Understandably, optimism has cooled since our last report, but still remains positive, and the need for skills is underlined by one third of companies increasing staffing levels in the last three months, with a similar intent forecast forward.
Training investment plans remain strong, matching the mood we hear in training groups and colleges for an increased demand for new start apprentices alongside up-skilling and re-skilling programmes for current staff.
Key attention points from this quarter:
- Training intent 32% positive, but apprentice start numbers for the year to the end of March 2022 are still below pre-pandemic levels.
- Order intake softens from last quarter’s high of 35% positive, to 23% positive, with forecast of 29% positive for the coming three months.
- Precision Engineering (Machine Shops) show the largest order intake increase with a net 67% of companies in this category reporting increased orders, notable due to the slower recovery for this category to date.
The data in this Review were acquired by a survey of Scottish Engineering’s members and certain other manufacturing companies.
32% of members responded
Companies are described as:
Small (<100 employees), Medium (100–500) and Large (>500)
Annual trends
Order intake remained positive albeit at a slightly reduced level than the past two quarters. Output volume and exports also remained positive although again at marginally lower level than the previous quarter, however, staffing increased its positive balance by 9% underlining that staffing remains a priority within industry. Exports also continued its positive position, stabilising at 2% lower than last quarter.
Order intake
Output volume
Exports
Staffing
UK Orders
Net | Up | Same | Down |
17% | 39% | 39% | 22% |
UK orders continue with positivity across all sizes of companies and most of the sectors except non-metal products where a net 16% of companies reported reductions and also fabricators where net 30% of respondents reported a reduction. Machine shops showed the most improvement, with net 67% reporting increased orders this quarter. Medium companies, although positive, have reported the least increase, with an increase of 5 percentage points overall.
Companies | Net | Up | Same | Down |
Small | 22% | 42% | 38% | 20% |
Medium | 5% | 35% | 35% | 30% |
Large | 16% | 33% | 50% | 17% |
Sectors |
|
|
|
|
Machine | 67% | 78% | 11% | 11% |
Mechanical | 22% | 44% | 34% | 22% |
Metal | 0% | 25% | 50% | 25% |
Non-metal | -16% | 17% | 50% | 33% |
Fabricators | -30% | 10% | 50% | 40% |
Electronics | 33% | 33% | 67% | 0% |
Export Orders
Net | Up | Same | Down |
18% | 37% | 44% | 19% |
Export orders are positive over all sizes and sectors except for fabricators, where the balance of change is -20%, the same figure reported last quarter. Electronics, non-metal products and metal manufacturing are recording the most positive balance of changes at 40%, 33% and 29% with mechanical equipment at 26%. Machine shops remains static with a 0% balance of change. The overall balance of change has dropped very slightly from 20% to 18% and following a slight reduction in the rate of increase.
Companies | Net | Up | Same | Down |
Small | 19% | 38% | 43% | 19% |
Medium | 15% | 35% | 45% | 20% |
Large | 20% | 40% | 40% | 20% |
Sectors |
|
|
|
|
Machine | 0% | 40% | 20% | 40% |
Mechanical | 26% | 43% | 40% | 17% |
Metal | 29% | 43% | 43% | 14% |
Non-metal | 33% | 50% | 33% | 17% |
Fabricators | -20% | 0% | 80% | 20% |
Electronics | 40% | 40% | 60% | 0% |
Optimism
Net | Up | Same | Down |
12% | 39% | 34% | 27% |
Optimism has fallen slightly from last quarter, however remains positive with a 12% balance of change. Metal manufacturing, Fabricators and Mechanical Equipment show a negative return, with balance of changes at -50%, -27% and -7%. Machine shops show a strong result, with the balance of change at 67%, an increase of 42 percentage points since last quarter followed by electronics (balance of change 43%), increasing by 21 percentage points since last quarter. All sizes of companies remain positive with larger companies reporting the greatest balance of change of 50%.
Companies | Net | Up | Same | Down |
Small | 7% | 39% | 29% | 32% |
Medium | 16% | 36% | 44% | 20% |
Large | 50% | 50% | 50% | 0% |
Sectors |
|
|
|
|
Machine | 67% | 78% | 11% | 11% |
Mechanical | -7% | 29% | 35% | 36% |
Metal | -50% | 13% | 24% | 63% |
Non-metal | 17% | 50% | 17% | 33% |
Fabricators | -27% | 0% | 73% | 27% |
Electronics | 43% | 57% | 29% | 14% |
Output Volume
Net | Up | Same | Down |
16% | 41% | 34% | 25% |
Output volume remains positive with the balance of change at 16%. All sizes of companies are positive, in particular, larger companies. Most sectors remain positive except for non-metal products with a balance of change at -40% and electronics with a balance of change at -14%.
Although output volume remains positive overall for sectors and size, the balance of change has dropped by 3% on last quarter, with larger companies reporting an increase from 29% to 33%. Smaller and medium companies have a balance of change reducing 3 and 5 percentage points respectively compared to last quarter but still remain positive. Non-metal products are reporting a significant decline from 14% to -40%, whilst Machine shops shows the greatest positivity, improving by 54 percentage points since last quarter.
