Long read

How energy costs could be widening the skills gap in food processing

18-May-2023 - Last updated on 18-May-2023 at 09:55 GMT

High energy prices are threatening employee benefits at time when we need to focus on retention. Credit: Getty/wildpixel

Morten Wierod, President of ABB Electrification, explores the additional pressure that soaring energy costs are putting on businesses worldwide and how you can avoid sacrificing employee benefits in the face of high prices.

Rising inflation, increasing energy costs and security have never been far from the top of the global news agenda over the past year. But while much attention has been given to cost of living concerns for consumers and society, less has been highlighted about the ‘cost of operating’ challenges businesses are encountering due to this global crisis, including the potential knock-on effects on the food manufacturing workforce.

The £112 billion food and drink processing sector makes a substantial contribution to UK manufacturing, encompassing around 11,675 businesses and employing more than 450,000 people. It’s no secret that the industry is facing an enormous skills shortage. Data from the 2022 Skills Insight & Labour Market Focus Report¹ compiled by the National Skills Academy for Food & Drink (NSAFD) indicated that nearly 58 percent of food and drink businesses had ‘hard-to-fill’ vacancies, including for machine operatives, due to the low number of applicants with the required skills.

More recent reports, including the Q3 State of Industry Survey² by the Office of National Statistics (ONS), show that the numbers of vacancies are continuing to rise. Between Q2 and Q3 last year, the number of unfilled positions for every 100 jobs rose from 6.3 to 9.1, well above the UK’s average of 4.1. Even more worryingly, these shortages were reported across a wide range of different roles, from highly skilled engineers to production line workers and drivers.

Energy instability threatens investment in employees and innovation

New research by ABB Electrification suggests that there is now a new factor in that equation. Our Energy Insights survey³ of 2,300 leaders from small and large businesses across a range of sectors, revealed that 92 percent of respondents feel that the continuing instability of energy is threatening their profitability and competitiveness. Not only is this leading to reduced investment in innovation and new technologies, but businesses have also slashed investment in their workforces in the last year because of increased energy costs and the need to implement mitigation measures.

Martin — Morton Wierod highlights the difficulties energy woes are causing industry's labour force

If energy challenges persist, this trend is expected to continue over the next three to five years, with three of the top five business areas highlighted for budget reductions related to the workforce. Forty-two percent will spend less on recruitment; 38 percent will decrease spending on salaries, overtime and bonuses; and 37 percent will reduce investment in staff training and development.

This is a worrying situation at a time when the food and drink manufacturing sector needs to be more focused on recruitment, development and training than ever in order to keep pace with environmental regulations and future requirements for food production, including the shift to plant-based products and alternative proteins.

According to the NSAFD, there is general recognition that the sector needs to recruit, develop and retain the necessary skills for the modern workforce, which includes environmental management, procurement, supply chain and smart manufacturing. However, respondents to ABB’s survey made it clear that dealing with energy challenges could override spending plans that would normally enable their organisation to remain competitive, whether that’s related to their workforces with recruitment, retaining or developing talent, or investing in new technology capabilities for greater productivity, agility and speed.

How to avoid trade-offs in face of energy volatility

The good news for manufacturers is that addressing energy challenges does not have to mean sacrificing investment in people.

To build the sustainable food and drink sector society needs for the future, we need to move more quickly on both the supply and demand sides of the equation and harness technology tools and new ways of working to optimise energy across the value chain, such as retrofitting food processing facilities with smart energy monitoring solutions.

Much of the support and technology that can help food manufacturing businesses – large or small – to optimise their energy management and reduce costs, is already widely available and at a reasonable cost. Supporting them in the take-up of proven technologies in energy management, efficiency, and renewable energy generation and storage will not only help to insulate them from the impacts of fluctuating energy costs and security concerns; it will also support the green energy transition.

With the right approach, food manufacturing businesses don’t have to trade off climate and growth goals. Reduced energy costs and increased energy reliability should in turn alleviate cost pressures and enable investment in key areas of business growth, people and sustainability to be maintained.

References

Skills insights and labour market focus - nsafd.co.uk. Available at: https://nsafd.co.uk/wp-content/uploads/2022/11/NSAFD-Skills-Insights-Labour-Market-Focus-FINAL-report-for-NSAFD_120922.pdf (Accessed: 18 May 2023).
Jobs in the food and Drink Industry Fall (no date) The Food & Drink Federation. Available at: https://www.fdf.org.uk/fdf/news-media/news/2022-news/economic-insights/jobs-in-the-food-and-drink-industry-fall/ (Accessed: 18 May 2023).
Energy insights report 2023 (no date) ABB. Available at: https://campaign.abb.com/energy-insights-report-2023 (Accessed: 18 May 2023).