Shortage of Engineers a Strain on Britain's Economy

http://www.nytimes.com/2013/02/04/business/global/04iht-ukskills04.html

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NORTH SHIELDS, ENGLAND — Andrew Esson has plenty of workshop space to expand his small, thriving company that designs and makes hydraulic equipment here in the northeast of England. His investors have offered more financing should he need it.

Even his bank is supportive.

His problem is people — more specifically, finding enough skilled engineers. And it is a shortage of a type afflicting much of British industry that some experts worry could help tip the country into its third recession since the financial crisis.

When Mr. Esson’s advertisement for a design engineer and an experienced technician produced no suitable applicants last year, he decided to train apprentices instead. Even that proved impossible until he widened the search beyond those leaving the closest secondary schools — despite the fact that more than one in five young people are unemployed here in this pocket of the Tyneside area of around 830,000 people.

With the right pool of skilled talent, Mr. Esson thinks he could have won extra orders worth £700,000 to £800,000, or $1.1 million to $1.3 million, a year for his company, Quick Hydraulics, which had revenue of £3.1 million in 2012. Its primary business is designing and building hydraulic power units for businesses including military contractors and paper producers.

His lost opportunities illustrate one of the reasons experts say the British economy is vulnerable. Another potential drag is new economic uncertainty resulting from Prime Minister David Cameron’s plan, if he stays in office, to hold a referendum by the end of 2017 on whether the country should remain in the European Union. Regardless, a key to putting Britain’s economy back on the path to growth will be overcoming the shortage of people with mathematics and science skills.

Mr. Esson, who acquired the company in 2011 when it had a staff of 14, planned to take on his 24th employee Monday, a sales and marketing administrator recruited from his former company. But if there were a bigger pool of engineering talent, Mr. Esson said, he would be able to add even more staff and more aggressively pursue new business.

The problem is endemic in Britain. In the aftermath of the financial crash, the country’s politicians acknowledged that they had put too much faith in a bloated financial sector that plunged the country into crisis. But rebalancing the skills of the British labor force may require a shift that is as much social and cultural as it is economic.

Engineering has never been truly prestigious in Britain, where traditionally many of the best brains have opted for careers in law, medicine, the civil service or the news media. Add to that the more recent lure of London’s financial sector, which, despite recent layoffs, still offers lavish salaries and bonuses. It is little wonder that British manufacturing struggles to compete for the country’s most capable young people.

In 2010, British manufacturing output accounted for only 2.3 percent of the global total. Among big Western economies, that trails even the relatively weak total of France, which has a 2.6 percent share in global manufacturing, and is far behind Germany’s 6 percent and the United States’ 18.2 percent, according to statistics compiled by the British Parliament.

The engineering community in Britain complains about the better support the German government gives to people in the field.

“You only have to go to Germany to see how revered engineering and industry are,” said Sir John Parker, president of the Royal Academy of Engineering. Britain has started to change course, he said, but still has much catching up to do. “Many of the countries I have visited have been more proactive in industrial policy than we have.”

The Cameron government argues that it has expanded its apprenticeship program and has set up several programs to promote engineering. But last September, the business secretary, Vince Cable, acknowledged the scale of the problem, describing the dearth of engineers as “one of the biggest long-term challenges” facing the British economy.

“We are chronically short at present,” he said. “I take encouragement from the fact that this year’s applications to university show engineering has remained a popular choice. But we need to do much more.”

Though British design engineers in their early 30s can earn £35,000 to £45,000 a year — a decent salary in the northeast — the sector suffers from a chronic image problem.

This part of England was once one of the country’s most important industrial regions, with coal and shipbuilding the mainstays of the local economy and the source of proud traditions, despite a sketchy record in occupational health and safety. But with the collapse of those sectors came the disenchantment of deindustrialization.

“Families who live in North Tyneside, who used to work in the shipyards, by and large will do anything with their kids except see them go into engineering,” said Mr. Esson, the Quick Hydraulics chief. He added that where he grew up, in Scotland, attitudes were similar; he took a degree in the subject against the advice of his father.

Mr. Esson checked off the stereotypes: “They will say, ‘Don’t go into engineering. It’s dirty. It’s dangerous, doesn’t pay well and has no job security.’ That’s been driving people away.”

Such ideas, perhaps visualizing an engineer as a throwback to the grimy past of the Industrial Revolution, might be ingrained in the British psyche, according to John Reece, chairman of Reece Group, a military products and general engineering services group that employs around 500 staff.

At his company, the design engineers work in a sleek and stylish modern complex overlooking the River Tyne, wearing either business dress or smart casual clothes. Though large workshops are close by, the office looks more like an architect’s studio than a factory.

“Engineers have low status in this country,” said Mr. Reece, an engineering graduate of the University of Cambridge. “Historically, there has been a class-based view: posh people think engineers are tradesman. Lawyers and accountants are regarded as professionals, while engineers are down there with the lumpen proletariat, the tradesmen who fix your toilet.”

Despite the stereotypes, Mr. Reece said, his companies can recruit most of the people they need because they have an established reputation, pay well, offer good terms and conditions, and concentrate on graduates who grew up in the region.

He seems to be among the fortunate few. According to a study commissioned by the Royal Academy of Engineering and published last autumn, the British education system needs to double the number of university graduates in mathematics, engineering and other sciences it mints annually.

The study said the country’s expected need for 100,000 new graduates in engineering, mathematics, science and technology every year until 2020 will not be met. Only about 90,000 students graduate with such qualifications each year, and that includes foreign students not entitled to British work visas after completing their studies, the report said.

Women are particularly underrepresented. Only about one-third of undergraduates and postgraduates in engineering, mathematics, science and technology are women, according to another study, cited in the Royal Academy of Engineering report. Computer science and engineering and technology had the lowest proportions of women undergraduates (19.4 percent and 14.9 percent, respectively) and postgraduates (20.7 percent and 20.8 percent, respectively).

Meanwhile, more than a quarter of engineering graduates choose occupations outside science, engineering or technology, the Royal Academy of Engineering report said.

“The economy needs more graduate engineers for both engineering and non-engineering jobs,” the study said, despite the lure of a “persistent, sizable wage premium for people holding engineering degrees.”

In the northeast of England, there is also a shortage of skilled technicians. That is partly because of the contraction of big employers, like the shipbuilder Swan Hunter, that used to train large numbers of apprentices, who often were later recruited by other companies.

Executives in the area continue to blame the government for not stepping up its efforts. Those include Phil Kite, director of Reece Group and chairman of the regional council of the federation that represents engineering employers.

“Manufacturing was out of favor with the government,” Mr. Kite said. “Obviously, the financial sector was the blue-eyed boy. As soon as the blue-eyed boy unfortunately played truant, you got people turning around and saying, ‘Manufacturing will help us out of this particular hole,’ but nothing came along to actually help manufacturing achieve that.”

That is why he and colleagues in the federation encourage projects to promote engineering, beginning in primary school. Others agree that a shift in thinking is needed.

“In Britain, we were seduced by the easy pleasures of finance and borrowing,” said Mr. Reece. “Engineering is harder work, with no instant returns but more satisfying. German society seems to admire that, but we don’t.”