PRESS RELEASE – QUARTERLY REVIEW – DECEMBER 2017

Engineering industry reports improving order levels

Scotland’s engineering sector continues to report increased orders and output despite the political uncertainty which has threatened to disrupt the economy for some time.

According to the latest Quarterly Review of the industry published today, companies throughout the country are reporting that business is good and some have even admitted having an exceptional trading year.

Bryan Buchan, Chief Executive, said: “We are heartened by these reports which I have gathered from our District Meetings around the country.  Of course, many businesses are suffering from the continued fall-out from the decrease in oil-related activity on the UKCS and the effect of the weak pound on raw material prices.

“However, in his Autumn Budget the Chancellor’s proposal to change tax policy, allowing new owners of North Sea installations to reclaim corporation tax on decommissioning costs, should attract new investment to the oil and gas industry.”

Particular improvement has been recorded in export orders (42%up, 44%same, 14%down) compared to the previous quarter, and this may be caused by the weakness of the pound against other European currencies.

Employment levels across all sectors and size of company (33%up, 51%same, 16%down) have remained steady, as has the amount of overtime being worked (44%up, 35%same, 21%down).  There is still a problem throughout the industry of skills shortages.  Bryan explained: “The likely loss of some of our skilled immigrant workers due to Sterling’s relative weakness against the Euro is already being felt in some quarters.”

He added: “On a more positive note, we have great hopes for the new apprenticeship initiatives with Foundation Apprenticeships promising to deliver business-ready school leavers and Graduate Level Apprenticeships accelerating the return of desperately needed qualified engineers.”

 

 

Engineering industry in Scotland has seen a drop in orders

For the second successive quarter, the engineering industry in Scotland has seen a drop in orders and output according to the latest survey of the industry conducted by Scottish Engineering, the support group for the sector.

Bryan Buchan, Chief executive of Scottish Engineering said: “The result of our second survey this year has, undoubtedly been heavily influenced by the ongoing issues in the oil and gas sector and by multiple anxieties in the run up to the General Election.”

While orders across the sector have decreased slightly (29%up,39%same,32%down) this has not been reflected in staffing levels which have remained similar to the previous quarter (19%up,60%same,21%down).

The survey also highlights the fact that export orders have fallen further (20%up,41%same,39%down). According to Mr Buchan: “Our member companies hope for an amicable solution to the EU question, with Britain remaining in membership under more beneficial terms.

“We also feel that it is not in the best interests of the engineering manufacturing industry to have to wait until 2017 for the referendum. May or autumn of 2016 would be a much better proposition for companies considering investment in the UK, and of course Scotland.”

The guest writer for the Survey, Donald MacRae, Chief Economist for the Lloyds Banking Group Scotland commented that manufacturing has had a difficult recession and after output plunged in 2008 it has shown a weak recovery. But overall output remains 5.8% below the pre-recession peak.

He also makes the valid point that manufacturing is not just about ‘making things’. He said: “While production inside a manufacturing company is at the core of the business it can often be one of ten steps in the value chain. Remanufacturing and recycling are now important parts of the circular economy.”

Looking forward, predictions within the engineering sector are forecasting continued negative order levels for the next three months for both the UK market (19%up,56%same,25%down) and for exports (22%up,46%same,32%down).

Latest Quarterly Review

Proposals For A Lobbying Transparency Bill

21 July 2015

EJPS/mm

Lobbying Consultation
Room 4N.02
St Andrew’s House
Edinburgh
EH1 3DG

Dear Sirs

PROPOSALS FOR A LOBBYING TRANSPARENCY BILL

Scottish Engineering is the major support organisation for the manufacturing engineering industry in Scotland. We have been in existence in one form or another since 1865. Present membership includes upwards of 350 member sites throughout Scotland, covering all sectors of manufacturing industry. Membership ranges from the country’s largest and best known manufacturers to the many successful and innovative smaller ones.

Core Principles and Need for a Register

It would be hard to disagree that openness and transparency are important ingredients of any parliamentary engagement process although it is not entirely clear that the proposals in detail are in proportion to the issues being addressed. The consultation itself acknowledges that there are no identifiable concerns about the probity of lobbying activity in the context of Scotland’s legislature and it therefore has to be questioned whether the inevitable bureaucracy would be justified.

Who Should Register, Definition of ‘Lobbyists’ and Types of Communication

Noting that there is a momentum towards a Bill and a supporting code of practice, it is suggested that it might be preferable to follow the English example by not placing an onus on individuals to register. It will be very rare for individuals, even consultant or in-house lobbyists, to be acting in their own cause and it will be the organisation that they represent which will be seeking to bear influence.

We are particularly concerned that an in-house lobbyist is described as an individual within an organisation who lobbies MSPs or Ministers as part of their work. This is very broadly defined and could readily capture employees within a company or organisation who happen to have face-to-face contact with their MSP, perhaps at a meeting organised by someone else, and however informal the dialogue.

Strangely, ‘lobbying’ as such does not appear to be defined other than that which ‘engages’ a Minister or MSP at a pre-arranged meeting or event, nor is it clear what is meant by meeting ‘in any other circumstance’ [reference – paragraph 28 of the consultation]. This on the face of it would seem to be all embracing and could even extend to a social event where the prime purpose was other than seeking to influence the business of government.
Moreover, it will often be the case that an individual attends a meeting with a Minister as part of a wider audience and may not even make a vocal contribution, but the fact of attending would appear to require registration.

