The skills shortages that construction equipment manufacturers deal with every day now have a number attached to them, and it is a big one.
A new report estimates that skills gaps and shortages are costing the UK’s engineering and manufacturing sector around £5 billion a year, or roughly 2% of total output.
Mind the Gap: The £5bn cost of missing skills is published by the skills charity Enginuity, alongside economic consultancy SQW and Oxford Innovation Advice. It is one of the first serious attempts to put a credible figure on the sector’s skills challenge, drawing on a survey of 227 small and medium-sized manufacturers from across all four UK nations, together with detailed economic modelling.
It arrives as the CEA formalises a new strategic partnership with Enginuity, supporting its Policy Centre for Supply Chains and SMEs and giving construction equipment employers a stronger route to feed their insight into skills policy and workforce planning.
For CEA members, the most striking finding is probably the cost at company level. The report estimates that an affected business could be losing as much as £110,000 a year, around 10% of its Gross Value Added, as a direct result of skills gaps and shortages.
For an SME, that is not a rounding error. It can be the difference between investing in new equipment, winning a contract or standing still.
Around half of the SMEs surveyed had faced a skills-related challenge in the previous year. Just over a third reported skills gaps, meaning existing employees who were not fully proficient in their roles, while a similar proportion reported skills shortages, meaning vacancies they struggled to fill.
Around three-quarters of the total cost comes from shortages rather than gaps, and the logic is simple enough: an under-skilled employee is still producing something, whereas an unfilled vacancy means output is missing altogether. That points straight at the recruitment problem our sector knows so well.
The skills in demand will be familiar to anyone who builds or maintains machinery. Technical manual skills such as welding were by far the most valued, selected by almost three-quarters of respondents.
But the demand no longer stops there. Digital, data, analytical and leadership skills were each prized by around a third of businesses, reflecting how automation and digitisation are changing the shop floor.
Nor are these challenges confined to entry-level roles. The survey found gaps and shortages across pay bands from £20,000 to £60,000, reaching well into mid-career and senior positions.
Behind all this, the report identifies what it calls a “perfect storm”. An ageing workforce is approaching retirement in large numbers, particularly in advanced technical roles, and too few young people are coming through to replace them.
The pipeline is made even thinner by outdated perceptions of the industry as “dirty, noisy and physically demanding” and poorly paid, ideas that persist partly because reliable information rarely reaches young people, their teachers or their parents.
SMEs feel it most acutely, lacking the time, resources and dedicated staff that larger firms can devote to training. The result is a familiar vicious circle, in which shortages suppress productivity and turnover, which then squeezes training budgets and deepens the shortages the business was trying to fix.
Many members will also recognise the frustration of investing years in an apprentice only to see them poached by a larger competitor offering slightly better pay.
The report does not leave it there. Its broader argument is that this is as much an opportunity as a cost. Address the skills challenge, it argues, and the sector stands to gain considerably in productivity and growth.
Its recommendations to Government include exploring a skills tax credit to encourage employer investment in training, rebalancing policy towards upskilling the existing workforce rather than concentrating solely on new entrants, making sure new Level 2 and 3 qualifications are clear and employer-led, and scaling up the regional employer networks that help smaller firms share the load of training.
For the CEA and its members, it is useful evidence. It attaches a credible, independent figure to a problem the industry has understood instinctively for years, and it reinforces the case for the practical, employer-led solutions the sector has been pressing for.
The full report is available on the Enginuity website.