The engineering manufacturing sector in Scotland is maintaining a healthy set of figures for the fifth consecutive quarter, according the Quarterly Review published by Scottish Engineering and M&C Energy.

With orders and output both up compared to the first quarter of 2011, the engineering sector continues its successful battle against all the economic trends.

The knock-on effect of the strongest group of orders since our survey began can be seen in the improvement in staffing levels over the last four quarters.

Total order intake, incorporating both UK and export orders (47%up,32%Same,21%down) falls just short of the peaks that were achieved in Quarter 2 in 2006 and Quarter 4 in 2010. UK orders (40%up,39%same,21%down) have improved on the previous two quarters but exports (37%up,44%same,19%down) have dipped slightly.

"The reason our engineering companies have been so successful," Dr Peter Hughes, Chief Executive of Scottish Engineering explained, "is down to the hard work companies have done in relation to business improvement programmes. Management, staff and unions have worked together, recognising the need to remain competitive, to bring about this transformation in working practices. They have become more efficient and competitive so that they are now reaping the rewards for several years of hard graft allowing them to win contracts successfully in world markets."

One of the engineering disciplines that has turned itself round within a quarter is metal manufacturing which in the latest quarter has seen order intake (57%up,14%same,29%down) increase substantially in line with output volume (46%up,31%same,23%down) and staffing (43%up,43%same,14%down). This is then reflected in the level of optimism (43%up,28%same,29%down).

Throughout the industry the need for both training (30%up,60%Same,10%down) and capital investment (32%up,57%same,11%down) is recognised with both areas continuing to improve quarter on quarter.

One major continuing concern to Dr Hughes, recently confirmed by the Bank of England is the failure of the UK banking system to assist SMEs at an appropriate level.

"It is quite shocking how banks are continuing to treat engineering companies with bulging order books which are either being refused funding or are being offered it at such punitive rates as to make it unviable," he said.

On the same theme, at Scottish Engineering's recent Annual Dinner he asked some pointed questions about the working practices and efficacy of the Scottish Loan Fund which was launched earlier this year.

Commenting on the survey, Mark Dickinson, CEO of M&C Energy Group said: "It is wonderful to see the hard work of the Scottish engineering sector paying dividends in spite of the challenges surrounding business cost inflation. The continuing growth seen in this review underlines the importance of the sector to the Scottish economy. It is important that Scottish Engineering remains vigilant against global cost inflation, and relentlessly continues to manage its costs and processes to remain on this upward curve."