One of the north-east’s best-known businessmen, Jim Milne, has said he is confident the worst is now behind the Scottish engineering and manufacturing industry.
Mr Milne, founder, chairman and managing director of Aberdeen-based Balmoral Group acknowledged there were significant challenges ahead for many firms as they try to recover from the impact of Covid-19.
But he also welcomed a new report highlighting an improvement in fortunes for the sector in Scotland.
He was speaking on the eve of industry body Scottish Engineering (SE) publishing its latest quarterly report.
SE says an improvement tentatively forecast by members earlier this year has “proven to be a welcome reality”.
Key performance indicators “across the board” have changed from negative to positive for the first time since the pandemic impacted operations, the report says,
But it adds a note of caution over ongoing concerns for “those sectors whose recovery is still some way off”.
Precision machining companies, in particular, are continuing to suffer from a lack of activity in the civil aerospace and oil and gas industries, it says.
While 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”, SE says.
Diversification key for the sector
Mr Milne said: “The report makes for welcome reading following a particularly harsh spell for engineering and manufacturing companies.
“It is pleasing to see that recovery rates appear healthier than expected at the beginning of the year.
“We read in the report that diversification will play an important role for the sector and, from a personal perspective, that is certainly the case.
“At Balmoral, we’ve used our experience in the oil and gas industry to inform the development of polymer-based product solutions for the offshore wind sector.
“There are still challenges to be faced during the recovery from Covid-19 but I am confident we have come through the worst of the current situation.”
It is pleasing to see that recovery rates appear healthier than expected at the beginning of the year.”
Jim Milne, Balmoral Group
SE chief executive Paul Sheerin said: “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.
“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… 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.”
SE’s report highlights a 27% net increase in orders for the sector in the past three months, with firms expecting an even bigger jump of 39% in the current quarter.
Measures for planned output, staffing, training, and investment are also up in line with a growing order book.
The report says a growing number of engineering companies now see opportunity in the path to net-zero, despite all the difficulties of the past year, with increased diversification into new projects in sustainable sectors driving optimism.
In his introduction, Mr Sheerin says: “Scottish Engineering sees that it is our responsibility to link the supply chain opportunities coming from the shift in industrial focus required to meet net-zero – in areas such as energy, transport and heating – and this underlines that our industry association intends to fulfil a key role in supporting companies in diversifying and growing in these areas.”