The UK’s workforce is getting older and older, and manufacturing will be particularly hard hit. However, wiser firms will make the most of the opportunities this opens up – older workers have the skills, experience and, outside of work, the spending power to revive manufacturing in the country.
As the great and the good of UK manufacturing come together for the annual conference of their trade body, the EEF, how the sector changes to deal with our ageing society ought to be a hot topic of discussion.
In his preface to a far-reaching review of the future of manufacturing, the business secretary, Vince Cable, noted that while the sector is a dominant and growing part of the UK economy, British firms will need to be innovative and nimble in how they react to the challenges and make use of the opportunities which face them during the next 40 years. A significant challenge is how to manage ageing workforces.
The ageing profile of the UK’s population, coupled with rising pension ages, means employers in all sectors are facing this challenge of ageing workforces, but the issue is particularly significant for manufacturers.
Manufacturing already has a workforce older than the national average. The average worker’s age is 43.6 compared to 41.9 for the UK economy as a whole, according to the Labour Force Survey.
As these older workers leave the sector faster than young people join, the industry will face a significant skills shortage. There is particularly strong competition for workers with Science, Technology, Engineering and Mathematics (STEM) as well as management backgrounds; and manufacturers cannot rely solely on new graduates to fill posts.
Yes, migration could go some way towards addressing skills shortages. However, as the EEF argues, the current immigration system is too limited and complex for many manufacturers, especially small ones, to hire people with the right skills.
Much manufacturing work is physically demanding, which adds another set of problems. While technological advances have reduced the physical strain of some jobs, many of today’s older workers are still living with health conditions which are legacies of poor working practices.
None of these problems can be resolved particularly quickly, in particular because many parts of the sector have difficulty planning their workforce requirements in advance. It takes a long time to train up workers in many areas (nuclear specialists and automotive engineers don’t appear overnight) and demand for labour fluctuates hugely as major projects start and end.
However the ageing workforce can be an opportunity for the sector too. As Cable noted, manufacturing is no longer simply about production, but a wide range of activities which add value. Think, for example, of delivering service and maintenance packages together with manufactured goods. Indeed, many firms are now redeploying older workers to service delivery; drawing on their skills and experience to be used in the delivery of excellent customer services. The most notable UK example, of course, is B&Q, the DIY/hardware chain which employs older tradespeople on their shopfloors to provide knowledgeable advice to customers.
Furthermore, as the UK ages, the “grey pound” offers lucrative opportunities for British manufacturers who design and market products for older people. And, of course, in this sense older workers can be a source of knowledge and ideas. Businesses in Asia are well ahead of the curve, led by older economies like Japan and Singapore in developing strategies for delivering to an ageing consumer base, and there are real risks that British businesses will miss out on this lucrative and expanding market.
Some manufacturers are already identifying win-win situations. BAE Systems, for example, has a longstanding flexible retirement policy that allows workers to taper their exit while facilitating the transfer of knowledge and experience from one generation of workers to another. BMW has redesigned its assembly lines around the world, including in Oxford, to support its older workers. In Germany, it even has a plant staffed entirely by over 50s – as the Daily Mail dubs it, “Built by Mature Workers”. BMW also found that the changes it made have reduced injuries and sickness among its younger employees.
Manufacturers need to get to grips with the ageing workforce, and this will require significant evolution in the way they operate. If their management practices fail to adapt to this, they will face growing skills shortages over the coming decades. Managed properly, however, older workers can be a great asset to the sector as it faces a changing and ageing global market.