In late 2025, the UK manufacturing sector continued to list skills shortages as the biggest barrier to growth, with three-quarters of manufacturers saying gaps in talent are holding them back. Nearly as many cited recruitment and retention challenges as a key constraint on performance and competitiveness.
This isn’t a temporary blip or HR problem – it’s a core business risk that affects productivity, delivery confidence, and long-term viability.
And yet, too many leaders still view an unfilled role as a temporary inconvenience rather than a strategic vulnerability.
The invisible damage of vacant engineering seats
When an engineer leaves and isn’t replaced quickly, two things happen that aren’t captured in neat budget lines.
Firstly, the work doesn’t stop. It is redistributed. Often to senior engineers already running flat-out or to managers being pulled back from strategy into firefighting. Secondly, the role becomes a gap in capability, not just headcount.
Data from the Institution of Engineering and Technology (IET) shows 76% of engineering employers struggle to recruit for key roles, with skills shortages most acute in specialist positions that are critical to delivery.
The UK is also facing a demographic squeeze: nearly 20% of the current engineering workforce is expected to retire by 2026, taking with them decades of tacit knowledge.
That matters because when specialist knowledge leaves, remaining teams are left to maintain systems and outputs they are not equipped to lead. And here the cost shows up not as a line on the P&L but in slower delivery timelines, lower product quality, and increased rework.
A decade-old but still relevant review of workforce economics suggests that replacing an employee can cost 1.5–2.5 times their annual salary when you account for recruitment, onboarding, training, and lost productivity.
For a mid-senior engineer earning £60–£80k, that’s not an HR cost, it’s a commercial cost.
Why the pressure doesn’t stay where it started
The impact of a vacancy ripples far beyond the empty desk.
A vacant role in engineering often means:
- Projects slow or stall while capable staff fill gaps
- Quality assurance functions are stretched, risking defects
- Continuous improvement gets shelved for urgent delivery
- Knowledge transfer and coaching slow or stop
Over time, these behaviours become norms, and the organisation adapts, but not because it thrives, but because it has to.
The result? A silent erosion of capacity, speed and confidence across the business.
This is particularly pronounced in manufacturing, where nearly 85% of firms say recruiting skilled workers is a major challenge. It’s no coincidence that sectors with the tightest labour markets also have the longest delivery cycles and highest rework costs.
The case for flexible hiring: contractors as strategic buffers
There is, however, a more measured way to manage engineering capacity in volatile delivery environments: contract engineers.
When deployed strategically, contract talent can do more than “fill seats”; they can protect delivery, elevate productivity, and build capability.
Skilled contract engineers can bridge gaps without long-term commitment, giving firms breathing room to hire deliberately and with quality. They’re most effective when:
- Supporting peak workload periods
- De-risking product launches or critical milestones
- Providing mentorship and coaching to junior engineers
- Stabilising teams while permanent hiring continues
Unlike permanent hires, contract engineers only cost what they deliver. There’s no long-term salary burden, and fewer overheads such as pensions or infrastructure costs, meaning leaders stay in control of spend while maintaining capacity.
This flexibility isn’t just a financial benefit, it’s a productivity lever. A well-integrated contractor can unblock bottlenecks, reduce cycle times, and raise the throughput of the whole team without the friction of rushed permanent hiring.
A strategic shift in hiring mindset
If manufacturing leaders are honest, one of the biggest risks they face in 2026 won’t be market demand or supply chain volatility. It will be their ability to deliver consistently with the talent they have.
Skills shortages aren’t a hiring problem, they’re a business continuity problem. And they won’t be solved by waiting for the “perfect candidate” to appear.
The businesses that perform best next year will be those that treat hiring as part of risk management and delivery planning, not just as a cost to minimise.
Whether through thoughtful permanent hiring, strategic use of contract engineers, or stronger internal pipelines, the shift starts with recognising that every unfilled role is a commercial risk, not an administrative gap.