Read the full Q1 2026 Quarterly Review
4 minute
It’s been a full year and a half since we were able to report positive results for our sector’s orders, output and exports, so forgive me for the rush of enthusiasm that comes with that decent news. And whilst they may not be as far above the line as we’d like, order intake took an 18% upward swing, alongside 11% for orders and an impressive 28% for output volume. After eighteen months in the doldrums, we’ll take those gladly.
Before I get carried away, I remind myself that it doesn’t feel like that for everyone, as there are plenty of companies still recording slower demand and on so many measures the economic headwinds are strong, but it’s heartening to see the trend for sectors that have struggled such as fabrication taking a significant positive step.
My eye will always be drawn to our statement of intent for Training Investment, simply because in my best Eeyore voice, downturns will come and go, but skills shortages feel like they are for life. Training investment is our strongest index this quarter at 25% positive intent, and that’s a statement that’s true for small, medium and large companies and all but one of the sub-sectors we report on.
Good timing then that this quarterly review coincides with Scottish Apprenticeship Week which kicks off this coming Monday. Timely too as we run into the Scottish Parliament elections debating productivity, resilience and the future shape – and opportunities – of Scotland’s economy. The conversation often circles back to skills, as few areas illustrate both the challenge and the opportunity more clearly than engineering.
Engineering underpins almost every sector that matters to Scotland’s future – energy, manufacturing, security and defence, construction, transport, digital and life sciences. Yet for all its importance, the pipeline of engineering talent remains fragile. Skills shortages are not abstract forecasts; they are being felt daily by employers trying to deliver projects, innovate and grow. When asked to best describe their current talent strategy, 37% of companies responded with upskilling or reskilling their existing workforce. Conversely less than 20% have prioritised recruiting from the skills talent pool highlighting that industry recognise their role to play in developing their own talent for future success.
Apprenticeships offer the practical, proven response that has been recognised by industry with 24% of companies prioritising modern apprenticeships and an additional 6% focusing on graduate apprentices to ensure they have the necessary skills to meet business ambition. Apprenticeships combine academic learning with real world application, ensuring that skills are developed in line with industry need rather than theory alone, and in engineering, where competence, safety and experience matter, that blend is particularly powerful.
Apprenticeships for our traditional trades remain vitally important, as they address some of the most acute skills shortages across the industry. However, don’t be fooled by the traditional tag, as these overlap and include aspects from the wide range of modern engineering apprenticeships. Companies are united in their search for specific technical skills they require to deliver their projects, but the breadth of skills is wider than ever and includes everything from welding and fabrication to advanced manufacturing, robotics, data driven maintenance, renewable technologies and systems engineering. These are high value roles that support well-paid, long-term careers and anchor economic activity in communities across Scotland.
Scottish Apprenticeship Week is also a reminder that apprenticeships are not just for young people taking their first step into work, in fact the percentage of over 25 year olds who began a modern apprenticeship increased in Q3 of 2025/26 from 38.6% to 40.6% with the remaining starters aged 16-24 years, as Engineering employers increasingly use them to upskill existing staff, retrain workers transitioning from other sectors, and futureproof their workforce in the face of rapid technological change. The flexibility to deliver this is one of the system’s greatest strengths.
Credit then to the companies that support and commit to apprenticeships, as behind every successful engineering apprentice is an employer willing to invest time, resources and trust. In an uncertain economic climate, that commitment deserves recognition. Developing an apprentice is not a short-term fix; it is a statement of confidence in the future – of the business, the sector and the individual.
It’s a complex balancing act considering skill shortages in key roles with the need to replace staff nearing retirement, and skills gaps were the most frequent drivers influencing talent strategy. It’s also positive to see that 12% of companies expect to add team members due to planned growth in their business.
If Scotland is serious about delivering its ambitions for infrastructure renewal, a fair energy transition and inclusive growth, then engineering skills will be part of the solution. Apprenticeships sit at the intersection of education and industry, translating policy aspiration into practical capability. It is surely more imperative than ever that whoever takes the reins of Government this year has this issue at the core of their policy for economic growth and prosperity.
As Scottish Apprenticeship Week approaches, it is worth looking beyond the headlines and frameworks to the quieter success stories playing out in workshops, factory floors and design and support offices across the country. These are the places where engineering apprentices are not just learning a trade, but helping to build Scotland’s future – one skill, one project, one opportunity at a time.
Paul Sheerin
Chief Executive
Scottish Engineering
