SME Snapshot 3 reveals rising costs and falling staffing levels within the engineering and manufacturing sector

Our new survey shows concerns among UK companies around finances, and the impact on skills development and staffing levels.

The third Enginuity SME Snapshot surveyed more than 200 companies across the UK within the manufacturing and engineering sector to assess the outlook from business leaders in months and years ahead.

Respondents’ concerns about escalating costs and low confidence in the financial outlook are compounded by an apparent disconnect between government policy initiatives and their impact on SMEs.

Pressure to raise prices may impact headcount

Almost four out of every five SMEs reported that they felt under pressure to increase prices due to the costs of raw material (78%) and labour (77%).

When asked how they plan to offset these rising costs, nearly three-quarters (73%) of respondents said they would pass them on to customers. Some companies also said they would be making changes that affect their current workforces:

• More than a quarter (28%) said they would freeze recruitment
• 14% said they plan to reduce headcount.

And more than two-thirds of those surveyed (68%) said their business was currently operating below full capacity, although that figure has decreased on the year prior (76%).

Impact on skills investment

Finances are potentially affecting companies’ ability to hire or train employees. When asked to identify the single most significant barrier stopping them from investing in skills and training, a third (34%) said financial constraints. Over a fifth (21%) said there was a lack of suitable applicants., while 16% said it was the non-financial aspects of training such as having the time or personnel.

Nearly three in five (59%) said they have limited confidence in being able to find and access Government support for skills and training.

Only one in ten said the new apprenticeship units – short, flexible training courses for developing specific skills – would fill current skills gaps; a fifth of respondents had never heard of them.

“SMEs face a double whammy of financial constraints that could force higher prices onto customers, and a disconnect from the government initiatives that could spur growth,” said Cathryn Moses-Stone, Senior Policy and Public Affairs Manager at Enginuity. “Our SME Snapshot represents the views of companies with a combined £2 billion turnover, and this summer’s survey shows the need for policy development that offers positive long-term results.”

Download the third SME Snapshot and see how the latest survey responses compare to those taken six months and a year ago.

Download the SME Snapshot Report