Only a slight easing of gloom

Oil price weighs on sentiment among manufacturers

WirelineThe oil price continues to weigh on the Scottish engineering industry with fourth quarter figures following the trend set in the previous three: static orders, and a fall in output and staffing.

Scottish Engineering, the trade body, says the price of oil has had a “devastating effect” on many companies throughout the country, while the strong pound has curtailed export activities across the board.

In the home market companies are finding that prices have been squeezed even further, and business is being taken ‘on the margin’.

Bryan Buchan, chief executive of the organisation, has identified a slight lifting of the gloom.

“The displacement of staff from the oil and gas sector has seen some easing of the long standing skills shortages across the central belt. This is not a total panacea as a number of companies which provide sub-contract services to the oil and gas sector are themselves recording a drop in orders. But it is allowing us some degree of hope for the future.”

While the overall order intake level over the past three months (27% up,26% same, 47% down) shows a negative differential similar to the UK orders (17% up, 34% same,49% down), the forecast for the next three months (26% up, 45% same ,29% down) shows orders in the home market are picking up yet they are still remaining negative. Companies are reporting similar figures and trends for export orders.

Optimism has been lower in all four quarters, culminating in the final quarter with 23% up, 37% same, 40%down.

HS2, the high speed rail line, has been identified as a potential source of new work. Representatives of the project were in Edinburgh recently to outline the opportunities available.

Mr Buchan commented: “HS2 is the biggest UK project for some time. If the timescales for the work remain on time, then this could be an important opportunity for our home grown companies.”

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