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21 February 2001: The UK Electronics Industry is under threat from skills shortages and a lack of investment in research and development, according to a new report published today by KPMG. These issues will only be resolved if the industry raises its profile in order to attract staff and to sustain overseas investment levels, the report warns.

The UK currently has the fifth largest electronics sector in the world, with annual revenues of $130 billion, out of a total $1 trillion revenues world-wide. The electronics industry has historically been a great success for the UK. It is the preferred location for the European headquarters of many of the major international electronics firms, the majority of which are US or Japanese owned.

KPMG recommends that electronics companies forge closer relationships with government and education organisations to improve the public’s awareness of the industry, and to develop favourable policies for companies. The latter will help competitiveness in a fierce global marketplace by reducing costs and improving profitability, such as tax credits on incremental research and development spend.

The report, ‘Electronics in Focus’, was compiled by KPMG with assistance from the Federation of the Electronics Industry (FEI). Round tables and interviews were carried out with key executives from top UK electronics companies to uncover the main issues affecting the marketplace. A postal survey based on the issues resulting from the round tables was then sent to all 186 members of the FEI.

The report identifies three major weak-spots affecting the future of the electronics industry:

1. Skills shortage: 98% of those surveyed agreed that this was the most pressing issue for the industry, and one which will worsen in the next year

2. Lack of investment in research & development (R&D): UK R&D spend in electronics is lagging behind the growth in the market and this gap is widening. Over two-thirds (68%) of industry leaders called on the Government to place a high priority on encouraging R&D spend through tax credits

3. Strengthening relationships with education and government: Over 90% of those surveyed said that working with the education sector to alter the perception of the industry would help to improve public awareness and attract employees.

The Electronics industry has traditionally been seen as a male-dominated profession, and the report shows that not enough has been done in the past to attract women into the industry. By introducing more flexible working patterns, the industry would become more attractive to a far wider skills base. The Government has already responded to the skills shortage by liberalising the issue of work permits for graduates with IT and other key skills. Their recent White Paper*, which focused on the areas of enterprise, skills and innovation, supports KPMG’s vision of improving university and business collaboration and encourages increased investment in R&D.

Crispin O’Brien, Head of Electronics at KPMG, commented: “The electronics industry has to develop stronger links with government and education to raise the profile of the industry and change perceptions. This is essential if companies are to attract and retain high calibre school leavers and graduates to the industry. Another aspect of this is proving to overseas investors and global firms that the UK is still at the cutting-edge of innovation and an attractive location for businesses.”

“UK firms can no longer assume that they will win business or attract new electronics plants, even if this has been the case in the past. The industry has to work with education and government groups to create centres of excellence and innovation, similar to the links that electronics companies have with universities such as Harvard and Stanford in the US. Our report is effectively a warning to the UK electronics industry - unless the industry responds quickly to these issues, the strength of the UK electronics industry could easily decline.”

Notes to editors:

KPMG facilitated round table discussions with key spokespeople from top UK electronic companies such as ARM Holdings, BT Cellnet, IBM, Motorola, Philips and Xerox.

The issues that emerged from the round tables and interviews were used to develop a postal questionnaire, which was sent to all 186 members of the Federation of the Electronics Industry in November 2000.
KPMG works with 15 of the world’s top 20 electronic companies, including Canon, Fujitsu, Motorola, Philips, Siemens and Xerox.
*White Paper, ‘Opportunity for All in a World of Change’, announced 13 February 2001 by the DTI.

KPMG is one of the leading global business advisers, with offices in 157 countries and over 11,130 staff in the UK. KPMG's Information, Communications & Entertainment (ICE) practice has developed outstanding knowledge of the sector, and provides a complete range of services to facilitate change and growth among ICE businesses. Worldwide, the ICE practice comprises over 13,000 dedicated professionals with audit, due diligence, tax, management consulting and corporate finance expertise.

For more information contact:

Kate Maybank, ICE Media Relations Manager, KPMG: 0207 694 4771

Kate.Maybank@kpmg.co.uk


For a copy of ‘Electronics in Focus’, contact:

Mark Grant, ICE Electronics Market Manager, KPMG: 020 7311 3249

Mark.Grant@kpmg.co.uk

This press release was distributed by ResponseSource Press Release Wire on behalf of KPMG in the following categories: Consumer Technology, Personal Finance, Business & Finance, Computing & Telecoms, for more information visit https://pressreleasewire.responsesource.com/about.