The UK's manufacturing sector is facing a hiring crunch with the quality and quantity of graduates "failing to match up to industry needs", a watchdog has warned.

According to research by the manufacturers' organisation the EEF, manufacturers will need almost a million replacement workers by 2020.

But the report warned that this need comes at a time when skills from within the UK are already in short supply.

"With UK manufacturing continuing to expand, access to the right skills in the right numbers is ever more important," said Terry Scuoler, chief executive of the EEF.

"Businesses are engaging with universities, sponsoring students and hiring graduates, but we need action now if we are to meet expected demand.

"Decisive steps must be taken if we do not want to see the manufacturing sector increasingly looking outside the UK for talent for fear of otherwise running out of steam."

The research revealed that in the next three years alone more than six out of 10 of manufacturers (66%) plan to recruit an engineering graduate [Fig 1].

EFF Graph
[Fig 1] Manufacturers\' demand for graduates is on the rise EFF

More than a quarter of firms (27%) will also be on the recruitment trail for those with business and administration degrees, while 20% will be taking on people with a technology degree.

But their plans could be holed by the limited number of science, technology, engineering and mathematics (Stem) students coupled with the number of graduates lacking industry experience and manufacturing knowledge.

As a result, 80% of manufacturers want to see higher education establishments prioritise improving student employability while 79% want courses to be designed to meet industry needs.

The study also found that almost three quarters (74%) want to see universities build stronger relationships with employers - crucial if students are to gain valuable work experience and the skills and knowledge employers say they lack.

More than six in ten manufacturers (63%) think that increasing the number of placements and internship opportunities at universities will increase the number of Stem students.