By Kristy Dorsey

Scotland’s manufacturing sector remains “a long distance from recovery” with more than 60 per cent of companies planning or having already cut jobs in order to survive the recession triggered by Covid-19.

In its latest quarterly report on the state of the sector, industry body Scottish Engineering also said it is “deeply concerned” that time is running out to secure a trade deal that would minimise the additional difficulties that will beset manufacturers after the Brexit transition period closes at the end of this year. In its survey of members, 58 per cent said they have yet to evaluate the impact of the UK Global Tariff process on their supply chain from the EU, while 61% said that if no trade deal is in place, their business will suffer further adverse financial impact.

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“In the midst of this biting recession it still raises disbelief that in four months we will choose to add the further financial penalties of Brexit, with impact regardless of whether a trade deal is reached or not,” Scottish Engineering chief executive Paul Sheerin said.

“A trade deal would reduce at least some of those headaches, so if the UK Government want to help this sector and the wider UK export economy, now is the time for compromise to deliver that.”

In terms of order intake, output volumes and exports, performance improved by almost a third from the previous quarter’s disastrous readings. However, the average outlook of minus 43 percentage points remains well adrift of the neutral 50 mark separating decline from growth.

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The fourth key benchmark of staffing was the only measure to have deteriorated during the last quarter, falling by nine percentage points to a net minus 36.

The proportion of jobs at risk at individual companies ranges from less than 10% to more than 50%. Scottish Engineering estimates that overall job losses in the sector could average 13%, with a “significant proportion” of these people expected to retire or otherwise leave the sector for good.

In addition to this, one in four companies are planning further reductions in training and apprenticeships.

Looking ahead, UK orders, export orders and output volumes are expected to show some improvement, but remain in negative territory at minus 11, 12 and 14 percentage points respectively. Overall optimism climbed to minus 40 from minus 63 percentage points in the previous quarter.

“Whilst these results cannot be presented as anything other than the extreme challenge that they are, there is evidence that the sector is showing the resilience it needs to survive by taking hard decisions on costs, and seeking out available and alternate business streams,” Mr Sheerin said.