Quarterly Review

Q1 March 2021

December’s optimism has been curtailed by the impact of the new variant of coronavirus and further national lockdown since the start of the new year, and the end of the Brexit transition period unfortunately only brings additional challenge.

Chief Exec's report Q1 March 2021

Key attention points from this quarter:

  • Order intake and exports slip back by -5% and -11% from last quarter
  • Output volume increases 2 points to a balance of net zero
  • Companies staffing levels continues to slow its rate of decline, standing at -9% this quarter, an improvement of 8%
  • Confidence overall holds flat at -9%, 29% of respondents remain negative reinforcing sectors with lowest demand forecasting absence of visible recovery
  • Only one in four companies (25%) report ‘No Impact’ from the impact of post Brexit processes, with export documentation burden the most common impact
  • More than half (56%) of responding companies are experiencing detriment due to additional customs and logistics administration costs post-Brexit

 

The data in this Review were acquired by a survey of Scottish Engineering’s members and certain other manufacturing companies.

36% of members responded

Companies are described as:
Small (<100 employees), Medium (100–500) and Large (>500)


Output volume, and staffing have improved slightly since last quarter, whilst order intake and exports have fallen – all remain negative.  Output volume and staffing have improved by 2 and 8 percentage points respectively; order intake and exports are down by 5 and 11 percentage points.

Order intake

01 Order Intake

Output volume

02 Output Volume

Exports

03 Exports

Staffing

04 Staffing
05 UK Orders

   Net  

   Up  

   Same  

    Down  

UK Orders

-15%

28%

29%

43%

Small companies

-18%

27%

28%

45%

Medium
companies

-4%

31%

34%

35%

Large companies

-33%

17%

33%

50%

Machine shops

-30%

30%

10%

60%

Mechanical
equipment

-7%

30%

33%

37%

Metal
manufacturing

-50%

25%

0%

75%

Non-metal
products

-29%

29%

14%

57%

Fabricators

18%

36%

46%

18%

Electronics

-29%

14%

43%

43%

 

UK orders are negative, with the balance of change at -15%.  All sizes of company are reporting decreases. Across the sectors fabricators are reporting increases, but all other sectors are reporting a downturn.

06 Export Orders

   Net  

  Up  

  Same  

  Down  

Export Orders

-16%

23%

38%

39%

Small companies

-18%

23%

36%

41%

Medium companies

-13%

21%

46%

33%

Large companies

-17%

33%

17%

50%

Machine shops

-50%

17%

16%

67%

Mechanical
equipment

0%

31%

38%

31%

Metal
manufacturing

-67%

0%

33%

67%

Non-metal
products

0%

29%

42%

29%

Fabricators

-25%

0%

75%

25%

Electronics

0%

50%

0%

50%

 

Export orders are negative, with the balance of change at -16%.  All sizes of company are reporting decreases, the balance of change is -18% for small companies, -13% for medium companies, and -17% for large companies. In the sectors the balance of change is -50% for machine shops, -67% for metal manufacturing, and -25% for fabricators; mechanical equipment, non-metal products and electronics are reporting equal numbers of increases and decreases.

07 Optimism

   Net  

  Up  

  Same  

  Down  

Optimism

-9%

20%

51%

29%

Small companies

-13%

19%

48%

33%

Medium companies

0%

21%

58%

21%

Large companies

0%

17%

66%

17%

Machine shops

-40%

10%

40%

50%

Mechanical equipment

-6%

16%

62%

22%

Metal manufacturing

-13%

25%

37%

38%

Non-metal products

0%

29%

42%

29%

Fabricators

0%

36%

28%

36%

Electronics

57%

71%

15%

14%

 

Optimism has remained the same as last quarter, at -9%. Small companies are reporting decreases, whilst medium and large companies are reporting equal numbers of increases and decreases. Across the sectors machine shops, mechanical equipment and metal manufacturing are reporting decreases, electronics are reporting increases and non-metal products and fabricators are reporting equal numbers of increases and decreases.

08 Output Volume

  Net  

  Up  

  Same  

  Down  

Output volume

0%

36%

28%

36%

Small companies

-7%

34%

24%

42%

Medium
companies

15%

37%

41%

22%

Large companies

17%

50%

17%

33%

Machine shops

-30%

10%

50%

40%

Mechanical
equipment

9%

44%

22%

34%

Metal
manufacturing

-25%

25%

25%

50%

Non-metal
products

-29%

29%

14%

57%

Fabricators

9%

36%

37%

27%

Electronics

57%

71%

15%

14%

 

Output volume has improved 2 percentage points since last quarter and the balance of change is now 0, small companies remain negative whilst medium and large sized companies are reporting increases of 15 and 17 percentage points respectively. Within the sectors machine shops, metal manufacturing and non-metal products are reporting decreases; and mechanical equipment, fabricators and electronics are reporting increases.

