Chief Exec’s report Q2 2023


Read the full Q2 2023 Quarterly Review


6 minute read


Entering a third year of positive orders and output is definitely noteworthy, but it feels like a statement that is struggling to command attention in comparison to the feedback we are reporting on changes in flexible work patterns in our sector.  Society has seen a seismic shift in working patterns since Covid, and manufacturing has been no different, but honestly, we probably expected a gentler pace of change due to the well understood challenges that such changes present.. 

The positive business demand still has some eye-catching highlights, with around half our survey reporting increased orders and output in the last quarter, compared to around one in five experiencing a decrease on these metrics.  For the same measures, around one third of companies are forecasting increases for the coming three months, underlining that generally, the theme of busy and stretched continues. 

The same picture is reflected in staffing – four out of ten companies increased their training investment in this last quarter while only one in twenty reduced this, and four out of ten increased their staffing levels in the last three months and plan to do the same again. 

Against a backdrop of capacity constraints, it would seem an unlikely bet that industry would embrace working pattern changes that on the face of it could bring capacity reduction but given the importance of the ability for business to attract and retain staff, perhaps it’s not the surprise that it feels like at first glance. 

An important caveat in considering this is that we have no benchmark for these metrics, as in the thirty-two years that Scottish Engineering have been carrying out this survey, its not a question that we believe has been asked until now.  We know that the recent pandemic has had a huge influence in this area, but maybe not as much as we expected, with the 43% of companies stating that they had reviewed their working hours and patterns because of a post covid review being somewhat lower than anticipated. 

The driver for adding the question on flexible working to this quarter’s survey has been the sheer volume of conversation we have had with members as everyone tries to find the balance that works for their business, and that’s anything but straightforward.  Societally, we have an expectation and desire for a blended work pattern that allows for home working, and employers are acutely aware of how that positions their attractiveness to recruit and retain staff.  But the other side of that coin is the resulting ineffectiveness for early careers training and staff development more generally, and you can add internal friction in an organisation where it’s easier for one group to work more remotely than others.  Consistency has always been the bedrock of sound company culture, and for some organisations that has meant limiting or even eliminating remote working to maintain that fairness.  Who would envy finding the balance that meets those conflicting demands? 

In numbers, 68% of member companies reported that they allow employees to implement an element of working from home where that is practical or possible for the role they hold, a figure that compares specifically with the 83% of all sector companies adopting hybrid working reported in the CIPD’s extensive survey released just last month, which includes both public and voluntary sectors where it is recognised that these levels are significantly higher.   

Of course, flexible working is not just about working from home, and the wider application was where we saw results that we least expected.  More than one in four (28%) of our engineering companies allow their shop floor employees to work flexibly in terms of variable start and finish times, with the ability to bank and take back hours.  Combine that with a response that 47% believe that they are likely to review their flexible working arrangements in the next twelve months and this does feel like a significant and rapid shift within our industry. 

Compressed working weeks have been a longer-term feature of our sector, with shorter working Fridays or four-day weeks commonplace before covid.  28% of companies report that they already have a compressed working week in place, with a further 18% currently considering a move to a form of compressed working week, and the balance unlikely to consider such a change at this time.  The application of these arrangements can consider whether to maintain or shorten the number of weekly working hours, and here six out of seven companies have maintained the same hours in their compressed schedule. 

I said before that these results surprised the Scottish Engineering team with higher levels of use and consideration of flexible working than we would have expected, so its useful also to consider some of the comments on how this is working for companies – as whilst the argument for sector attractiveness is clear, it would be concerning if it brought significant detriment to the efficiency that makes us competitive, and that productivity is one we will all be watching closely. 

Companies adopting these arrangements report higher employee engagement and satisfaction as measured in their employee surveys, plus lower staff turnover, and for efficiency a range from gains to no detriment from the modified arrangement.  A positive view so far then which is more than welcome.  

Whilst there is no doubt that the pace of change and level of review suggests that this will be an area for our sector that will continue to evolve, it’s important to point out that more than ever no one size fits all.  The variety and breadth of engineering and manufacturing processes and operations means that what works for one may not be the same solution for others, but we can perhaps celebrate that in the constrained resource world we live in, once again our sector has shown its adaptability, flexibility and innovation in work practices to ensure it can survive and thrive. 

Paul Sheerin
Chief Executive
Scottish Engineering


Read the full Q2 2023 Quarterly Review