The boss of Scottish Engineering (SE) has said the industry needs a preservation plan despite “tentative” signs of improvement.
Paul Sheerin, chief executive at the trade body, also warned that some sectors, including oil and gas, will recover from the Covid-19 crisis more slowly than others.
SE today published its final quarterly review of a torrid year for most businesses.
Mr Sheerin said: “It would be easy to look at this report and highlight the positive aspects, as they are certainly there, and we are all keen to find them at the end of a difficult year.
“Caution remains, however, particularly for those areas where recovery looks further away, in sectors where the competition is truly global.
“The winter economic support package from the UK government is genuinely welcomed, but come spring we need to ask whether we want to retain the strength we have in these sectors, and act to provide sector specific support to enable their survival.
“Other countries are doing so already, so if we want to retain our current capability, a preservation plan is needed, clear and visible, long before the current support ends.”
SE’s report says key indicators for the industry north of the border – like orders, output, exports and staffing – are showing “considerable improvement”.
It also reveals the number of companies expecting to axe more jobs has fallen from three in five (60%) in the previous quarter to about one in five (21%), although 15% are non-committal due an uncertain outlook for their businesses.
SE says it remains optimistic that 2021 will show an “upward curve of more normal operations” – delivering “crucial” benefits for business.
But the industry’s recovery will likely be uneven, it warns, adding it has “significant concerns for aerospace and oil and gas demand recovery”.
Highlighting Brexit as another cause for concern, SE says even a “best of a bad bunch” trade deal will mean “significant changes to almost every aspect of the way we do business with Europe”.
A majority of firms are still reporting reduced order intake, lower output and decreased exports but the negative balance has narrowed to an average of 4% this quarter, from 43% three months ago, SE says
Confidence overall has improved “significantly” but the outlook for different industry sectors is patchy, the report adds.
Two in five companies (42%) are experiencing a further “productivity impact” from coronavirus self-isolation absences, it says, adding: “More than half (56%) of responding companies have experienced and managed the impact of an employee attending their normal workplace and subsequently reporting a positive Covid-19 test.”
In his introduction to the report, Mr Sheerin says there is “genuine hope and optimism” in the industry.
He also describes net-zero targets as a significant opportunity as well as a concern, adding: “It’s not ideal to achieve business transformation in the middle of a biting recession.
“But if these commitments are real, and we believe they are, there will also be real demand for the engineering to deliver them.
“Nothing will enable that transformation more than ensuring the most significant portions of that demand flows to Scottish manufacturing and engineering companies.”