Engineering sector hampered by Russia boycott

Despite problems caused by sanctions on Russia, Scottish Engineering's report showed signs of recovery. Picture: Getty
Despite problems caused by sanctions on Russia, Scottish Engineering's report showed signs of recovery. Picture: Getty
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Scotland’s engineering sector got back on track in the final quarter of 2014 but firms are losing export orders because of sanctions on Russia, according to the latest survey by Scottish Engineering, published today.

The industry body said there had been a marked pick-up in employment but much of the growth in demand has been domestic, as both Russia and European markets remain in the doldrums.

Scottish Engineering chief executive Bryan Buchan said the recovery still had an “inherent fragility” to it, although he noted that some sectors were enjoying strong growth.

In particular, he said parts of the offshore engineering industry that had re-focused their attention beyond the North Sea were involved in buoyant emerging markets in Africa and South America where deep-sea oil and gas production is taking off.

“Where we are feeling the pinch is in the eurozone,” he said. “It’s being felt in the margins – to remain in European markets firms are having to be very price competitive. We are definitely feeling the effects of the austerity measures across Europe.”

He added: “From the latest round of district meetings throughout Scotland, I have heard directly of the effect on the surprisingly significant number of our members who export to Russia.

“The country’s general economic malaise is compounded by widening sanctions which are impacting on a range of Scottish-produced goods.”

He said a wider slump in the Russian economy meant that even those not directly hit by sanctions were struggling in that particular market. But he also pointed to the fact that the United States has turned off quantitative easing as the country appears to be well into a robust recovery.

“This should be seen as a positive sign because, as we know, what is good for the US can generally be good for us,” Buchan added.

Scottish Engineering’s final quarterly snapshot of 2014 shows the sector has apparently bounced back following a brief setback in the third quarter.

The two main indicators – order intake and staffing – are both showing growth over the previous quarter, with the improvement seen across all sizes of business.

Buchan said that a slight fall in the reading for output had been expected because of the drop in orders seen in the previous quarter, but production should now pick up again.

The engineering sector has long been campaigning to increase the number of young people taking up careers in the sector, which faces skills shortages in many areas as experienced older workers retire.

Buchan said self-help measures by a number of companies had mitigated the shortage, as firms invested in training semi-skilled workers in order to fill the gap.

He added: “One thing we found very encouraging this year was research by Scottish Enterprise that showed careers in engineering and technology were a top choice for both students and their parents.

“This could be the sea change in attitudes we’ve been hoping for, although engineering is still less respected that it is in some European countries, such as Germany.”

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