Scottish manufacturing has a bright future but the industry needs to develop better skills to help it cope with the worst economic conditions in more than 70 years, the Institution of Mechanical Engineers (IMechE) said yesterday in a report to Holyrood.

SCOTTISH manufacturing has a bright future but the industry needs to develop better skills to help it cope with the worst economic conditions in more than 70 years, the Institution of Mechanical Engineers (IMechE) said yesterday in a report to Holyrood.

In a generally upbeat assessment of the industry, which accounts for 13% of Scotland's GDP, the IMechE made four recommendations to the Scottish Government.

It wants Holyrood to support commercialisation of research and development through the creation of a centre of excellence for industrial prototypes.

The institution also calls for the creation of a "route map" for national infrastructure investment to create a stable demand for skills. "No clear route map for future infrastructure investment has been developed. Such a route map would help manu- facturers plan and ensure correct resources are in place," the report states.

More controversially, the IMechE wants the minority SNP administration to work with Westminster to build a carbon capture and storage project in Scotland.

It also calls on the government to encourage support of the emerging renewables sector by financing a "reli- ability data centre". This would measure the "reliability and maintainability" of renewable energy systems.

The institution points out that traditional manufacturing was focused around heavy industries such as steel, shipbuilding, locomotives, and more recently the construction of offshore oil rigs and platforms.

However, competition from lower-cost producers in foreign countries such as South Korea and China has lead to a downturn in manufacturing in the last 30 years, in terms of importance and contribution to the economy.

"Despite this trend", the reports says, "manufacturing still plays an important role in Scotland, currently employing in excess of 218,000 people and generating approxi- mately 13% of Scotland's gross domestic product, equal to more than £12bn".

The report warns that with the current global financial crisis, "prospects for the global economy appear to be worsening". It goes on to say that the world is experiencing an economic slowdown and many countries are entering recession.

"This economic slowdown has now caught up with the Scottish manufacturing industry and is presenting significant challenges for businesses that must be overcome."

In 1981, before much of the shipbuilding and mining industries collapsed, manufacturing employed more than 475,000 people north of the border. This represented 23% of total employment in Scotland.

Since then, the structure of Scottish industry has gradually shifted, with a reduction in Scotland's manufacturing industry and the number of people it employs. The latest data from the Office for National Statistics shows that 218,300 people worked in Scottish manufacturing, approximately 9% of total employment north of the border.

The IMechE said a number of key Scottish-based firms such as Doosan Babcock, Babcock Marine and Rolls-Royce were among those interviewed for the report.