An on-going shortage of skilled staff in the Midlands is jeopardising the future of many companies, businesses in the region have been warned.
The latest Business in Britain study from Lloyds TSB Corporate revealed more than half (57 per cent) of local businesses experienced difficulty in recruiting skilled staff the last year.
However a separate report by the Engineering Employers Federation (EEF) suggested he productivity gap between British firms and those of their overseas competitors could finally be closing following an increase in spending on training to boost workers' skills.
Its survey of 500 companies showed that over half had improved their productivity levels over the past year.
The EEF said its study revealed an increase in spending on training, which was set to continue this year.
But in the Midlands, the Business in Britain study suggested the skills problem looked set to continue during the first half of 2006, with just 27 per cent of firms expecting to fill their job vacancies in the coming months.
And the majority of companies (66 per cent) admitted to cutting back staff rather than taking new ones on.
Keith Simpson, who heads the organisation's commercial business in Birmingham, said: "Because of the tight labour market, finding the right person for the job remains a challenge for the region's businesses.
"A skilled workforce is integral to business success, but as the results of the survey demonstrate, the skills shortage crisis is jeopardising the future of many companies as they face the uphill struggle to recruit suitable employees.
"However, by continuing to invest in management, training and resources, we can wage the war for talent in the region with confidence."
However, it is not just the Midlands that is experiencing a shortfall of skilled workers.
Of the other regions surveyed in the report, businesses in the Eastern region (69 per cent) and the North and North Wales (58 per cent) also reported problems in hiring skilled staff.
But it is a different picture for businesses in London. Thirty three per cent of companies said they have taken on more staff, compared to 22 per cent that have reduced employee numbers.
The Business in Britain study also found there had been stable orders and sales throughout the UK, with the balance of companies increasing rather than decreasing exports in all of the regions except the East.
In the Midlands, 56 per cent of the companies surveyed reported increased orders in the last six months, while 76 per cent enjoyed improved sales.
The same per centage of businesses also reported above average pricing power. Capital expenditure was also a priority, with 57 per cent of firms choosing to invest in their business during the second half of 2005.
Mr Simpson said: "The suppression of consumer spending and rocketing oil prices make the business environment very challenging, especially for mid-sized firms."
Director general of the EEF Martin Temple said his organisation's report demonstrated that increasing the amount spent on training was not enough on its own to improve performance.
The Post reported in the autumn how the Midlands branch of the EEF said drastic action would be needed to address the looming skills shortage if firms are to move up the value added chain and compete. The organisation said 2,000 apprentices needed to be trained in the Midlands every year, which was nowhere near being realised.