skills Funding Agency (ESFA) which advises on applications, training and funding. All round there are many options out there to be actioned. Spot skill shortages early on and consider either training up next month’s star today by investing in an apprentice or train, upskill or reskill current staff today. © stock.adobe.com/goodluz 24-27.qxp_Layout 1 06/02/2023 12:42 Page 4 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk TAX What are your customers doing differently in light of the cost-of-living crisis? James Pinchbeck, partner at Streets Chartered Accountants, discusses the impact of the cost-of-living crisis on your customers and what businesses need to consider. W ith the rate of inflation having seemingly or hopefully peaked at a 40 year high and with Prime Minster Rishi Sunak’s announcement that he seeks to half the rate of inflation by the end of the year, we might start to feel some sense of easing in the cost of living. However, against this backdrop many households and businesses are still feeling the financial impact of the pandemic. This is aside from the fact that salaries are not keeping pace with inflation. How then does or is the current economic situation affecting customers and consumers alike and what do businesses need to think about or consider? Whilst this may depend on the nature of your business, the broad considerations tend to be the same. Perhaps the starting point is what we buy and why? Is it a necessity, essential through to desirable or even a luxury. Whilst we may cut back on and even forego luxuries, essentials are something we tend to continue to purchase. Though for such items, products or services, we continue to purchase we may consider or are more likely to consider alternative provision perhaps trading down or seeking lower cost alternatives. We may also look at reducing not just our rate of consumption or use, but even the frequency of our purchase. When it comes to where or who we buy things from, whilst we may have our preferred supplier or outlet in the current climate, we are increasingly likely to at least consider the same in a quest to find comparable cheaper alternatives. This is often even despite the longevity or depth of a business relationship. When things become financially tighter we tend to be more thorough and considered, often taking longer to make the decision to make purchases, certainly high value capital items and one-off purchases - a process which is likely to involve greater consideration and analysis before reaching or justifying the decision to purchase or not. Who doesn’t like a good deal or offer! Incentives, promotions and offers are likely to be key for those considering making a purchase as consumers and customers seek to get better value for money. Whilst businesses will no doubt look to adapt their marketing to respond to conditions affecting their business, perhaps one of the key areas to focus on is customer service and experience, both for existing and new customers. At a time when businesses are dealing with rising costs, supply chain shortages, even labour shortages, many will probably be experiencing a deterioration in their level of customer service and experience. Unfortunately, this comes at a time when most of us are feeling poorly served, perhaps are seeking or demanding more and as such puts in jeopardy our business relationship. Business as normal may be the approach of some, though for most if not all there is a need to consider both the short and longer term impact of the current situation. Few of us are likely to be running our businesses or undertaking our marketing in a year’s time like we are today. Taking time out to consider not only how your business is being affected but also what you need to do differently are likely to be key to your continued success. 28-29.qxp_Layout 1 06/02/2023 12:43 Page 128-29.qxp_Layout 1 06/02/2023 12:43 Page 2Next >