Companies | Net | Up | Same | Down |
Small | 19% | 42% | 35% | 23% |
Medium | 5% | 35% | 35% | 30% |
Large | 33% | 50% | 33% | 17% |
Sectors |
|
|
|
|
Machine | 67% | 78% | 11% | 11% |
Mechanical | 14% | 43% | 28% | 29% |
Metal | 0% | 25% | 50% | 25% |
Non-metal | -40% | 20% | 20% | 60% |
Fabricators | 0% | 27% | 46% | 27% |
Electronics | -14% | 29% | 28% | 43% |
Staffing
Net | Up | Same | Down |
25% | 36% | 53% | 11% |
Employee numbers are positive for all sizes of company, and all sectors. The balance of change for medium companies is 32 percentage points, a 15% increase overall since last quarter whilst larger companies have reduced from 71% to 33% this quarter.
Companies | Net | Up | Same | Down |
Small | 21% | 32% | 57% | 11% |
Medium | 32% | 48% | 36% | 16% |
Large | 33% | 33% | 67% | 0% |
Sectors |
|
|
|
|
Machine | 11% | 33% | 45% | 22% |
Mechanical | 25% | 39% | 47% | 14% |
Metal | 0% | 0% | 100% | 0% |
Non-metal | 50% | 67% | 16% | 17% |
Fabricators | 0% | 9% | 82% | 9% |
Electronics | 29% | 43% | 43% | 14% |
Overtime
Overtime working is comparative to last quarter, with small companies reporting the largest increase. This may be reflective of the medium and larger companies increase in staffing, resulting in a decline in overtime, particularly in larger companies with a 0% balance change with increase and decrease being equal.
Companies | Net | Up | Same | Down |
12% | 33% | 46% | 21% | |
Small | 15% | 37% | 41% | 22% |
Medium | 8% | 28% | 52% | 20% |
Large | 0% | 17% | 66% | 17% |
Investment
Net | Up | Same | Down |
16% | 23% | 70% | 7% |
Capital investment plans remain positive, with majority of sectors reporting positive returns. Fabricators reports a balance of change of -30%, and overall, capital investment has increased to a net positive balance of 16%, a reduction on last quarter of 9 percentage points.
Companies | Net | Up | Same | Down |
Small | 14% | 24% | 66% | 10% |
Medium | 20% | 24% | 72% | 4% |
Large | 17% | 17% | 83% | 0% |
Sectors |
|
|
|
|
Machine | 13% | 13% | 87% | 0% |
Mechanical | 18% | 32% | 54% | 14% |
Metal | 13% | 13% | 87% | 0% |
Non-metal | 33% | 33% | 67% | 0% |
Fabricators | -30% | 0% | 70% | 30% |
Electronics | 33% | 33% | 67% | 0% |
Training Investment
All sizes of company are reporting increases in training investment, however, this shows a lower rate of increase compared to last quarters positive balance of 43%.
Companies | Net | Up | Same | Down |
32% | 36% | 60% | 4% | |
Small | 24% | 30% | 64% | 6% |
Medium | 44% | 44% | 56% | 0% |
Large | 67% | 67% | 33% | 0% |
Capacity Utilisation
Capacity utilisation has decreased 9 percentage points to 17% since last quarter.
Order Intake Total: Machine Shops
Machine shops order intake is positive after reporting 0% in quarter 3 in 2021 to 67% in the second quarter of 2022. Their recovery has steadily improved over these past four quarters showing a welcome return of order rate after the past two years.
Forecast
Looking at the next 3 months, forecasts remain positive however, increases are stabilising to a reduced rate compared to the very high previous two quarters. The forecast net balance of change for overall orders is +29%, UK orders +21%, export orders +15% and output volume +37% showing positivity across all orders. All sizes of companies and sectors are showing an increased forecast for UK prices, export prices and employees but less positivity for order intake UK and order exports. Fabricators and metal manufacturing are the most significant sectors showing decreases in order intake for UK and order exports, with larger companies showing decreases in UK order intake overall.
| Net | Up | Same | Down | |
Orders | 29% | 45% | 39% | 16% |
UK Orders | 21% | 39% | 43% | 18% |
Export Orders | 15% | 33% | 49% | 18% |
Output Volume | 37% | 51% | 35% | 14% |
Balance of change %
| Order Intake UK | Orders Export | Prices UK | Prices Export | Output Volume | Employees | |
|---|---|---|---|---|---|---|
| Small | 18 | 10 | 83 | 76 | 27 | 36 |
| Medium | 39 | 21 | 79 | 65 | 61 | 44 |
| Large | -17 | 40 | 50 | 80 | 50 | 33 |
| Metal Manufacturing | -13 | -14 | 88 | 71 | 13 | 0 |
| Non-Metal Products | 67 | 40 | 83 | 67 | 60 | 17 |
| Electronics | 17 | 20 | 86 | 80 | 71 | 71 |
| Fabricators | -20 | -20 | 82 | 80 | 0 | 9 |
| Machine Shops | 33 | -20 | 78 | 80 | 44 | 33 |
| Mechanical Equipment | 19 | 17 | 81 | 83 | 25 | 36 |