What the Future Holds for Manufacturing & Engineering in Scotland
22 March 2017
Between Brexit and ‘indy ref 2’, Scotland’s political landscape is facing an unusual amount of uncertainty. Socioeconomic phases like this can often be reflected in the business world. Manufacturing and exporting tend to suffer in times of turbulence. Moreover, the thriving workforce can end up facing the sharp end of redundancies.
Whilst there was once so much hope pinned on a North Sea recovery, this sector, too, has stagnated – ensuring another difficult spell for the national economy.
GDP data from the Scottish government stated that, in the third quarter of last year, the national economy grew by just 0.2 per cent. Expansion in Scotland (for the second quarter of last year) reached the same figure – after initially being forecast at 0.4 per cent.
In comparison to the same period in 2015, GDP had increased by a marginal 0.7 per cent. This presents a huge challenge to a national economy that is fighting tooth and nail to get back on its feet.
But it’s not all bad news. Despite these fairly gloomy figures, there has been encouraging growth in the whisky and engineering sectors. This highlights the ever-growing importance of Scotland’s ability to forge strong international trade links.
The plummeting value of the pound – in our new, post-Brexit reality – has been credited as a core reason in the growth of Scottish exports.
Recent figures from HM Revenue & Customs reveal that the value of whisky exports has grown for the first time since 2012. These exports are now estimated to be worth £3.98 billion per year – an increase of 3.3 per cent on the previous year. In fact, 40 bottles of whisky are now shipped overseas every second.
The food and drink sector, has a whole, remains Scotland’s largest export industry, delivering over £4.8 billion in revenue in 2015. The Middle East, Far East and America remain huge destinations for exports in this sector, specifically whisky.
In yet more good news, reports from Scottish Engineering have shown a veritable surge in sector exports during the latest quarter. This renaissance comes after thirteen consecutive quarters of decline and was responsible for driving a measurable upscaling in new order intake for Scottish engineering companies.
The flipside to the weakness of the pound is, however, the rising costs of imports for business. This is particularly relevant for imports such as oil, which are measured against the dollar.
Most companies feel the only choice they have is to pass these increases on to their customers. Businesses within sectors such as engineering and FMCG have urged the government to allow them continued access to the European market in terms of securing labour.
With uncertain times ahead – as the much talked about Article 50 is finally triggered – the main focus should be to protect businesses and the economy from a wave of unfavourable circumstances.
Scottish businesses within the Manufacturing and Engineering industries will certainly be hoping that the UK government can reach the same free trade deals that currently exist under EU membership.
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Written By Michelle McLaughlin