Quarterly Review Q3 2021 - Scottish Engineering

A welcome sigh of relief as last quarter’s results continue their upward trajectory. The forecast of three months ago has proven to be accurate with a continued improvement in all key measures, and there are signs that this is finally arriving across industry with slower recovery sectors showing improvement too. Strengthening order are always welcome, but material availability, pricing, and the logistics capacity to move them challenge the ability to meet demand. Additional resource, particularly skilled, does not seem to be readily available and notes of caution on intention for apprentices’ numbers brings concern that our skills gap will only widen.

Chief Exec's report Q3 2021

Key attention points from this quarter:

Order intake, Output Volume, Exports and Staffing remain strongly positive for the second consecutive quarter since the pandemic started
Order intake for the last 3 months up 33%, forecast further positive 36% for next 3 months
Optimism holds positive at net 21% positive
UK and Export prices continue to reflect raw material price increases with net 47% and 46% increased respectively

The data in this Review were acquired by a survey of Scottish Engineering’s members and certain other manufacturing companies.

37% of members responded

Companies are described as:
Small (<100 employees), Medium (100–500) and Large (>500)

Annual trends

Order intake, exports and staffing have all further improved since last quarter, whilst output volume remains positive albeit at a slightly reduced rate. Order intake increases its positive path quarter on quarter by a further 6 percentage points, and an overall 33 percent positive position

Order intake

Output volume

Exports

Staffing

UK Orders

Net	Up	Same	Down
27%	46%	35%	19%

UK orders have remained positive, with the balance of change at 27% (9% more than last quarter). All sizes of company are reporting increases, with all sectors positive or reporting equal numbers of increases and decreases. Fabricators record a balance of 73% positive with 82% reporting increases.

Companies	Net	Up	Same	Down
Small	17%	41%	35%	24%
Medium	48%	56%	37%	7%
Large	25%	50%	25%	25%
Sectors
Machine shops	0%	33%	34%	33%
Mechanical equipment	35%	57%	21%	22%
Metal manufac.	38%	50%	37%	13%
Non-metal products	0%	20%	60%	20%
Fabricators	73%	82%	9%	9%
Electronics	25%	50%	25%	25%

Export Orders

Net	Up	Same	Down
15%	38%	38%	24%

Export orders have also remained positive this quarter, with the balance of change at 15%. All sizes of company are reporting increases, the balance of change is 8% for small companies, 25% for medium companies, and 25% for large companies. All sectors are positive; the balance of change is 57% for electronics, 25% for mechanical equipment, 29% for non-metal products, 17% for fabricators, and 29% for metal manufacturing; machine shops and non-metal products are reporting equal numbers of increases and decreases.

Companies	Net	Up	Same	Down
Small	8%	43%	22%	35%
Medium	25%	33%	59%	8%
Large	25%	25%	75%	0%
Sectors
Machine shops	0%	40%	20%	40%
Mechanical equipment	25%	45%	35%	20%
Metal manufac.	29%	43%	43%	14%
Non-metal products	0%	25%	50%	25%
Fabricators	17%	33%	50%	17%
Electronics	57%	71%	15%	14%

Optimism

Net	Up	Same	Down
21%	38%	45%	17%

Optimism has remained positive, with the balance of change at 21%. All sizes of company are reporting positive returns: small companies 22%, medium companies 31% and large companies 50%. Across the sectors it’s a similar scene, with only machine shops and non-metal products reporting negative returns.

Companies	Net	Up	Same	Down
Small	10%	32%	46%	22%
Medium	43%	50%	43%	7%
Large	25%	50%	25%	25%
Sectors
Machine shops	-11%	22%	45%	33%
Mechanical equipment	32%	48%	36%	16%
Metal manufac.	13%	38%	37%	25%
Non-metal products	-20%	20%	40%	40%
Fabricators	27%	45%	36%	18%
Electronics	50%	50%	50%	0%

Output Volume

Net	Up	Same	Down
19%	40%	39%	21%

Output volume remains positive with a lower rate of increase compared to last quarter, with the balance of change at 19%. All sizes of company are positive. Across the sectors, mechanical equipment, fabricators and electronics are reporting increases; and machine shops, metal manufacturing and non-metal products are reporting decreases.

