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Second successive quarter downturn

Oil downturn and election blamed for slip in factory orders

scottish industryThe slowdown in the oil and gas industry and uncertainty surrounding the General Election have been blamed for a drop in Scottish manufacturing orders and output for the second successive quarter.

Exports also slipped, although companies retained staffing levels which remained similar to the previous quarter. Firms are predicting “continued negative order levels” for the next three months for the UK and export markets.

Bryan Buchan, chief executive of support body Scottish Engineering, said: “The result of our second survey this year has, undoubtedly been heavily influenced by the ongoing issues in the oil and gas sector and by multiple anxieties in the run up to the General Election.

“Our member companies hope for an amicable solution to the EU question, with Britain remaining in membership under more beneficial terms.

“We also feel that it is not in the best interests of the engineering manufacturing industry to have to wait until 2017 for the referendum. May or autumn of 2016 would be a much better proposition for companies considering investment in the UK, and of course Scotland.”

The guest writer for the Survey, Donald MacRae, chief economist for the Lloyds Banking Group Scotland, commented that manufacturing has had a difficult recession and after output plunged in 2008 it has shown a weak recovery. But overall output remains 5.8% below the pre-recession peak.

He also makes the point that manufacturing is not just about ‘making things’. He says:  “While production inside a manufacturing company is at the core of the business it can often be one of ten steps in the value chain. Remanufacturing and recycling are now important parts of the circular economy.”


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