Research reveals up to 300% return on investment from automotive apprentices
The Institute of the Motor Industry (IMI) is calling on the automotive sector to overcome its doubts about employing young people and to future proof businesses by hiring apprentices
The Institute of the Motor Industry (IMI) is calling on the automotive sector to overcome its doubts about employing young people and to future proof businesses by hiring apprentices. The call to action comes on the back of new research by the IMI that breaks the myth that apprenticeships cost firms money and overwhelmingly demonstrates that there is a clear and significant financial return.
The IMI's research shows that, by the end of their third year, a well-recruited apprentice can generate between 150% and 300% return on investment, based on a £50 hourly charge out rate. This means that for every £1 invested, the business nets between £1.50 and £3.00. Furthermore, apprentices who start with no experience typically generate profit within 18 to 24 months- much earlier than was previously assumed.
Co-funded by the UK Commission for Employment and Skills, the research is the result of a two year IMI project to ascertain the level of return on investment of, and make the economic case for apprenticeships. The study looked at a cross section of businesses from micro independents to franchise dealers across the whole of the UK and involved 30 apprentices. The productivity of an apprentice was found to follow an 'S-curve', showing low skilled, low level growth in the first year accelerating through the second year and delivering the same return as an experienced technician by the third or fourth year.
Steve Nash, the IMI's CEO, comments: "Businesses must overcome their doubts about employing young people and invest in the future if our industry is to succeed as a whole. Overwhelmingly, the results from our recent study have shown that there is a clear financial return to the business within the apprenticeship, but the attitude and support of the employer to the apprentice is critically important. By giving a young person opportunities to apply their skills they will ultimately become better and more productive technicians much earlier than commonly perceived."
About the research
To find out more about the IMI's ROI research
There were 5 key benefits identified as a result of the study:
- The IMI S-curves show that, by the end of the third year of an apprenticeship, for a £50 hourly charge out rate, an apprentice can generate between 150% and 300% return on investment - this means that for every £1 invested, against apprentice expenses, the business nets between £1.50 and £3.00.
- Apprentices typically generate profit within 18 - 24 months - this is based on an apprentice who has no experience and is essentially non productive at the start. If an apprentice has some experience, and is able to be productive from the start, they can pay their way much sooner - often in the first few quarters of the apprenticeship.
- Home-grown apprentice-trained technicians outperform market-recruited technicians.
- 'Growing your own technicians' through apprenticeships reduces long-term recruitment and training costs.
- Apprentices learn company best practice and culture from the start - helping to ensure a better fit with the team and internal processes.