By Scott Wright
RECRUITING staff with essential skills remains the “biggest challenge” facing the engineering sector in Scotland, according to a report that underlines growing optimism cross the industry.
The engineering industry saw an eighth consecutive quarter of order and output growth in the first quarter of 2023, figures published today by Scottish Engineering show. Only once has the industry in Scotland put together a longer sequence of uninterrupted growth since the millennium.
The report found that order intake was positive for a net 32 per cent of members of the industry body over the quarter. This was driven by UK orders and exports recovering from flat to a single digit, positive percentage figure, and up 12% on the preceding three months.
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Order volume was found to have increased for 43% of companies. Subtracting the proportion of firms reporting a fall from that experiencing a rise, a net 22% posted an increase in volume. Some 58% of companies are forecasting a rise in order volumes in the coming quarter, and 45% on a net basis.
The survey also underlined rising optimism across the sector, despite the challenging economic backdrop. A net 23% of respondents reported increased confidence while 15% indicated a fall in optimism.
And alongside rising optimism was growth in companies’ intentions to invest and train staff.
However, the report highlighted an ongoing shortage of skills in the sector, defining the shortfall as the “limiting gate on growth for too many companies”.
Scottish Engineering said that “this unfulfilled demand for skills is directly related to this quarter’s measure of capacity utilisation, with 31% of companies responding that they are at full capacity, compared to an average in the last eight years of less than 6%”.
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Paul Sheerin, chief executive of Scottish Engineering, said: “Current strength in orders and output is combining with future opportunities to deliver justified optimism for our sector. People and skills remain our biggest challenge, and conversations with industry on their need to attract a bigger – and more balanced – slice of our working population has driven our work to understand where we can lead on equality, diversity, and inclusion to attract, retain, and develop people.
“The results of our survey shows areas of action that are encouraging, and others where we clearly have a way to go, and we can return to these metrics to map our progress and more importantly call for action to improve it.”
The survey comes a week after Mr Sheerin highlighted that the number of engineering apprenticeships appeared to have grown in the last year to the highest level in a decade.
But, writing in The Herald, Mr Sheerin said that while the growth was “heartening” it was “not nearly enough”.
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“The widening gap between supply and demand – both current and near future – should feel like trying to work every day in a building where the firm alarm is sounding from the minute you arrive and never stops,” he said
The new survey shows that orders in the UK remained positive in the first quarter for all sizes of companies, with a net balance of 32% of firms in positive territory.
Medium-sized companies in the UK showed the greatest improvement, with a net balance of 40% showing growth.
Smaller companies followed closely behind, with a net balance of 30% of firms reporting an increase in orders.
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