09 Staffing

   Net  

   Up  

   Same  

    Down  

Staffing

-9%

18%

55%

27%

Small companies

-16%

15%

54%

31%

Medium
companies

-4%

19%

59%

22%

Large companies

50%

50%

50%

0%

Machine shops

-30%

0%

70%

30%

Mechanical
equipment

-6%

25%

44%

31%

Metal
manufacturing

-63%

0%

37%

63%

Non-metal
products

-43%

0%

57%

43%

Fabricators

27%

36%

55%

9%

Electronics

-14%

14%

57%

29%


Employees

Employee numbers are positive for large companies, but small and medium companies are reporting decreases. Fabricators are the only sector reporting an increase in employees.

 

 

  Net  

  Up  

  Same  

  Down  

Overtime

-6%

29%

36%

35%

Small companies

-16%

21%

41%

38%

Medium companies

11%

41%

29%

30%

Large companies

17%

50%

17%

33%

Overtime working has picked up, medium and large companies are reporting increases, but it is still reduced for small companies.

10 Investment

  Net  

  Up  

  Same  

  Down  

Investment

-4%

20%

56%

24%

Small companies

-8%

19%

54%

27%

Medium
companies

7%

25%

57%

18%

Large companies

-17%

0%

83%

17%

Machine shops

-60%

0%

40%

60%

Mechanical
equipment

-9%

9%

72%

19%

Metal
manufacturing

-38%

13%

37%

50%

Non-metal
products

14%

29%

57%

14%

Fabricators

10%

40%

30%

30%

Electronics

17%

17%

83%

0%

 

Investment

Capital investment plans have dipped since last quarter, with small and large sizes of company now reporting negative net returns.  Within the sectors non-metal products, fabricators, and electronics are reporting positive net returns, and machine shops, mechanical equipment and metal manufacturing are reporting negative net returns.

 

 

  Net  

  Up  

  Same  

  Down  

Training Investment

12%

25%

62%

13%

Small companies

9%

24%

61%

15%

Medium companies

14%

25%

64%

11%

Large companies

33%

3%

67%

0%

All sizes of company are reporting positive figures for training investment.


Capacity Utilisation

Capacity utilisation has fallen 2 percentage points since last quarter and remains negative at -14%. 11 Capacity Utilisation

Fabricators

Order Intake Total Fabricator order intake is positive for the second consecutive quarter. 12 Order Intake Total

Forecast

The last twelve months have been extremely challenging for our sector, but forecasts for the next three months look to improve slightly, although some measures remain negative. In general, overall orders, UK orders and output volume are forecast to recover slightly, but export orders remain negative at -3%.  All sizes of company are forecasting positive figures for UK order intake, export prices, output volume and employee numbers. Small and medium companies are forecasting negative figures for export orders, and medium companies are expecting UK prices to be negative.

Metal manufacturing, non-metal products, fabricators and mechanical equipment are forecasting an increase in U.K. order intake, whilst electronics and machine shops are forecasting a decrease. Mechanical equipment is the only sector forecasting an increase in export orders.  The forecasts for UK pricing are positive or neutral.  Metal manufacturing and electronics are forecasting a decrease in export prices, whilst non-metal products, fabricators and mechanical equipment are forecasting an increase.  Forecasts for output are positive from non-metal products, fabricators and mechanical equipment, but other sectors are neutral or anticipating a decrease.  Metal manufacturing and machine shops are anticipating decreases in employee numbers, whilst all other sectors are forecasting increases.

   Net       Up       Same       Down   

Orders

15%

 39%

 37%

 24%

UK Orders

 13%

 36%

 42%

 22%

Export Orders

 -3%

 26%

 45%

29%

Output Volume

 9%

 35%

 38%

 26%


Balance of change %

Order
Intake UK
Orders
Export
Prices
UK
Prices
Export
Output
Volume
Employees
Small 9 -7 24 16 9 10
Medium 19 -4 -8 8 0 18
Large 33 33 0 17 50 67
Metal Manufacturing 25 0 0 -33 0 -13
Non-Metal Products 14 -29 43 43 14 14
Electronics -29 -17 14 -17 -29 29
Fabricators 9 0 18 50 10 18
Machine Shops -10 -17 10 0 -10 -10
Mechanical Equipment 30 18 23 21 28 16