By Ian McConnell
Business Editor
SCOTLAND’S engineering sector has recorded a fifth consecutive quarter of growth in output volumes, order intake, exports and staffing, but expansion has eased slightly and skills shortages pose a major threat, a survey shows.
Scottish Engineering chief executive Paul Sheerin, writing in the industry body’s latest quarterly report published today, expresses surprise that the growth slowdown was not greater amid “global turmoil”. And he declares skills are “regularly cited as the economic speed limiter that sets the maximum output for a business”.
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He says: “A fifth successive quarter of positive principal measures might feel like something worth celebrating and, whilst there are signs of softening in the upward rate, we surely expected a sharper response than the levelling seen here, given the escalation in global turmoil of the last few months. This muted response feels out of step with the continuing and deepening uncertainty that the feared invasion of Ukraine not only happened with devastating and ongoing humanitarian costs, but also underlined the interconnected and fragile nature of global supply chains. Once again, in the last two years, we learned that it’s easy to take certain commodities for granted until they stop.”
Mr Sheerin notes “the knock-on effect to gas and electricity costs has been added to the long line of other challenges, especially hard-hitting for a sector with a strong proportion of energy-intensive operations”.
He adds: “The logistics and materials headaches remain, and despite some very cold economic winds blowing our way, it is testament to our sector that we remain in positive territory. To stay there will require amazing efforts from all in the sector on innovation, product leadership and driving efficiency – it will not happen with fingers crossed alone. In terms of business threats, pole position is once again held by skills, regularly cited as the economic speed limiter that sets the maximum output for a business.”
Subtracting the proportion reporting a fall from that recording a rise in the latest quarter, a balance of 17% of engineering companies in Scotland achieved an increase in UK orders. Respective balances of 18%, 12% and 16% reported rises in export orders, optimism, and output volumes. Growth in UK and export orders, and output volumes slowed.
However, the rate of increase of staffing accelerated, with a balance of 25% of respondents recording a rise in workforces.
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