The logistics sector is in crisis. A massive gap in skills and recruitment is stretching supply chains to breaking point. So could the property industry have the answer?
Developers are planning a series of new logistics academies around the UK – and according to their cheerleaders, they could help resolve the recruitment crisis that is now gripping the logistics business. It could also help landlords and developers.
Logistics academies are intended to help solve a well-known and deepening problem: the logistics sector is running out of skilled staff. The topsy-turvy growth of e-commerce has meant massive expansion in all parts of the supply chain – and the labour supply is not keeping up. The 2.2m jobs in the sector are expected to grow by at least 50%.
The response is coming, albeit slowly – and Liverpool is seeing much of the early action, inspired by the completion of the newly expanded Liverpool 2 deep sea container terminal. Bootle’s Hugh Baird College has won funding from the £232m city regional growth deal for a £2m plan to create Port Academy Liverpool. The academy aims to prepare youngsters aged 14 and upwards for job opportunities in maritime operations and logistics created by the development of the Port of Liverpool.
Further south, St Helen’s College and Knowsley Community College have tapped into the same fund to create a logistics academy supported by Stobart Group, Wincanton, Stena Line and the Chartered Institute of Transport and Logistics. The £3m academy will open this year.
Now the property business is getting into the academy business – and it sees providing skills training as a key marketing tool.
Gazeley is proposing a new Logistics Institute of Technology at the heart of its 4.6m sq ft plans to extend Magna Park in Lutterworth, Leicestershire.
The proposals include a “hub” containing the 40,000 sq ft Logistics Institute of Technology and campus to accommodate 400 students aged 16 upwards. It will sit next to a cluster of 15,000 logistics hubs on a site that will eventually total 13m sq ft of warehouse space.
Led by South Leicestershire and North Warwickshire and Hinckley Further Education Colleges in partnership with Aston University and Gazeley, the project aims to exploit this unique cluster opportunity.
Gazeley’s planning director, Gwyn Stubbing, says the academy seizes the opportunities identified by the Leicestershire LEPs’ logistics report and its Growth and People Action Plan to upskill the logistics labour force and address skills shortages.
Programmes will be co-created with employers for the existing workforce and will also inspire recruits from schools, colleges and universities, while providing bespoke opportunities for development and career progression within the sector.
“We are looking at a five-acre, campus-style development,” says Stubbing. “It will have all the usual academy facilities, from classrooms to football pitches.”
Gazeley hopes that the academy will add an extra something that potential tenants will appreciate, and see it as a powerful marketing tool.
“One of the biggest location factors for national or regional distribution centres is obviously the availability of labour – and they are looking not just for quantity of labour, although that is important, but for quality,” says Stubbing. “It is a really big consideration. We are saying we cannot help with the quantity – that is largely up to housebuilders – but we can assist on the quality, by upskilling the local labour force.”
He adds: “We can, in particular, help attract the youngsters and show them logistics is not just about warehouses; it is also about sophisticated IT.”
The advantages for property developers come in two forms. First, it is a large, tangible sign of the potential economic benefits of development – and a big “welcome, come and join us” invitation to the local community.
Magna Park is already a huge asset for Harborough, providing about a quarter of all the town’s jobs. A 200-acre extension could provide many more – something local politicians are sure
Stubbing discreetly sidesteps the suggestion that including the academy helps to ensure a smooth journey through the planning system for the Magna Park extension. But he confesses that it doesn’t hurt.
“I don’t think we would have a problem without the academy, because planning applications have to be assessed on their merits,” he says.
However, Gazeley is more up-front about the marketing benefits of the academy. In particular, it offers the chance for some product differentiation in a distribution park market dominated by monotonous large, flat, motorway-connected sites.
“Yes, the academy makes us different,” he says. “We hope it is something occupiers will take into account.”
For now, the academy, and the Magna Park extension, depend on receiving a green light from planners. Harborough District Council’s planning committee is expected to make a decision soon after Easter.
Jon Sleeman, director of industrial research at JLL, has no doubt that the logistics academy will do Magna Park no harm.
“The academy will contribute to the value of the site, because no site will attract occupiers unless the occupiers think they can attract people with the right skills,” he says.
“Areas that develop a strong logistics skills base will also influence developers’ decisions. We often look at the employment market in a given location when doing the preliminary work for planning applications because these days, developers want to know what the local labour pool is like before they do anything.”
Yet, as Sleeman reveals, improving logistics skills levels is not just something for HGV drivers or
pickers-and-packers. It is also about widening and deepening skills for property professionals. Sleeman – a graduate of Cranfield University’s post-graduate logistics course and a member of the Chartered Institute of Logistics and Transport – is playing a central role in JLL’s own logistics upskilling.
“We have been establishing an internal supply chain academy of our own,” he says. “The idea started in the US where we wanted to train brokers to understand what drives the supply chain. Now we are rolling that out in London, Paris and Frankfurt.”
Together with the recent takeover of a French supply chain consultancy, JLL is trying to forge new links in the supply chain.
“In other sectors, this kind of deep experience is normal,” says Sleeman. “I have known senior figures in the logistics business who started out working in warehouses. They know exactly what’s what because they have done it themselves. It is not knowledge from a book.”
Today, the JLL academy extends to about 45 senior members of its European industrial teams.
Filling the logistics skills gap will involve a journey down a long, slow road to reskilling. Yet for developers, their consultants and their tenants, there are increasingly hopeful signs that they are on the road to somewhere.
What is on the curriculum?
The Magna Park Logistics Academy will work with up to 400 16- to 19-year-olds from a 45-minute drive-time around the warehouse site. There will also be the potential for university student placements in the 19-21 age group.
The academy will cover three broad curriculum areas: computer programming and data analysis; engineering, including robotics and related technologies; and business management.
The emphasis will be on preparation for the world of work. The skills acquired can be transferred to a wide range of potential academic and employment futures.
Partnered by Aston University, the academy’s first student intake is projected for September 2017, subject to planning consents.
Beware of the gap
Research from the UK Commission for Employment and Skills suggests the logistics and distribution sector will need to fill 1.2m extra jobs by 2022.
The toughest challenge is recruiting young people to a sector in which some skills, such as HGV driving, are dominated by older men, many of them close to retirement. Just 9% of logistics sector workers are 25 or under.
Separate research commissioned by Baker Dearing Educational Trust says this results from outdated perceptions of young people and their parents that logistics is a low-skilled industry associated with cold, dirty warehouses.
Keep on trucking
The shortage of HGV drivers is particularly acute, with a 45,000 shortfall today and 60,000 more required by 2020.
The average age of the UK’s 600,000 HGV drivers is 57 and around 150,000 will retire in the next decade. The UK is training only 17,000 new HGV drivers every year – just enough to replace those retiring, and nowhere near enough to fill extra vacancies.
The Road Haulage Association has pointed out that many HGV drivers are approaching retirement, and replacements are not coming forward. It has warned of supply-chain breakdowns. A parliamentary committee is investigating.