Demand recovers

Factories upbeat despite no easing of rising costs

Paul Sheerin: persistent headwinds

Scotland’s engineering factories are seeing a continued recovery in demand, tempered by rising costs which show no sign of stabilising.

Order intake, output volume and exports during the last quarter are at their most positive since 2018, and firms are investing more in training staff, says the trade body Scottish Engineering.

But raw material and component cost increases remain “and there is no clarity that they are stabilising yet, with energy costs also now a significant concern”.

Staff shortages remain an issue and there is “concern that import checks scheduled for the New Year may bring further headaches”.

“Our optimism comes from a sector that has survived remarkably intact after the most brutal of recent economic downturns, enacting all the learnings from recent, crippling recessions that allowed it to balance spending in a way that ensured survival.”

The survey shows that training investment is an encouraging positive with a 37% increase for the next three months indicated.

Scottish Engineering’s chief executive Paul Sheerin added: “One year ago when the path of the pandemic was less clear, manufacturers would have bitten your hand off for the recovery of demand which has continued for three successive quarters now.

“But it’s tempered by persistent headwinds in material and logistics costs and availability, with little sign of improvement to bring some optimism, so it’s no surprise that our average of responses forecast this situation will remain until the second half of 2022.

“As ever companies will take actions to remain resilient in the meantime, and for the skills and resource shortages the significant increase in plans for training investment reflects how seriously industry takes this despite the wider uncertainty they face.”

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