Coronavirus: Engineering firms struggle with 'tornado'

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Four out of five Scottish engineering firms expect to cut jobs in the next six months because of the coronavirus crisis, according to a survey.

Industry body Scottish Engineering found confidence among companies plummeted in the last quarter.

Orders and output fell in at least 60% of firms who responded, with 27% reporting a cut in employee numbers.

Scottish Engineering said Covid-19 had been "an economic tornado", both in its pace and impact.

It reported that order intake, output volume, exports and staffing had all dipped to record low levels for a single quarter.

Scottish Engineering also found that firms' confidence had a negative swing of 80% in only three months.

Other findings included:

  • 77% of respondents said their organisation thought that the impact of Covid-19 would still be felt by businesses in 12 months' time.
  • 72% forecast that they will have to reduce training and apprenticeship plans to ensure business survival.
  • Respondents indicated that where they were operating, social distancing had reduced operating efficiency by an average of 27%.

Scottish Engineering chief executive Paul Sheerin said: "Covid-19 has been an economic tornado, both in the pace and impact that it is causing, and these results make crystal clear the need for rapid recovery actions as soon as public health considerations allow.

"Part of that recovery will look and feel different to the way we have worked before, as amongst these massively difficult business conditions, there has been recognition that our adaptation to digitally connected working shows advantages previously unseen."

About 70% of Scottish Engineering members have remained in operation over the lockdown weeks, and with some getting back to work, that is reckoned to be around 90% now. So they give an insight into economy activity for those who haven't been sent home, with the doors closed.

What do we learn? A falling order book comes as no surprise. The number of firms shedding workers is a disappointment. The share expecting to do so in the next six months - 80% - is truly alarming. The 27% in productivity due to physical distancing requirements is instructive to other sectors.

The messages from chief executive Paul Sheerin are interesting too. This is a further sector that wants the easing of lockdown to be aligned across the UK. And while welcoming government funds to pay for furlough and make loans and grants to firms, there's a plea to watch out for the loss of training and apprenticeships in the sector.

Companies are focused on survival, and drastic measures are being taken to cut costs and retain cash. That includes the spend that upskills existing staff and brings on new recruits.

The call here is for government to continue its engagement with recovery and to extend it by providing incentives for firms to keep apprenticeships going.