Quarterly Review

September 2020

The rate of damage slows, but our sector feedback still shows that Covid-19 impacts make for a desperately difficult business environment. Companies have moved quickly to ensure survival, taking costs out of the business to offset falling orders and revenue.

Chief Exec's report September 2020

Key concerns from this quarter:

  • More than 60% of companies have or are planning redundancies to offset business loss
  • Confidence remains strongly negative at –40%, but improved from last quarter (-63%)
  • One in four companies plan further reductions in training and apprenticeships
  • BREXIT transition period deadline shows concern for UK Global Tariff and UK Conformity Assessment preparedness

 

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

45% of members responded

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


Order intake, output volume, and exports have improved slightly since last quarter, but still remain negative. Staffing has dipped by a further 9 percentage points. Order intake has improved by 18 percentage points, output volume by 24 percentage points, and exports by 14 percentage points.

Order intake

Output volume

Exports

Staffing

   Net  

   Up  

   Same  

    Down  

UK Orders

-39%

20%

21%

59%

Small companies

-58%

12%

18%

70%

Medium
companies

3%

37%

30%

33%

Large companies

-40%

20%

20%

60%

Machine shops

-90%

0%

10%

90%

Mechanical
equipment

-34%

23%

20%

57%

Metal
manufacturing

-80%

0%

20%

80%

Non-metal
products

-71%

14%

0%

86%

Fabricators

-8%

33%

25%

42%

Electronics

14%

43%

28%

29%

 

UK orders are negative, with the balance of change at -39%. Small and large companies are reporting decreases, whilst medium sized companies are positive by 3 percentage points. Within the sectors electronics are the only sector positive at +14%, all others remain negative.

   Net  

  Up  

  Same  

  Down  

Export Orders

-49%

15%

21%

64%

Small companies

-69%

10%

11%

79%

Medium companies

-18%

21%

40%

39%

Large companies

-40%

20%

20%

60%

Machine shops

-75%

0%

25%

75%

Mechanical
equipment

-42%

18%

21%

61%

Metal
manufacturing

-89%

0%

11%

89%

Non-metal
products

-50%

17%

16%

67%

Fabricators

-20%

20%

40%

40%

Electronics

0%

50%

0%

50%

 

Export orders are negative for all sizes of company. The balance of change is -69% for small companies, -18% for medium companies, and -40% for large companies. In the sectors the balance of change is -75% for machine shops, -42% for mechanical equipment, -89% for metal manufacturing, -50% for non-metal products, -20% for fabricators and electronics have equal numbers of increases and decreases.

   Net  

  Up  

  Same  

  Down  

Optimism

-40%

10%

40%

50%

Small companies

-48%

7%

38%

55%

Medium companies

-23%

13%

52%

35%

Large companies

-40%

20%

20%

60%

Machine shops

-80%

0%

20%

80%

Mechanical equipment

-24%

16%

43%

41%

Metal manufacturing

-60%

0%

40%

60%

Non-metal products

-29%

14%

43%

43%

Fabricators

-33%

8%

50%

42%

Electronics

-38%

13%

37%

50%

 

The rate of decline of Optimism has decreased slightly since last quarter but overall remains negative at -40%. All sizes of company and all sectors are reporting negative optimism. In the various sectors machine shops, metal manufacturing and electronics are reporting the greatest decreases.

  Net  

  Up  

  Same  

  Down  

Output volume

-39%

20%

20%

60%

Small companies

-56%

13%

18%

69%

Medium
companies

0%

35%

30%

35%

Large companies

-60%

20%

0%

80%

Machine shops

-90%

0%

10%

90%

Mechanical
equipment

-38%

24%

14%

62%

Metal
manufacturing

-60%

10%

20%

70%

Non-metal
products

-71%

14%

0%

86%

Fabricators

0%

33%

34%

33%

Electronics

13%

38%

37%

25%

 

Output volume has improved 24 percentage points since last quarter, but is still negative at -39%, small and large companies remain negative whilst medium sized companies are reporting equal numbers of increases and decreases. Within the sectors machine shops, mechanical equipment, metal manufacturing and non-metal products are reporting decreases; electronics are reporting an increase and fabricators are reporting equal numbers of increases and decreases.

