Chief Exec’s report Q4 2021Leave a Comment
Read the full Q4 2021 Quarterly Review
4 minute read
Welcome all to our final review of 2021, a year of surprising welcome levels of order recovery in one sense, dampened by the reality of raw material, component, logistics and resource shortages and costs. One member couldn’t have described it more clearly in their response in this review: “We are not able to enjoy being as busy as we are, as the continual issues of price and supply are not easy to deal with”.
In any kind of normality, the increased order intake, output volume and exports would be welcome news after a period of downturn – and in truth they still are – but for now, it comes with a constant headache of where and when the ingredients needed to make a customer’s order will come from. Energy price increases are a new addition to the list of concerns, so perhaps it’s not surprising that almost half of our respondents believe that this challenge will be with us until the second half of 2022, and only then might we see an improving outlook.
Elsewhere, if you are looking for the risks that raise concern, Brexit still lingers like a bad smell, a gift that not only keeps giving but never seems to go away either. In the crucial skills area, one quarter of members have been impacted by the loss of EU nationals, and over seventy percent honestly outline that they are not fully prepared for the scheduled implementation of Brexit enforced import checks due to start from January 1st, 2022. That’s not surprising after the year and a half of plate spinning that industry has had to do just to stay alive, but it’s galling that this extra headache comes once again without support, and especially with zero benefit to industry in Scotland or indeed the UK.
November also saw the much-anticipated one-year delayed arrival of COP26, and after guessing what shape it might be, it very much was face to face, and certainly put Scotland in the spotlight on a global stage. As much as we would like to say we were in the heart of the global negotiations, we weren’t, but the fringe events we attended, spoke at and indeed led, underlined some common themes that are fundamentally important for our industry as we consider the challenge and opportunity of the climate emergency.
Our main takeaway from those sessions was that business and industry are now ahead of governments in their intentions for action to address the climate emergency. Whilst governments act with one cautious eye on the timing of the next election cycle, business is moving in the way it always has, first to survive and then to thrive. The realisation for business that achieving these aims only comes from change and action is the tipping point, as to whether you like it or not, the drive to be sustainable financially also brings the outcome of being sustainable in the broader climate sense.
As we look forward to 2022, it has to be a cautious outlook with materials, logistics, energy and wage inflation all likely to be possible causes of headaches for the foreseeable future, but perhaps the most difficult factor is the continued unpredictability. A constant theme across companies talking to us every day is how hard it is to plan, when there is so little you can reasonably base a forecast on.
Our optimism then comes from a sector that has survived remarkably intact after the most brutal of recent economic downturns, enacting all the learnings from recent, crippling recessions that allowed it to balance spending in a way that ensured survival. If margins get squeezed then the lean tools will be exercised continuously to find the savings that ensure survival, and against our never-ending skills challenge, this survey shows that training investment is an encouraging positive with a thirty seven percent increase for the next three months indicated.
It’s been a busy year for all then, with an improved business position versus 2020, but still with difficulty and uncertainty now and ahead. 2022 and beyond brings opportunity in abundance with the massive infrastructure programmes that our climate emergency targets stipulate across the UK, an opportunity that will need a concerted effort across Scottish industry stakeholders to ensure we have the skills pipeline needed to deliver.
Read the full Q4 2021 Quarterly Review