Chief Exec’s report Q2 2022
6 minute read
As an opening summary, a fifth successive quarter of positive principal measures might feel like something worth celebrating, and whilst there are signs of softening in the upward rate, we surely expected a sharper response than the levelling seen here, given the escalation in global turmoil of the last few months.
This muted response feels out of step with the continuing and deepening uncertainty that the feared invasion of Ukraine not only happened with devastating and ongoing humanitarian costs, but also underlined the interconnected and fragile nature of global supply chains. Once again, in the last two years, we learned that it’s easy to take certain commodities for granted until they stop.
The knock-on effect to gas and electricity costs has been added to the long line of other challenges, especially hard-hitting for a sector with a strong proportion of energy intensive operations. The logistics and materials headaches remain, and despite some very cold economic winds blowing our way, it is testament to our sector that we remain in positive territory – to stay there will require amazing efforts from all in the sector on innovation, product leadership and driving efficiency – it will not happen with fingers crossed alone. In terms of business threats, pole position is once again held by skills, regularly cited as the economic speed limiter that sets the maximum output for a business.
Last week I took part in a panel discussion following an in-depth look at the National Ship Building Strategy Refresh delivered by the CEO of the National Ship Building Office, Rear Admiral Rex Cox, and when the conversation naturally turned to skills, the question posed was are we doing enough to address the issue for the maritime sector? I answered that never mind the maritime sector, it’s a gap of such concern across engineering that if you were the MD of Scotland Plc (Engineering Division), it would be your single biggest priority, and every morning would start with your senior team daily skills crisis action meeting. So that would be a no.
Skills Development Scotland (SDS) published their Modern Apprentice new starts for the year to end of March 2022 in the same week, with welcome news that there was a near 40% increase over the same period for 2020/21 – the first year of the Covid pandemic. But it was still only at around 90% of pre-pandemic apprentice levels, and with low numbers in 2020/21 it represents an almost 600 shortfall over the last two years from the most recent benchmark of “good” we have. I think we can all have a gut feeling that it’s not enough to even just tread water, and sure enough, looking at SDS’s last sector skills assessment, it estimates that by 2024 we will lose 4600 staff from engineering through retiral, and a further 3400 will be needed for sector growth. So, a deficit of around 8000, against which a good year would see an output of around 1500 apprentices, to which we can add the engineering graduates who will stay and work in Scotland and choose to start a career in engineering. Not enough then.
My daily crisis meeting idea would be worthless if it only continues to rob Peter to pay Paul (no pun intended), so if we want something to change, we must change something – and that’s all of us: Industry, Education, Government and wider society too in our support and belief in the value of the full range of STEM skills. Alongside these tricky considerations, a real cause for celebration for the family of Scottish Engineering has been our 2022 Awards celebrations, returning to our traditional May slot to celebrate companies and individuals that have stood out in their innovation, resilience, and commitment in the last year. Our Young Engineer of the Year competition enjoyed a bumper entry of applicants, brimming with talent, personal growth, and examples of wider societal benefit through engineering and alongside these, our company award winners highlighted the fantastic variety and quality that exists throughout our industry.
It’s fitting perhaps to close with a stand out message delivered at the awards by our President Aine Finlayson: “Getting comfortable with constant chaos feels like the mantra for our age, and judging by the resilience our sector shows, and the support we give each other through Scottish Engineering, we are good at remembering that no matter what is coming at you, we have demonstrated commitment; innovation and adaptability with multiple creative solutions and this will steer us well through these times.”