Companies	Net	Up	Same	Down
Small	8%	33%	42%	25%
Medium	37%	48%	41%	11%
Large	50%	75%	0%	25%
Sectors
Machine shops	-22%	11%	56%	33%
Mechanical equipment	36%	48%	40%	12%
Metal manufac.	-38%	13%	37%	50%
Non-metal products	-40%	20%	20%	60%
Fabricators	64%	73%	18%	9%
Electronics	38%	50%	37%	13%

Staffing

Net	Up	Same	Down
20%	34%	52%	14%

Employee numbers are positive for all sizes of company, with all large companies reporting increases. Mechanical equipment, non-metal products, fabricators and electronics are reporting increases; and machine shops and metal manufacturing are reporting decreases.

Companies	Net	Up	Same	Down
Small	3%	20%	63%	17%
Medium	43%	54%	35%	11%
Large	100%	100%	0%	0%
Sectors
Machine shops	-22%	11%	56%	33%
Mechanical equipment	12%	16%	80%	4%
Metal manufac.	-25%	13%	49%	38%
Non-metal products	20%	40%	40%	20%
Fabricators	64%	73%	18%	9%
Electronics	38%	38%	62%	0%

Overtime

Overtime working has picked up, with all sizes of company reporting increases.

Companies	Net	Up	Same	Down
	22%	38%	46%	16%
Small	11%	33%	45%	22%
Medium	41%	48%	45%	7%
Large	50%	50%	50%	0%

Investment

Net	Up	Same	Down
17%	27%	63%	10%

Capital investment plans have improved since last quarter: small and medium sized companies are reporting positive returns and large companies reported equal numbers of increases and decreases. All sectors are reporting increases or equal numbers of increases and decreases.

Companies	Net	Up	Same	Down
Small	14%	27%	60%	13%
Medium	25%	32%	61%	7%
Large	0%	0%	100%	0%
Sectors
Machine shops	11%	22%	67%	11%
Mechanical equipment	13%	21%	71%	8%
Metal manufac.	14%	29%	57%	14%
Non-metal products	40%	40%	60%	0%
Fabricators	45%	55%	36%	9%
Electronics	0%	0%	100%	0%

Training Investment

All sizes of company are reporting increases in training investment.

Companies	Net	Up	Same	Down
	30%	38%	54%	8%
Small	26%	34%	57%	9%
Medium	36%	43%	50%	7%
Large	50%	50%	50%	0%

Capacity Utilisation

Capacity utilisation has risen 11 percentage points since last quarter, the increase reflects the movement in order intake.

Order Intake Total: Fabricators

Fabricators order intake is positive for the fourth consecutive quarter, with an increase of 34% this quarter.

Forecast

Looking to the next 3 months, forecasts are good, with all measures positive. The net balance of change for overall orders is 36%, UK orders 34%, export orders 34% and output volume 37%. All sizes of company are forecasting positive figures for UK order intake, orders export, UK prices, export prices, output volume and employee numbers; and across the sectors all measurements are positive.

	Net	Up	Same	Down
Orders	36%	44%	47%	9%
UK Orders	34%	46%	42%	12%
Export Orders	34%	42%	49%	8%
Output Volume	37%	50%	37%	13%

Balance of change %

	Order Intake UK	Orders Export	Prices UK	Prices Export	Output Volume	Employees
Small	26	28	47	44	28	20
Medium	48	38	46	46	46	50
Large	50	75	50	67	100	100
Metal Manufacturing	13	14	50	43	25	25
Non-Metal Products	20	25	40	50	60	20
Electronics	25	29	25	14	50	63
Fabricators	45	17	64	67	45	55
Machine Shops	33	40	56	40	33	22
Mechanical Equipment	26	45	50	59	32	24

Quarterly Review

Annual trends

Order intake

Output volume

Exports

Staffing

UK Orders

Export Orders

Optimism

Output Volume

Staffing

Overtime

Investment

Training Investment

Capacity Utilisation

Order Intake Total: Fabricators

Forecast

Balance of change %

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