John Swinney bids to soothe fears over cost of cuts to industry

Manufacturers have held talks with the Scottish Government to seek assurances that they will not lose out in the forthcoming cuts in public spending.

• Finance secretary John Swinney

Almost 60 top executives met finance secretary John Swinney, at an invitation-only event to seek ways of improving access to finance, raising its profile and ensuring it remains at the heart of the government's plans for recovery. Among those firms represented were BPI, Highland Spring, Thales, Axis-Shield and Caledonian Alloys.

Swinney told them the government was "determined" to address the perception of Scottish manufacturing as in long-term decline. He added that manufacturing and exports were key components to a sustained recovery.

The broader clampdown on credit has been felt particularly acutely in the manufacturing sector, where access to finance remains among the top concerns.

"The position is improving but is by no means acceptable with regard to the terms upon which finance is available and the characteristics of the arrangements being put in place to enable people to do viable business," Swinney said.

"It's very much on our agenda and is something that we continue to pursue vigorously with the UK government."

The meeting - hosted by the Scottish Manufacturing Advisory Service (SMAS) and the headhunters Finlayson Wagner Black - was a follow-up to a similar gathering held more than two years ago when industry leaders met the minister in an effort to get additional support for the sector from the new government.

Steve Graham, director of SMAS, said the climate for manufacturers had improved, but the sector continued to need support. Initiatives such as the expansion of the East of Scotland Investment Fund have been helpful, but this week's meeting concluded that more remains to be done. But it will have to be achieved in the face of declining public sector budgets, which may reduce grant support.

"The reality is that money is tight and is going to get tighter," Graham said, "so we are going to have to get tougher about deciding where that money goes."

The bias, he said, should be in favour of key growth areas where Scotland has the potential to compete on a global scale. Those include life sciences, the oil and gas sector, renewable energy and the food and drink sector. Other concerns raised included skills gaps among the working population, and the tendency to downplay what the sector has to offer. Graham said manufacturers also needed to focus more on growth and expansion.

"Businesses in Scotland are not very good at taking risks," he said."That's become very acute over the last two years with the amount of capital declining.

"We've got to find a way to encourage more businesses to take risk and it's got to be at capital that is at least cost competitive."

David Currie, managing director of oilfield services specialist FMC Technologies, said barriers also remained to forming link-ups with academia. His firm has licensing agreements with international universities such as St Petersburg, but has struggled to form similar alliances in this country, with the exception of Glasgow Caledonian and Robert Gordon universities.

"The universities and colleges have to get alive to commercial agreements in industry," Currie said. "They have a standard format and the approach is always, we own everything."