The impact of skills programme spend cuts on manufacturing growth potential

Innovation is the currency of progress, and a company’s investment in skills programmes is a testament to its commitment to a thriving manufacturing sector. The very foundation of this growth rests upon the shoulders of a well-equipped workforce but, unfortunately, the cost of upskilling and reskilling employees can be difficult to swallow, particularly for organisations grappling with economic uncertainties.

Paige Sherriff, the head of Skills Development at BMA, says that as companies look to cut budgets, skills development is often an easy target. “Most organisations recognise the potential of a skilled workforce to drive productivity and innovation. However, as it’s difficult to quantify a rand return on skills training, they tend to opt for programmes that provide BBBEE [broad-based black economic empowerment] points, SETA [sector education & training authority] mandatory and discretionary grants, and tax rebates,” she explains. “The catch is that to qualify for these incentives, training must be accredited, which in many cases is detrimental to discretionary skills spend on non-accredited courses that meet company growth requirements more directly.”

Many companies, therefore, are opting for accredited programmes – a fact that was confirmed in a recent survey among manufacturing companies in the Clothing, Textile, Leather and Footwear and the Automotive and Chemicals sectors. 79% of respondents indicated that accreditation is of moderate to extreme importance when selecting skills programmes.

“The respondent organisations indicated that BBBEE and SETA workplace skills plan requirements were barriers to the uptake of non-accredited training courses. There was also a strong preference for SETA/QCTO [Quality Council For Trades & Occupations] accreditation bodies over higher education and other training providers,” adds Sherriff.

She elaborates further: “Discretionary skills spend has also been further eroded by the cost of running a business in South Africa. The impact of COVID, escalating interest rates, fuel prices and loadshedding have contributed significantly to lost uptime and increased overheads in the production of goods. Add the continued downward pressure from customers to meet price points and targets and, understandably, 83% of the surveyed firms confirmed they have cut discretionary spend on skills training.”

This cut, however, comes at a cost.

“Not all accredited skills programmes meet the critical skills needed to support business growth,” says Sherriff. “To qualify for BBBEE points and/or rebates, firms often invest in ‘quick win’ training initiatives not directly related to their business or industry. This training usually provides little to no return in their operations and value chains.”

Measurable results

At the core of every thriving manufacturing sector lie critical skills that drive growth. According to survey respondents, innovation, efficiency and competitiveness stand out as the most crucial skills for the manufacturing industry – skills that lean manufacturing drives for process stability, standard operating processes/workflow alignment, cost control and inventory management.

“Through strategic investment in non-accredited programmes designed to develop skills specifically for manufacturing, companies provide their employees with the tools and knowledge needed to identify and implement projects that contribute positively to the bottom line,” continues Sherriff. “That is where training delivers REAL impact.”

This is achieved by focusing on training that adds to the elimination of waste, optimisation of production processes and continuous improvement. Trained employees are then enabled to contribute to and improve the overall efficiency of the manufacturing process.

And there are definitive results to back this up.

“Learners who completed our Lean Manufacturing programme have delivered as much as a massive 1:30 return on investment in skills development spend,” Sherriff states. With their new skills, these learners have identified over R50 million in annual waste reduction opportunities in 2023 implemented by operators, supervisors and team leaders.

“By optimising production processes and eliminating waste, manufacturers can produce goods at a lower cost, making them more competitive in the market. This increased competitiveness leads to increased demand for locally produced goods, which in turn supports local supply chains and promotes economic growth.”