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