MORE Scottish engineering companies reported a fall in order intake than enjoyed a rise in the latest quarter, the first time this has happened since the opening months of 2010, a key industry survey reveals today.

And more companies in the sector reported a drop in optimism than declared an increase – the first time this indicator has been negative for nearly two years.

Industry body Scottish Engineering, publisher of the quarterly survey, says the economic chill affecting the eurozone and US is "finally affecting the temperature within the engineering ... industry in Scotland".

However, Scottish Engineering chief executive Peter Hughes highlighted the fact that larger engineering companies operating north of the Border were still doing very well.

He said it was small companies, with up to 99 employees, that were "feeling the hit".

Thirty-four per cent of companies surveyed by Scottish Engineering reported a rise in order intake in the latest quarter, with 37% enduring a fall, and 29% experiencing an unchanged position.

Among small firms, 42% reported a drop in order intake, and only 34% enjoyed a rise.

In stark contrast, 36% of large companies reported a rise in order intake and only 9% experienced a fall.

Mr Hughes cited Weir Group, Wood Group, Aggreko, ClydeUnion Pumps, Babcock, Rolls-Royce, and Thales as among the big companies which were "doing very well". He noted such companies had the advantage over their smaller counterparts in terms of their big customer bases and global spread.

Mr Hughes said: "The overall situation is still reasonable. I am not too pessimistic about it, to be honest."

Asked if he was disappointed that the eurozone and US economic issues appeared now to be hitting order intake and optimism in the Scottish engineering sector, Mr Hughes replied: "We thought we would actually see some of that in September, and it didn't happen. It (the impact) was about three months behind where we thought it was going to be."

Mr Hughes noted that, prior to the slide in the latest three months, the percentage of engineering companies in Scotland reporting a rise in order intake had exceeded that experiencing a drop for six consecutive quarters.

Meanwhile, he highlighted feedback from companies about significant skill shortages in the Scottish engineering sector, citing the need for "computer numerical control" machine operators, and declaring that firms "can't get welders anywhere for love or money". He also highlighted a shortage of project and design engineers, and electrical and mechanical engineers.

Among engineering sub-sectors, more firms in electronics experienced a fall in order intake than reported a rise, signalling this key sector of the Scottish economy came under pressure in the latest quarter.

While 31% of electronics companies reported a rise in new orders, 38% experienced a fall.

In contrast, 75% of companies in oil and gas-related engineering reported a rise in order intake and none of those surveyed in this category reported a fall.

In terms of optimism, 25% of Scottish engineering companies became more upbeat in the latest quarter but 26% reported a fall in confidence .

Following the same pattern as order intake, large companies were generally more confident than small firms.

Mr Hughes also claimed there was a need for more fact-based debate with the Scottish Government around key issues, including independence and energy policy regarding renewables and nuclear.

He said: "It annoys me that we don't get involved in any serious debate, based on facts. It is all political rhetoric".