Significant nationwide skills gaps for Irish Manufacturing SMEs
- Hiring a skilled workforce a key challenge for 4 out of 10 Irish Manufacturing SMEs
- Skills gaps most apparent in marketing, production and sales
- Outside of Dublin, retention of production staff a real challenge for more than one in three
- 41% do not regard investing in training as valuable
22 May 2018: A report which explores the skills gap challenges for manufacturing SMEs in Ireland has highlighted significant nationwide skills gaps for Irish Manufacturing SMEs. Despite over one in four (28%) SME manufacturing companies hiring new staff since the start of 2018, more than 4 out of 10 (44%) say that maintaining and hiring a skilled workforce is a real concern for the future.
The research, commissioned by Bank of Ireland and HRM (conducted by Red C), also found that more than half of businesses in Munster (53%) and Rest of Leinster (54%) believe finding a skilled workforce will be problematic in the future.
Marketing stands out as the most significant skills gap for almost 2 in 5 (39%) manufacturers nationwide, followed closely by sales (35%) and production (33%) which are a concern for a third of all companies surveyed. This rises to over 2 in 5 for companies in Connaught/Ulster. Larger SMEs are reporting particularly high skills gaps in areas such as research and development (47%), engineering (50%) and quality (42%).
Outside of Dublin, maintaining production staff is highlighted as a real challenge for over a third (35%) of companies surveyed, with one in three highlighting this concern as significant. 40% of medium sized manufacturing SMEs Companies surveyed, outside of Dublin, are worried about the retention of engineering talent. The retention of sales staff is a concern for one in five (20%) Dublin based manufacturing SMEs.
The research highlighted interesting departures between Dublin and other parts of the country when it comes to retention features. Dublin companies are less likely than the rest of the country to have formal HR policies in place and most likely to provide monetary incentives to staff (30% versus the 25% national average). Interestingly, it is companies outside of Dublin, particularly in Connaught/Ulster that are leading the way in terms of retention features, offering incentives such as flexi time (43%), pension schemes (37%) and health insurance (24%). This is paying off as companies from this region reported highest in terms of retention (41%).
Commenting on the findings, Brían Evans, Head of Manufacturing at Bank of Ireland said; “Leading sector indicators over the past few years have shown consistent employment growth and increased demand for Irish produced products in home and export markets. After Brexit, the hiring and retention of a skilled workforce is one of the main challenges for manufacturers. With unemployment in Ireland at the lowest level since before the financial crisis in 2008, competition for skilled workers is increasing across industries with recent research from the construction sector also highlighting major challenges.
“The research findings reinforce what Bank of Ireland is hearing from businesses across the country. Many SME owners start businesses as a result of having expertise in one particular function so the absence of additional expertise can impact growth potential. A combination of skills is crucial to sustained business success and the reality is that manufacturing companies will miss opportunities if the skills gaps are not filled. We welcome the recent commitment by the government to meet the skills need of the economy by expanding the apprenticeship and traineeship schemes which we hope will go some way towards bridging the current skills gap.
“Investment in staff is one of the biggest overheads for manufacturing businesses and as headcount increases, retention of staff is going to be critical for business sustainability. Employee turnover represents a considerable cost for businesses in time, money and productivity. This research provides helpful insights to inform us as we work with businesses to support them in preparing for future sustainability,” concluded Mr. Evans.
The research surveyed over 250 manufacturing SMEs across the top five sectors including materials and products, print and packaging, equipment assembly, wood and timber products and food.
Commenting on what firms can do, Michael O’Leary, Chief Executive of HRM Recruit said; “In addition to Brexit, there are many challenges facing SME manufacturers including the pace of technological advancement, the need for continuous innovation and the changing dynamics of supply change management. In the face of so many distractions it can be very hard to plan HR.”
Nonetheless acquisition of new staff and retention of current employees are the biggest current and future HR challenges for manufacturing SMEs. To futureproof against these risks it is important that firms take action now. 40% of participating firms say they have no form of training plan in place and 41% say they do not regard investing in training as being of value to them.
“We would advise SMEs to invest in the development of current employees, through the use of apprenticeship schemes and staff engagement initiatives. Nationally, a quarter of Irish manufacturing SMEs engage in some form of apprenticeship, but upping the availability of apprenticeships in skills areas where SMEs are currently seeing gaps, as highlighted in this research, would provide a valuable stream of future talent for SMEs across an increasing range of industries and sectors helping to bridge the gap. For SMEs the cost of getting HR wrong can be particularly high and detrimental to safeguarding their long-term viability,” Mr O’Leary concluded.
Bank of Ireland and HRM will run events around the country to support manufacturing SMEs futureproof HR requirements into the future.
To read a full copy of the report visit www.hrmrecruit.com/