Post Brexit uncertainty creates engineering slump

QR September 2016 – Press Release

The uncertainty surrounding the Brexit vote and the subsequent allusions to another Independence referendum by the First Minister, are exacerbating negative trading conditions for the engineering manufacturing sector in Scotland as witnessed by the results in the latest Quarterly Review of the industry published by Scottish Engineering.

The support group for Scotland’s engineering companies has seen a slump in orders and a sharp fall in output volume in the last quarter as well as a drop in employment levels.

Circumstances outwith the control of the Scottish economy, particularly the fall in Sterling against the Euro and Dollar, have impacted many costs for Scottish businesses.  Bryan Buchan, CEO of Scottish Engineering said: “We appear to have been hit on all fronts. The potential benefits of a weaker pound for exports have yet to be realised and our figures show there has been substantial downturn in export orders. At the same time, we have seen a significant rise in commodity prices, notably metals including nickel and zinc which is impacting directly on companies involved in fabrication and galvanising in particular.”

Order levels have been negative for eight consecutive quarters and have only been worse during the global slump of 2009.

Output volumes (21%up,31%same,48%down) are also at their lowest level since 2009.Staffng levels which have tended to be less volatile of late have dipped considerably (20%up,51%same,29%down) in this third quarter of 2016.

The guest writer in the Review, Lord Andrew Dunlop, Parliamentary Under-Secretary of State also comments on the result of the EU Referendum, stating: “There may be some turbulence ahead as our economy adjusts to this new reality and I fully recognise the concerns and questions which have arisen from the uncertainty of this decision for engineering businesses and their employees.”

He added: “I am pleased that the Treasury acted to secure the status of EU-funded projects, providing certainty in the medium-term on projects which are currently underway. It is important that we make it clear that the UK remains open for business.”

He concludes by suggesting that this Government: “Will hold fast to a vision of the UK that is respected abroad, tolerant at home, engaged in the world and working with our international partners to advance the prosperity and security of our nation, that truly works for everyone.”

Mr Buchan also hopes that the Bank of England’s recent package: “Will promote some improvement which will extend to our sector, but we now look to our new Chancellor Philip Hammond, to step in with further measures to defend our economy.”