To take an example, an executive could be explaining to an MSP what the function of his or her organisation is and to witness at first-hand how it operates without necessarily attempting to persuade the MSP to a particular course of action. If imparting information in that fashion took place at a pre-arranged meeting, it would seem to require that executive to register beforehand. If so, that would be excessive and out of all proportion. If it were the MSP who initiated the meeting that could also be interpreted as placing an onus on an individual to register before such a meeting with the MSP could take place. The Scottish Government appears to have ruled out an approach triggered by the frequency of contact with Ministers or MSPs, bringing minor and infrequent lobbying within scope. Furthermore in the nature of social interaction it can frequently happen that unintended topics of conversation can occur which are quite separate from the original purpose of the meeting or event.

Although we would strongly agree that there should be no need to register ahead of correspondence or telephone conversations with a Minister or MSP, there could be an unintended consequence that lobbyists will convey their views and objectives by telephone to circumvent the registration process.

What Information to Register and Frequency of Reporting

Details of the issues discussed are admittedly very difficult to set into legislation but any regulation should not expose an individual or organisation to a sanction for allegedly failing to provide sufficient detail. Sometimes information disclosed may be confidential in nature, commercially sensitive or might reveal tentative proposals at an exploratory or formative stage. Even if 6 monthly intervals for disclosure are adopted, the subjects of discussion should be broadly descriptive or in headline form only. In other words it should be sufficient for someone accessing the register to know what the meeting or event was about, but any more elaborate approach based on Minutes for example would be overly burdensome, likely to inhibit discussion and defeat the principle of ease of access.

The foregoing aims to narrate our views on what we see as the thrust of the proposal for a Bill rather than an individual answer to each question posed. Bearing in mind that the core principles of openness and ease of access are recognised in the Ministerial Code and the MSPs’ Code of Conduct, coupled with Freedom of Information legislation, we are not persuaded of a compelling need for a Lobbying Transparency Bill.

However, given the apparent impetus towards a Bill, we believe that some of the proposed requirements are too broadly described and would benefit from more precise definitions, particularly around ‘in-house lobbyists’ and the type of communications intended to be covered. If not, and as indicated earlier, there is a risk that merely imparting information with no intention to ‘lobby’, or attendance at a meeting or event at which an MSP ‘communicates’ with an audience ‘face-to-face’ would ostensibly be captured and would require registration in circumstances which the proposers of the Bill could not have intended.

Yours faithfully,

E J P Smith
Head of Finance and Business Support

Global Forces Influence Scottish Engineering Companies

Global forces which are impacting on the price of crude oil are creating problems for the majority of engineering companies operating in Scotland.

According to figures produced by Scottish Engineering in their latest Quarterly Review of the industry order levels have dropped significantly in the last three months – both in the home market and in exports.

Another feature over which the industry has no control is the strength of the pound which is causing problems for companies which rely on exports.

Speaking of the North Sea situation, Bryan Buchan, CEO of Scottish Engineering said: “Many of our member companies who are not directly involved in extraction on the UKCS but who over the years have developed expertise in the manufacture of components and equipment are now seeing their activities radically curtailed.”

Looking more specifically at orders, UK orders in general (20%up,38%same,42%down) show a negative balance of 22 points while exports (22%up,32%same,46%down) have a 24 point negative balance. These figures are also reflected in output volume where (26%up,31%same,43%down) a 17 point negative figure will fall further before it improves, based on the orders downturn.

One area which is not giving cause for concern is staffing (26%up,47%same,27%down) which appears to be holding up. Forecasts for the next quarter are actually positive (22%up,60%same,18%down) and show that more companies are considering increasing their staff than are expecting to see their levels falling.

Despite the adverse tone of the latest Review, Mr Buchan is confident that there are a number of engineering manufacturing companies throughout Scotland which are not directly affected by the oil situation that are actually performing extremely well in such adverse conditions.

For further information contact Colin McGill on 0141 221 3181 or 07976 224412 or visit the Scottish Engineering website on www.scottishengineering.org.uk

SEPTEMBER 2015 QUARTERLY REVIEW

Times Still Tough For Engineering Sector

The engineering industry in Scotland has seen the fourth quarter of 2015 continue the trend set in the previous three-quarters: orders are static, output and staffing levels are down.

As in previous reviews of the industry published this year by Scottish Engineering, the support group for the industry, the price of oil has had a devastating effect on many companies throughout the country, while the strong pound has curtailed export activities across the board.

Another area in which the engineering manufacturing sector has seen a downturn has been in the home market where companies are finding that prices have been squeezed even further, and business is being taken ‘on the margin’..

Bryan Buchan, CEO of the organisation has identified a slight break in the clouds, and explained: “The displacement of staff from the oil and gas sector has seen some easing of the long standing skills shortages across the central belt. This is not a total panacea as a number of companies which provide sub-contract services to the oil and gas sector are themselves recording a drop in orders. But it is allowing us some degree of hope for the future.”

While the overall order intake level over the past three months (27%up,26%same,47%down) shows a negative differential similar to the UK orders (17%up,34%same,49%down), the forecast for the next three months (26%up,45%same,29%down) shows orders in the home market are picking up yet they are still remaining negative. Companies are reporting similar figures and trends for export orders.

One other area which has seen a depressing year is optimism. All four quarters have returned negative figures, culminating with (23%up,37%same,40%down) in the final quarter.

The guest writer in the Quarterly Review is Beth West, Commercial Director of HS2, the high speed rail network, who visited Scotland recently to spell out how Scottish engineering companies can benefit by tendering for parts of the £10 billion of contracts available in the supply chain.

Any work to Scottish companies would be decided throughout 2016 with the work due to start in 2017.

Mr Buchan commented: “HS2 is the biggest UK project for some time. If the timescales for the work remain on time, then this could be an important opportunity for our home grown companies.”

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For further information contact Colin McGill on 0141 221 3181 or 07976 224412 or visit the Scottish Engineering website on www.scottishengineering.org.uk