   Net  

   Up  

   Same  

    Down  

Staffing

-36%

7%

50%

43%

Small companies

-41%

6%

48%

46%

Medium
companies

-29%

6%

59%

35%

Large companies

-20%

20%

40%

40%

Machine shops

-60%

0%

40%

60%

Mechanical
equipment

-41%

8%

43%

49%

Metal
manufacturing

-20%

0%

80%

20%

Non-metal
products

-29%

14%

43%

43%

Fabricators

-33%

8%

50%

42%

Electronics

-13%

13%

62%

25%


Employees

All sizes of company and all sectors have reported decreases in staffing numbers. Small companies reported the largest decrease at -41%, medium companies and large companies were slightly less, at -29% and -20% respectively.

 

  Net  

  Up  

  Same  

  Down  

Overtime

-51%

11%

27%

62%

Overtime working has picked up slightly but is still significantly reduced for all sizes of companies.

  Net  

  Up  

  Same  

  Down  

Investment

-42%

8%

42%

50%

Small companies

-43%

6%

45%

49%

Medium
companies

-39%

10%

42%

48%

Large companies

0%

40%

20%

40%

Machine shops

-60%

10%

20%

70%

Mechanical
equipment

-50%

3%

44%

53%

Metal
manufacturing

-40%

10%

40%

50%

Non-metal
products

-17%

17%

50%

33%

Fabricators

-33%

8%

50%

42%

Electronics

0%

13%

74%

13%

 

Investment

Capital investment plans remain repressed, with all sectors and sizes of company reporting negative or 0 net returns.

 

  Net  

  Up  

  Same  

  Down  

Training investment

-24%

12%

52%

36%

Training investment plans remain negative, although they have increased 18 percentage points since last quarter, and all sizes of company continue to report negative figures.


Capacity Utilisation

Capacity utilisation has picked up 20 percentage points since last quarter, but remains negative at -42%.

Electronics

Order Intake Total Electronics order intake has swung into the positive after three consecutive negative quarters.

Forecast

The last six months have been extremely difficult for our sector and whilst forecasts for the next three months show some improvement, they still remain negative. In general, UK orders, export orders and output volume are all forecast to recover, but remain negative at -11%, -12% and -14% respectively. Small companies are forecasting negative figures for all but one measurement – U.K. prices are expected to be positive. Medium companies are forecasting U.K. order intake and output volume to be positive and large companies are forecasting all measurements to be positive or equal numbers of increases and decreases.

Metal manufacturing, electronics, fabricators and machine shops are forecasting a decrease in U.K. order intake, whilst non-metal products and mechanical equipment are forecasting an increase. Non-metal products are forecasting an increase in U.K. order intake, U.K. prices, export prices and output volume and a decrease in export orders and employee numbers. Electronics are anticipating an increase in employees, but negative forecasts for other measurements. Fabricators and machine shops are forecasting decreases for all measurements. Mechanical equipment have a positive outlook for orders and output, but are anticipating a negative effect on export prices and employee numbers.

 

   Net       Up       Same       Down   

Orders

-5%

30%

35%

35%

UK Orders

 -11%

 27%

 35%

38%

Export Orders

 -12%

 22%

 44%

 34%

Output Volume

 -14%

 26%

 34%

 40%

 


Balance of change %

Order
Intake UK
Orders
Export
Prices
UK
Prices
Export
Output
Volume
Employees
Small -24 -18 3 -2 -28 -23
Medium 10 -7 -13 -14 6 -16
Large 40 20 0 0 40 20
Metal Manufacturing -40 -78 10 0 -40 -30
Non-Metal Products 14 -17 43 33 14 -14
Electronics -57 -57 -14 0 -38 13
Fabricators -17 -20 -25 -40 -17 -33
Machine Shops -50 -25 -10 -13 -60 -40
Mechanical Equipment 14 18 6 -3 5 -22