Engineering sector growth accelerates
Industry body lambasts rules stopping non-EU graduates from staying to work
THE Scottish engineering sector enjoyed an acceleration of growth in order intake and output volumes from already significant rates in the latest quarter, as employment and export business rose sharply, a survey reveals.
Industry body Scottish Engineering’s survey shows a third consecutive quarter of growth in new orders, output volumes and staffing. This recovery follows seven successive quarters of decline in order intake and output volumes.
Bryan Buchan, chief executive of the industry body, meanwhile criticised UK legislation preventing people from non-European Union countries from staying in Scotland after graduating, highlighting strong demand for specialist skills.
Mr Buchan said: “An immediate benefit to our sector would be removal of the ridiculous legislation that prevents non-EU graduates remaining in the country into which they have been assimilated while being educated, even if they have the opportunity of a job.”
He added: “They can’t immediately just graduate and go into employment [in Scotland] is my understanding. The universities are really strong on this – that they disagree with it [the legislation]. They are seeing their students being integrated, happy with their life in Scotland and obviously [having] exposure to some of the companies they [universities] have relationships with. It is effectively terminated.”
Mr Buchan, meanwhile, praised Scottish universities for their commitment to “graduate level apprenticeships” that can enable people, while working with an employer in the industry, to gain a Masters degree in engineering.
He said: “It is heartening to see our major universities, including Strathclyde and Heriot-Watt, getting behind the various graduate apprenticeship schemes that should do much to address the country’s skills gaps and which will prove extremely beneficial to both the student apprentices and their employers.”
Mr Buchan noted such programmes provided employers with “industry-ready” workers who were “not burdened by debt” because the companies picked up the education costs.
Drawing a parallel between such programmes and routes into the engineering industry in some mainland European countries, he added: “We have to hope that, over time, graduates through this route will be afforded equivalent status to their contemporaries in Continental countries such as Germany, Switzerland and France.
“In these countries, apprentice training attracts many of the brightest and best who, on completion of their apprenticeship, can often have academic qualifications or, at least, be trained to a professional standard, which is no less valuable than a conventional degree qualification.”
Subtracting the proportion reporting a fall from that achieving a rise, a balance of 30 per cent of Scottish engineering companies posted an increase in order intake in the latest quarter. This signalled an acceleration of growth of new orders, with a balance of 27 per cent having posted a rise in the previous quarterly survey.
In the latest quarter, respective balances of 28 per cent, 24 per cent and 22 per cent of Scottish engineering companies posted rises in output volumes, export orders and staffing. The pace of increase of output volumes accelerated sharply during the quarter, while the rate of export order growth eased slightly, the survey signals. And the rate of increase of employment picked up strongly.
Mr Buchan noted the emergence of some positive reports from engineering companies serving the oil and gas sector, which has been hammered by protracted crude price weakness.
He said: “We are starting to hear some positive news come through from the oil and gas supply chain. It is slow in gaining momentum. We have heard more positive stories in the last quarter than we did in the previous quarter – people saying they are starting to pick up orders again.”
Noting moves by smaller engineers in particular to diversify into markets outwith oil and gas, he added: “People have, out of necessity, diversified. Many of the smaller businesses are less reliant than they would have been at one point on oil and gas. They are starting to see some benefits feed through in terms of increased activity.”
Mr Buchan, while welcoming the strength of the second-quarter survey of Scottish engineering activity, cited cost pressures for companies against the backdrop of a weaker pound.
He said: “We are still really suffering in terms of the price of raw materials – that is what is depressing [profit] margins.”
Mr Buchan also flagged continuing uncertainty over future trade arrangements arising from last June’s Brexit vote.
He said: “There is still concern over what are the terms of trading going to be from Brexit in particular. Scottish companies have the added uncertainty of the potential, post the Brexit negotiations, of another independence referendum.”