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).

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