Factories recovering with ‘greater speed and scale’
Paul Sheerin: ‘welcome reality’ (pic: Terry Murden)
The speed and scale of the recovery among Scotland’s industrial companies is stronger than had been expected earlier this year.
Figures from trade group Scottish Engineering have turned a ‘tentative forecast’ into a ‘welcome reality,’ as metrics across the board move from negative to positive for the first time since the pandemic impacted operations.
“Whilst concern remains for those sectors whose recovery is still some way off, and raw material pricing and availability are a concern for all, the speed and magnitude of improvement is stronger than we could have reasonably hoped for in the first few months of 2021,” said the organisation in its latest update.
Orders in the last three months are up 27%, with a future forecast for the coming quarter of a further 39% increase.
Planned output, staffing, training, and investment follow suit as expected to match an increasing order book.
Challenges remain for sectors where delayed demand holds back those recovery benefits, and all are experiencing operational and financial restrictions caused by raw material pricing and availability.
The recovery from the pandemic has also been framed in the necessity to build climate action focus into the framework and support for economic rehabilitation.
“Scotland’s Engineering sector was well placed in this regard, with over 90% responding one year ago that they recognised the climate emergency as real and requiring urgent action, even where the actions posed a threat to their business,” according to the update.
“One year on and despite all the difficulties of the last year an increasing number of engineering companies now see opportunity in the path to net-zero, with diversification to sustainable sectors as the basis of that optimism.”
Scottish Engineering’s chief executive Paul Sheerin added: “As a self-confessed optimist, even I have to admit that I struggled earlier this year as new variant viruses and return to lockdown threatened to replace a hopeful outlook with dwindling optimism.
“In that regard, the results of our survey are more than appreciated in the scale and pace of improvement.
“Challenges remain, and these are global in nature related to demand on one hand and the economic balance of supply on the other.”
Mr Sheerin said the squeeze on global supply chains was an opportunity to embrace the supply across Scotland.
“One thing we can do here in Scotland is to remind ourselves of the truth that was underlined in 2020: that shorter supply chains are more resilient supply chains – and can also be more cost-effective – so let’s look to maximise the value we can have from suppliers here on our own doorsteps,” he said.
Business confidence rises
Business confidence in Scotland rose six points during May to 15%, the highest reading since February 2020, according to the latest Business Barometer from Bank of Scotland Commercial Banking.
A net balance of 8% of businesses expect to increase staff levels over the next year, up 17 points on last month and the first net-positive reading in 15 months.
Overall UK business confidence rose four points to 33%, a fourth consecutive month of growth.
The reading comes after non-essential retail and hospitality firms reopened their doors to customers.
Businesses reported an increase in optimism about their own trading prospects, up two points month-on-month to 28% and their confidence in the economy grew by six points to 38%.