A survey from the MHA network of independent accountancy firms in the UK suggests that Scottish manufacturers and engineers are more confident of growth than their counterparts elsewhere. 83% of them predict that business will increase by the end of 2013 compared to 75% for the UK as a whole. They also put the rest of the country into the shade when it comes to exports, with 76% supplying products to overseas markets, 5% ahead of this UK sector in general.
North Sea Oil remains important to the North East economy
The main export markets were mainly within the eurozone and the rest of Europe. Half of Scottish businesses also exported to Asia excluding China, the latter being one area where there is substantial room for increased trade. At the moment, less than 20% of respondents currently export to this significant market.
One area of concern to respondents was recruiting skilled staff. Many need extra staff to fulfil their growth potential; but 67% of Scottish businesses said that they have difficulties recruiting employees with the relevant skills and experience. This is higher than the UK figure of 57%, although with over 50% of respondents coming from the oil and gas and renewables sectors this is not surprising as skill shortages in the sector are well documented. The 18th Aberdeen & Grampian Chamber of Commerce Oil and Gas survey, published in mid-May, also reported over 60% of businesses facing skills shortages.
The Scottish companies participating in the survey were also asked what they considered the impact of independence might be on their business. 83% of them said they had yet to plan ahead for independence, largely because they were short of the essential information that would let them to do so.
Steve Cartwright, Head of Manufacturing and Engineering at Henderson Loggie — the lead firm in the survey, that that, while there were encouragingly positive results, particularly from a Scottish perspective, “we should not be complacent and the survey has found that, despite ambitions, growth is being constrained. There are a number of opportunities to maximise the manufacturing and engineering sector’s impact.”
Steve Cartwright
Henderson Loggie
These include research and development which plays a key role in economic growth; businesses, he said, should be educated on the importance of R&D with the aim of increasing spend. There’s also the image of manufacturing. The report suggests that companies should continue to promote the manufacturing and engineering sectors as appealing, with excellent career opportunities. Finally, businesses should be encouraged to take a more proactive approach to finding out about support available from Government. As Steve Cartwright acknowledged, “more needs to be done to ensure that any available support is communicated to the sector. Governmental backing, coupled with sound financial planning and advice on operating in unfamiliar territories, will ensure that the sector receives the support it needs to grow.”
James Bream, Research and Policy Director, Aberdeen & Grampian Chamber of Commerce added that the research was “particularly useful for adding some depth to high level output and confidence data. Across sectors we are finding the cost to do business is increasing significantly and squeezing margins. Businesses are making efforts not to pass on costs to customers and the survey found over 40% of businesses are using lean practices and continual improvement methodologies to maintaining margins and keeping prices down. The confidence in the future from Scottish manufacturers and engineers is reflected in the strong export culture in the North-east. This research helps us validate services available to members including international trade missions, export documentation and letters of credit as these members enter overseas markets.”
This latest manufacturing and engineering survey was conducted by Henderson Loggie, in conjunction with the other eight members of the MHA network. The Scottish element of the survey was analysed in conjunction with the Aberdeen & Grampian Chamber of Commerce Research Unit.