A major skills shortage, tight profit margins and the threat of low cost offshore manufacturing are the top three challenges for the UK manufacturing sector this year according to a survey of 400 interims managers specialising in manufacturing.

According to the survey, commissioned by interim management provider, Russam GMS, 86% claimed there was an industry-wide skills shortage and over half believed that the greatest skills gap was in general management. One in five also thought that employees with change management skills were needed, and 18% felt there was a lack of good project management skills in the industry.

When asked what issues are worrying managers working in manufacturing the most, 35% stated that it was tightening profit margins; whilst 34% said that low cost off-shore manufacturing was the most significant threat. Increased EU regulations, a lack of skilled employees, rising interest rates and reliance on export markets were also causes for concern.

Interim managers are, however, pretty optimistic about the future of UK manufacturing: a third of Interims are more optimistic about the industry’s prospects in 2008 than 2007; 45% feel as positive as they did last year, whilst just 22% believe that the outlook looks worse this year.

In terms of industry sectors, 51% of respondents felt that aerospace was particularly buoyant; 49% predicted that the pharmaceutical industry would experience strong growth; whilst 40% of interims stated that both the food industry and the chemical industry were set for excellent growth in 2008.

John Wilson, head of manufacturing practice at Russam GMS commented: “The significant skills shortage appears to be particularly pronounced at managerial level. Whist this is good news for interim managers in terms of generating good employment prospects, it is an issue that needs addressing now if UK manufacturing companies want to retain their competitive edge in the future.”