A new survey released today (October 11 2016) has revealed a dip in confidence among Scottish manufacturers asked about their prospects for growth in the year ahead, with almost one in four (23%) blaming uncertainty following the EU vote and nearly one in three (30%) citing global economic concerns as the main barrier to growth.
Of Scottish firms responding to the latest manufacturing survey conducted by Henderson Loggie, in conjunction with the MHA association of UK independent accountancy firms and Bank of Scotland, 60% are confident of growth in the coming year, which is 14% down on last year’s results and below the national index (69%).
Last year’s poll showed that only 4% of Scottish respondents, and 10% 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% of respondents had a positive outlook and 39% expressed a negative outlook. The remainder (48%) opted to remain neutral.
Amidst concerns within the sector about rising costs, sustainability is still a consideration for businesses with 62% rating this as a high or medium priority (72% UK). So far however, only 10% are already sourcing energy produced using renewables, while a further 10% signalled their intention to use energy from renewable sources. Despite the importance attached to sustainable manufacturing, 62% 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% reporting growth for the last 12 months, down 22% from last year, compared to 59% for the UK as whole, representing a drop of just 7%.
• Less than half (46%) 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% Scotland; 65% UK)
• 55% of Scottish manufacturers have received grant funding in the past five years compared to 46% of respondents in the rest of the UK
• 97% of respondents have received bank funding in the last 12 months
• Currently 83% of Scottish respondents [88% UK] invest in research and development, an increase of 17% year on year, but awareness of R&D tax credits amongst Scottish manufacturers remains low with 18% being unaware of this attractive tax relief [10% UK].
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.”