The latest LDP Business round table discussion looks at manufacturing. Neil Hodgson reports

ACCESS to finance is still an issue for business – but the skills gap represents an equally contentious problem as firms seek to improve competitiveness and develop niche positions in global markets.

That was one of the issues occupying the minds of nine key figures within the Merseyside business scene in the latest Liverpool Daily Post round table series, this time on the manufacturing sector, sponsored by business advisers and accountants Grant Thornton.

Prof Murray Dalziel, director of the University of Liverpool Management School, highlighted the perceived shortage in relevant skills by insisting: “The UK is at a competitive disadvantage because we haven’t invested in the early stages at school.”

He also believes the region could do more to retain the skills of around 75,000 students studying each year at Liverpool’s three universities as well as Edge Hill and Chester.

Lloyd Whiteley, chairman of Liverpool- based food and agriculture group Edward Billington, bemoaned a lack of suitably qualified graduates, saying: “We struggle to get high quality engineers.

“We can get people to run the factories, a lot from Eastern Europe, but if you want high quality engineers to run your line, we really struggle.”

He added: “At universities, engineering has gone downhill. It is now making a comeback, but there’s a gap in people in their 20s to 30s.”

Richard Else, operations manager at Jaguar Land Rover’s (JLR) Halewood plant, agreed, criticising cuts in training: “It was short-sighted of us four years ago when we cut back on these things, we should have invested in it. (skills).”

But Grant Thornton partner John Loebl admitted puzzlement at where today’s talented graduates go: “We talk about the lack of skilled people for what we do and I am thinking, what do they do? They’re not manufacturing or engineering, what do they do?”

Prof Dennis Kehoe, who founded Edge Lane-based technology company Aimes, believes the balance is wrong: “There’s a planning gap about our skills.

“We produce more media students than there are media jobs in the UK.”

And he proposed post-graduate courses to attune the workers of tomorrow to the modern world.

“I can’t employ graduates any more.

“They are as good as they have ever been. However, the world has moved on and the gap you need to contribute to a business like ours and what we have when you leave university, there’s a huge gap.

“There’s a need for a graduate apprenticeship for about two years.

“We can’t let them near our kit.

“The world has moved on. By the time they are 27 or 28 they are employable.”

He praised certain manufacturing sectors who he believes have learned to “cascade” the necessary skills to the new generation, but warned that hard-nosed business decisions still need to be addressed where it is clear there are problems.

“The automotive, aerospace, industry and food sectors are great at passing down good practice,” he added.

“There’s lots of good things being done. But, maybe we have propped up too many companies.

“Liverpool Innovation Park has a good example on the Marconi site which was the place where digital telephony was born, and all that has been lost to the city because we hung on to that side and it went down from 3,000 to 1,300, and when it finally died and withered there was nothing left.”

Prof Dalziel supported the notion of allowing business casualties to fall by the wayside. He said: “Bankruptcy levels are much lower than 10 years ago.

“There’s a lot of inefficient small businesses because of low interest rates.

“There should be more self-destruction, and allow more efficiencies.”

And the panel believed there was a need for the banks to be more ruthless in today’s struggling economy.

Prof Kehoe defended their lending policies post-economic downturn, saying: “They lent to the mad, bad and sad and you can’t say to them you need to do that again. The banks will fund development, not cash flow or working capital. You need to be doing something new in an area of growth.”

Mr Whiteley disagreed: “Whatever the banks tell you, they aren’t doing it.”

But Dr Penny Attridge, senior investment manager with Liverpool Science Park-based early-stage venture capital fund SPARK Impact, interjected: “I know small businesses just starting up that banks are backing.”

However, Knowsley Chamber of Commerce chief executive Lesley Martin-Wright said another problem facing small manufacturing firms eager for development capital, is the expertise to unlock funding: “Micro businesses have worked their socks off, but they don’t have any ability to do the business plan.”

She suggested Grant Thornton has a specific role to play in this regard following its appointment to a consortium delivering support through the Manufacturing Advisory Service (MAS).

“There’s an art in that and that is where the MAS could work.”

Grant Thornton partner Neil Sturmey agreed, saying: “The element we are particularly involved in is the business improvement aspect, and that’s where our skills set fits.”

Larger scale companies can still rely on the support of a group structure, although even some of the biggest are now more insistent on sustainable success.

Alan Jones, managing director of mobile electrical power company Conductix Wamfler revealed: “We’re fortunate in that we have had a very good year.

“But, we’re part of a French- owned group and if we need finance the parent company is quite supportive.”

JLR is owned by Indian conglomerate Tata and Halewood director Mr Else added: “Back in 2008 JLR was a difficult place to be because the market collapsed around us. We have gone through a transformation we could not have predicted would happen, but we have been supported by our parent company.

“If they had bought JLR a few months later it might have been a different outcome – but they have made it clear that we need to stand on our own two feet.”

Attention then turned to the prospects of a private-sector led export recovery and Mr Whiteley cautioned: “Our main export partner is Europe and they’re in a frightful mess.

“The idea of an export-led recovery, quite frankly, I don’t think is going to happen.”

But Mr Kehoe looked beyond Europe to China where he believes the focus for the UK has changed significantly: “The opportunity is not cheap labour. That opportunity has passed now. The opportunity is the market. When they electrify their rail system, that is the big opportunity.”

However, in the short term he believes an economic stimulus could lie closer to home: “This city is very second rate in terms of digital infrastructure.

“Politicians don’t understand it. But 200 years ago people didn’t understand how the sewer system worked. That is the challenge to this generation.

“There’s a £10bn hole in our digital infrastructure in the UK and that is a role for the state. This is a very important sector for this city. There are very competent people in this sector that has had a huge impact on this society. We should be part of that in taking that up.”

To watch video interviews with some of the panel members log onto www.ldpbusiness.co.uk