Manufacturing still in recession

Manufacturing still in recession

Small and medium-sized firms were hardest hit

Scotland's manufacturing sector remained in recession as both UK and export orders fell in the first quarter of 2003, a report shows.

Scottish Engineering's Quarterly Review found that nearly three times as many companies were shedding staff as taking them on.

It also warns optimism among firms was at its lowest level for 12 months.

The organisation, which represents manufacturing employers, found that order intake was down at 41% of companies, with 39% cutting their output volume and 38% shedding staff.

If politicians need further proof that this important sector needs all the help they can provide then these figures make the case for it.

Peter Hughes
Scottish Engineering

Only a few sectors bucked the gloomy trend within the industry, with electronics firms recording an increase in output overall and metal manufacturing, transport and non-metal products taking on more orders on balance.

When asked about their prospects, 36% of firms said they were pessimistic compared to 17% who said they were optimistic.

Dr Peter Hughes, chief executive of Scottish Engineering, said the figures showed manufacturing was in dire need of assistance from the government.

He said: "Our industry is run by hard-headed professionals who understand that while politicians can help at the margins, it is the effort of everyone involved in the sector which brings the results."

Order books

The economic downturn also affected companies' investment plans, with only transport and non-metal production firms more likely than not to be planning to invest in new equipment.

Order books were worst hit in the oil and gas sector, where 83% of companies reported a slump in orders, followed by electrical goods (55%) and electronics (40%).

The figures also showed small and medium-sized firms were hardest hit, with 41% and 45% respectively losing orders compared to just 21% of big companies.

State aid

Mr Hughes criticised the government for failing to provide the levels of state aid enjoyed by manufacturing firms in other European countries.

Figures from the European Union show British manufacturing gains just over 0.5% in value from state aid, compared to 4.3% in Greece and an EU average of 1.9%.

Mr Hughes said: "I don't think it is coincidence that we are reporting such disappointing figures when the UK government offers less financial encouragement to manufacturing compared to any other EU country.

"If politicians need further proof that this important sector needs all the help they can provide then these figures make the case for it."