20 July 2011
Power to the people
Tight cost controls mean manufacturers are turning to employees rather than new equipment to maximise productivity. Max Gosney reports on the results of the People & Productivity report 2011
Manufacturers are ramping up workforce skills and morale to combat productivity drains inflicted by ageing equipment, supply chain chaos and a void in talented new recruits.
Nearly three quarters of businesses are upskilling existing staff with widespread investment in formal training and appraisal schemes, according to WM's People & Productivity report.
The commitment to people power comes as firms get cold feet over splashing out on new machinery in the face of ongoing economic uncertainty.
The make-do-and-mend approach means machine downtime is proving the biggest threat to workforce productivity levels, the survey of over 150 factory managers reported. Ageing equipment is a dominant concern for maintaining future efficiencies, WM's People & Productivity report reveals. And with cost control named the overwhelming priority in keeping that productivity up, maintenance departments might want to rethink their holiday plans for 2012.
Site managers may also want to avoid long haul destinations should they manage a summer escape. Production lines have felt the pinch of events in far flung lands this year. The Japan earthquake saw automotive giants enforce shutdowns at UK plants. The Libya conflict and unrest in the Middle East have resulted in spiralling oil prices and a knock-on hike in transport and energy costs for UK firms.
An overwhelming 61% of site managers said rising materials and energy costs were the top threat to future productivity.
However, it's not just oil prices that are soaring. The mood among factory floor workers remains high despite the gathering storm. Few businesses report issues around low morale. Employees appear to be delivering a rapid ROI for firms who have invested in staff development and training.
But the bonhomie may only be fleeting. Much of the labour is being performed by longstanding employees who can't work forever. Businesses claim the quality of replacements coming through is not up to scratch. A toxic skills gap edges ever closer.
Staff performance soars as employers invest in people power
Take care of your staff and they'll take care of you. WM's People & Productivity report reveals employers investing in a raft of formal staff training and development. In return, employees are more reliable, punctual and motivated than ever. Relations have been further buoyed by a brighter business outlook. The number of firms reporting redundancies and pay freezes has halved since June 2010. Pay rises are almost twice as common as one year ago, with 52% of businesses giving an increase compared to 30% in 2010.
Over 80% of manufacturers are running formal staff appraisal schemes. The majority of employers offer support for engineering degrees, apprenticeships and NVQs.
Manufacturers have also established tighter controls over absenteeism according to the report. Over 40% of firms reported fewer staff taking sickies over the past year and 61% now have employee absence levels below 3%.
Cost control puts the strain on machinery
Manufacturers are taking a hit from misfiring machinery rather than commit to expensive upgrades while the strength of the recovery remains in doubt.
Cost control is a runaway priority for firms looking to maintain day-to-day productivity. But businesses are being left in a catch-22 scenario with the biggest slumps in shopfloor efficiency being blamed on equipment downtime.
Manufacturers told WM they would continue to patch up plant wherever possible rather than re-equip because of fears over long-term business demand. Factory managers cited rising energy costs as the biggest risk to future productivity, but ageing equipment and capital budget equipment restrictions both featured in the top three.
Skills gap The fanfare over government plans to recruit an extra 75,000 apprentices appears to have fallen on deaf ears in the sector. Nearly 80% of frontline site managers believe the government is failing to offer good enough support to help firms bridge the skills gap. A common gripe is the dumbing down of apprenticeship courses. Manufacturers told WM that courses are too short and fail to equip youngsters with the specialist skills many require. Businesses are taking up the slack by teaching new recruits on the job. Over 60% have at least one apprentice in the company and nearly half plan to take on another this year. Cost is the biggest obstacle for the third of manufacturers opting out of apprenticeships. However, the declining quality of candidates was cited as the second biggest turn off.
Overall, more than half of manufacturers believe the shortage of skilled workers will damage their efficiency – a 5% fall from 2010, but still worryingly high. The shopfloor is the epicentre of the skills crisis, with 78% saying shortfalls showed most on the factory floor.
Continuous improvement all conquering
Nearly nine in 10 sites run a continuous improvement (CI) programme, with 5S the favourite tool for boosting operational efficiency.
The number of sites adopting CI was up 5% on 2010, the report reveals. Most programmes are under five years old. Manufacturers rated 5S the top CI tool, with value stream mapping and just-in-time also tried and trusted lean tools. More difficult to master is lean accounting, enterprise lean and Six Sigma, according to respondents.
Can UK manufacturing sustain productivity gains? WM unites site managers with productivity experts to debate the findings of our research. Don't miss the full report of the debate in WM's September issue.
Methodology 153 senior managers and decision-makers from manufacturing sites took part in the research for WM's People & Productivity report. The sample included representatives from a variety of sectors including plastics & rubber, general mechanical engineering, electrical engineering, pharmaceuticals and automotive. Respondents came from companies large and small, from those employing over 500 to those with fewer than 50.
1 Equipment downtime the top drain on employee productivity 71% Percentage of companies with absenteeism below 3% 70% Percentage of manufacturers upskilling existing staff 14% Percentage of firms reporting workplace bullying
Tune in to turn output up
There's nothing like a blast of Aerosmith to drive up sagging energy levels on the shopfloor, according to a third of respondents.
Over 30% said they played music to boost productivity. The jury's out on which tracks trigger the biggest pick up in performance, though presumably big baselines have the edge over boy band ballads. Anecdotally, site managers told WM that while they remained unconvinced on the productivity impact of allowing music, taking tunes away could damage workforce morale. Get set for the first 'Music to manufacture to' compilation CD sometime in 2011...
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