Are rates of pay and skills shortages limiting the manufacturing industry?

In recent times the national living wage (NLW) and the national minimum wage (NMW), have been introduced to ensure workers earn sufficient funds to afford a decent standard of living.  The impact of this legislation has been to increase the cost of production for manufacturing businesses, making it more difficult for them to compete in the global economy.  This increase in labour rate is compounded by the skills shortage being experienced in the manufacturing sector.  There are 5 key factors that impact the skills shortage:

1.   Young people have a lower level of interest in the manufacturing sector

2.   There is a perception that manufacturing employees have a lower income

3.   There is a lack of appropriately skilled and qualified applicants for vacant positions

4.   Female employment in manufacturing is significantly less than male

5.   The manufacturing sector has an ageing workforce

This begs the question, how can we help?  If you know the answer please let me know, but the reality is that, if we know these are issues facing businesses we can discuss them and see what assistance we can offer.

How can servitisation, automation and innovation help?

As part of the challenges facing manufacturing businesses, servitisation, automation and innovation are all part of the solution.  Businesses need to identify and respond to customer needs, create new revenue streams, increase margins and increase profit by adding value. The key to adding value is servitisation. For more information about servitisation, click here to read Tony's blog 

Automation, the name gives this one away. The skills shortage and National Living Wage/ National Minimum Wage are pushing businesses towards automation to streamline and accelerate production, to review production methods, cut costs, improve productivity and be more competitive.

And finally, innovation. The manufacturing sector must innovate to stay competitive, standing still is not an option – “innovate or die” will be a common message.

So how can we help manufacturing businesses?

Businesses need to look at their procedures and processes to identify improvement and areas to add value; we can discuss this with you, as well as grants, research and development, patent box, capital allowances, and management information systems. In addition Blue, Armstrong Watson’s business advisory service, is a great vehicle to bring these matters to the table and add a structure to the discussions.

So I urge you all to think about these issues – identify your needs and issues in order to maximise your opportunities. It is not about major changes, but small steps when added together make a difference.

If you have any queries, please feel free to contact me at

If you have any questions for RIchard or the Manufacturing team, please get in touch or visit our website for information on the services we provide to our manufacturing clients.


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