Research has shown that growth in the manufacturing sector is being jeopardised by a shortage of skilled people. One way of investing in new talent and working to close the skills gap is through apprenticeships, but the Close Brothers Business Barometer found only one in 20 (5%) manufacturing SMEs planning to take on new staff in the next year will look for an apprentice.

Worryingly, the survey also found that over half (56%) of manufacturing SMEs do not have an apprentice programme in place and almost a quarter (24%) don’t plan to start one. Of those manufacturers that wanted to hire an apprentice, the biggest reason for not doing so was: cost (47%), red tape (20%) or lack of time needed for training (16%).

According to recent reports, SME bottom lines are also being squeezed by a number of macro-economic issues, further affecting their ability to hire apprentices. The strong pound continues to affect exports, while speculation around rate rises is causing uncertainty around borrowing. With the Bank of England’s decision to keep interest rates at 0.5% for the 80th month in a row, speculation continues on when exactly the rise will come.

Alongside this, the hope of a radical overhaul of business rates was dampened by speculation that it may be slipping down the government’s agenda. All of which, recent reports say, are negatively impacting industrial growth and thus manufacturers’ ability to spend on hiring.

Stephen Hodges, CEO, Close Brothers Banking Division commented: “Our data shows a worrying trend amongst SMEs, including manufacturing SMEs. Despite a clear need for more skilled workers, hiring apprentices to address this simply isn’t possible for the majority of manufacturing companies. This is only made worse when macro-issues also impact on their ability to grow and meet their ambitions. We see the issues of cost, red tape and a lack of time also affecting many aspects of growth amongst the manufacturers we work with. Our SME Apprentice Programme is designed to tackle these issues. It’s our hope that this programme can be used as a model across different sectors to provide other SMEs with the support they need in order to achieve their ambitions.”

The Close Brothers SME Apprentice Programme is part of the company’s long established commitment to supporting SMEs. With the support of the University of Sheffield AMRC Training Centre the programme will help SMEs recruit and train a new generation of advanced engineering workers. The scheme helps pay for 20 apprentices in the Sheffield area to learn new skills at the AMRC Training Centre. Close Brothers funds half of the new recruits’ wages during the first year and a quarter in the second, meaning participating SME manufacturers won’t have to bear the full cost of employing the apprentices, until they are actively contributing to the bottom line.