Chief Exec’s report Q1 2022
Tags: Chief Exec | Paul Sheerin | QR | Quarterly Review
Read the full Q1 2022 Quarterly Review
6 minute read
Welcome to our first review of 2022, taking stock of what feels like a stabilising pandemic position, and especially pleased to report that the positive demand we cautiously tracked through 2021 appears to not only be holding but in many cases strengthening.
Four successive positive quarters reflect the high levels of activity we see in industry, and despite the inevitable impact on pricing from rising costs, it’s encouraging to see a positive movement on margins on goods and services, essential to sustainability of business. We talk to many members looking to expand the sectors they supply and are encouraged by the numbers developing, innovating, and investing in their products or business structure to be ready for opportunity.
Are we in the foothills of the exponential growth of an all-out proper Industrial Revolution? It’s a phrase I have heard several times in the last couple of months, most recently in shock at the scale of the ScotWind leasing process, where 25 Gigawatts of capacity was signed up for when we hoped that 10 Gigawatts might be secured. Those of us of an optimistic nature can’t help counting how many support structures, towers, turbines, and everything else that means, or the numerous other net zero enablers that could be engineered and manufactured here in Scotland.
Of the four industrial revolutions, the third and fourth are a lived experience for many of us in industry, but is there a valid argument that from the public perception the view is that they were more rapid evolution than revolution? There was plenty of revolution going on but mostly out of sight, out of mind, and out of comprehension of the general public. Because the first had the physical scale, noise, and presence of steam, and the second had the massive installation of life-changing electricity infrastructure, it made both of them highly visible and impactful on everyday life.
The third was based on technology beyond the understanding of the majority of the general public, with “silicon chips” a great visual for the upbeat filler at the end of the news, but no time or appetite set aside to explain what it actually was or why understanding binary numbers might be a useful skill. For many, the first impact was when they stopped typing and sending memos and instead did the same operation on a computer and sent emails instead. The fourth has followed a similar pattern, a minority understanding and driving relentless progress through technology little understood in the mainstream, resulting in a general public that sees they no longer need to carry a separate camera, GPS, or other gadgetry anymore, but why does it seem to know where I am going next and what I want to buy?
In comparison to those more cushioned experiences, right now we face changes to avert the climate emergency, that if they are to be effective will need to be on a massive scale, with a significant portion carried out in the next decade. The way we travel, the way we heat our homes and offices, the way we generate energy, all these and many more will have to change with redesigned infrastructure being installed right in front of us. That’s what’s on the minds of those people that ask if we are in or about to be in a proper revolution, more akin to the advent of public access to electricity than trading typewriter for terminal.
Before I let another quarter with upbeat numbers lull me into my default optimism, some clear-headed review reminds me to fairly characterise the other side of this coin. A sobering start is that Scotland and the UK have a lot of work to do in short order to ensure that this revolution, or at least a large share of it, is engineered and crafted by our own hands, and not those of our major overseas competitor nations. That means investments in skills, capabilities, and infrastructure – with a laser-sharp focus, collaboration, and joined up thinking across all levels of industry, governments, and academia, or else the opportunity could be lost to this generation. As things stand, we see positive movements in this direction, through government initiatives and the work of effective clusters, but I don’t find many willing to debate that there is a lot more to do.
Once in step with a more pragmatic evaluation, our remaining optimism needs to be qualified with some of the uncertainties our industry faces in the short to medium term from a range of externalities including eye-watering energy price hikes, tax increases on companies and individuals, wage and material cost inflation and the general squeeze on real purchasing power in wider society. There are some dark clouds out there, not to mention a potential land war in Europe, and our sector, as it has done before, will have to draw on its proven levels of resilience to manage through this period. Opportunity remains – on a staggering scale – but we will need to get our act together on multiple fronts to ensure we grasp it.
Paul Sheerin
Chief Executive
Scottish Engineering
