Scottish manufacturers’ confidence weakens

Of Scottish firms responding to the latest manufacturing survey conducted by accountants Henderson Loggie, in conjunction with the MHA association of UK independent accountancy firms and Bank of Scotland, 60 per cent are confident of growth in the coming year, which is 14 per cent down on last year’s results and below the national index .

Last year’s poll showed that only 4 per cent of Scottish respondents, and 10 per cent of all respondents for the UK as a whole thought it would benefit British business to leave the EU. Asked about the EU referendum results this year, 13 per cent of respondents had a positive outlook and 39 per cent expressed a negative outlook. The remainder (48 per cent) opted to remain neutral.

Amidst concerns within the sector about rising costs, sustainability is still a consideration for businesses with 62 per cent rating this as a high or medium priority (72 per cent UK). So far however, only 10 per cent are already sourcing energy produced using renewables, while a further 10 per cent signalled their intention to use energy from renewable sources. Despite the importance attached to sustainable manufacturing, 62 per cent plan to remain reliant on traditional energy providers.

Commenting on the report Henderson Loggie Partner Gavin Black said: “This dip in confidence is worrying for the sector. Across the UK manufacturers continue to report that they find it a challenge to recruit the skilled technicians their businesses rely on for future growth. There are however some green shoots of optimism with, amongst others, Michelin confirming a further £15 million investment at its Dundee operation, GSK committing a further £110m investment in manufacturing at Montrose and up to £200 million of funding for job security and creation at Ross-shire Engineering.”

Other findings of the report:

• Scottish manufacturers are lagging behind their UK counterparts with 45 per cent reporting growth for the last 12 months, down 22% from last year, compared to 59 per cent for the UK as whole, representing a drop of just 7 per cent.

• Less than half (46 per cent) of respondents anticipate staff numbers will increase in the next 12 months and see recruiting skilled staff as a key barrier to growth

• There has been an increase in companies that currently export, but Scotland remains behind the rest of the UK in this regard (50 per cent Scotland; 65 per cent UK)

• 55 per cent of Scottish manufacturers have received grant funding in the past five years compared to 46% of respondents in the rest of the UK

• 97 per cent of respondents have received bank funding in the last 12 months

• Currently 83 per cent of Scottish respondents invest in research and development, an increase of 17 per cent year on year, but awareness of R&D tax credits amongst Scottish manufacturers remains low with 18 per cent being unaware of this attractive tax relief .

Dave Atkinson, head of UK Manufacturing, commercial banking at Bank of Scotland, said: “While the result of the EU Referendum has left Scottish manufacturers with some questions over how they will fulfil their future plans, many are actively investing in research and development to help deliver sustainable growth.

“Manufacturing has never been more important to the success and growth of the Scottish economy, and closing the skills gap remains crucial to sustain the long-term success of the industry. We continue to work closely with firms through this evolving economic landscape to provide the support and funding they need to help ensure they maintain their competitive position in domestic and global marketplaces.”