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Sound investment – not heavy costs

first_imgSound investment – not heavy costsOn 1 Apr 2000 in Personnel Today Comments are closed. Previous Article Next Article Low completion rates have helped brand Modern Apprenticeships as a failureand prompted a Government rethink. But one engineering company has calculated theimpact of apprentice training on its bottom line – and the results areimpressive. By Elaine EsseryDoes a £9,000 return on an investment of £34,000 over four years seem like agood deal? K Home Engineering thinks so, which is why it is committed to apprenticetraining. Each apprentice makes a £9,000 bottom line contribution at the end of his orher four-year apprenticeship, according to a cost/benefit analysis carried outby engineering director Peter Kay.K Home Engineering is a multi-discipline management and engineering designcompany offering a range of services worldwide. It employs engineers in themechanical, electrical, instrumentation, civil/structural and processdisciplines. It is ISO9001 accredited and won the Queen’s Award for Export Achievementin 1998.Apprentices are taken on as trainee design engineers and follow a commonfirst year at Emta’s Cleveland Training Centre with day release to college fora Btec course. The cost of the first year, approximately £6,500, is met byTeesside Tec, leaving the company to foot only wage and National Insurancecosts. K Home also qualifies for a levy rebate of £3,600 from the ECITB foreach technician trainee completing their first year training.During their second, third and fourth years apprentices specialise accordingto their discipline, embarking on NVQ Level 3 in the company and continuing dayrelease up to HNC. An NVQ registration fee of £250 is payable by the employerin the second year, along with college fees of £500 per annum in years three andfour, in addition to employment costs.As they learn on the job, apprentices make a contribution to the business.”I analysed time sheets and used ten years’ experience of trainingapprentices to estimate what our apprentices contribute to the business onaverage,” Kay says. “In the second year 20 per cent of anapprentice’s time is recoverable as a CAD operator/technician. That goes up to40 per cent in the third year. In the fourth year 25 per cent of time isrecoverable as a CAD technician and 25 per cent as a CAD draughtsman as theybecome capable of taking on higher level work.”The analysis shows a break-even point after around two-and-a-half yearsbetween what an apprentice costs and the income he or she generates.Thereafter, income generation outstrips costs so by the end of the training anapprentice will have earned an estimated £43,000, while the training will havecost around £34,000, yielding a bottom line benefit of £9,000.100 per cent retentionBut short-term cost recovery is not the only reason K Home maintains itsapprentice training programme. It does so to overcome a shortage of designengineers in the area and to fill a void caused when major Teessidemanufacturers ceased to train technicians ten years ago, says Kay.”It would be disastrous for us not to take on apprentices,” hesays. “We are losing 30,000 engineers a year in the UK through naturalwastage and people going abroad and we are only putting 15,000 back, so thatleaves us with a deficit and employers are unable to recruit.”Kay takes on board the argument that companies spend time and money trainingyoung people only to see them leave, but he says, “If everyone adoptedthat attitude we would get nowhere. We all need to contribute to thepool.”The company has not experienced the problem of apprentices failing tocomplete their training, and has a completion and retention rate of 100 percent. It puts its success down to careful selection and thorough training whichenables apprentices to contribute to the business progressively and see thecareer opportunities it has for them.Kay undertook the cost/benefit exercise mainly to demonstrate the financialadvantages of apprentice training to other engineering employers and toencourage them to step up their own training efforts.The company is founder of the Tees Valley Engineering Partnership (TVEP)which aims to improve the quality and quantity of engineering training in thearea. Helping smaller companies is one of the aims of TVEP. “We are all inthis together and it is in all our interests to support training,” hesays.Changes aheadIn February Education and Employment Secretary David Blunkett announcedmajor changes to boost apprenticeships, including an extra £30m to train250,000 young people next year. National Traineeships are to become Foundation Modern Apprenticeships(FMAs), leading to Advanced Modern Apprenticeships (AMAs) in a bid to create acoherent structure, clarify terminology and improve progression routes.Among changes being considered by Blunkett are:Independent monitoring and supportFinancial incentives for employersAwards for traineesLicensing of employers who want to engage AMAs.DfEE officials are preparing a consultation document on the proposals. Arethe announcements welcome news for K Home? Kay has mixed feelings. For onething he would like to know more details about the plans. “I am not surewhat Mr Blunkett’s ideas are for creating two different types of ModernApprenticeship – it sounds very complicated. Direct financing of training isalways welcome and better than indirect finance such as ECITB levyrebates,” he says.But he fears other proposals may not help. “Setting up independentmonitoring would mean more money not going into training. And I’m not happywith the idea of licensing employers, as doing this would undoubtedly putadditional administration costs on employers. What about voluntary regulationor self-regulation through, say, something like the TVEP?” he suggests.He is also doubtful about the impact of the Government’s proposed increasedinvestment. “£30m to train 250,000; if my maths is correct that equates to£120 per trainee – not a lot.” Related posts:No related photos.last_img read more

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