In disbelief that another 12 months has almost passed once again, I found myself this week recalling a former colleague from my engineering career. Each time I would ask a polite pleasantry such as “how are you doing today?”, the same answer would come back every time: “Too soon to say.”. At first, I wasn’t sure how to take this evasive answer, but as I got to know them, I saw that in fact as well as being their own wee trademark, it was generally honest, as not all the facts were yet known to answer one way or another.
It feels like the right approach for some of the questions I can think of for our manufacturing sector as we approach the end of another turbulent year.
Covid is the perfect example of the right question for that answer, as the rollercoaster just keeps going, and instead of coasting to slower speeds, Omicron has given it a boost for who knows how many more loops of the circuit. Our sector has managed the Covid impact exceptionally well, achieving a condition of well-managed risk, but not without its cost. The extra measures needed to keep workplaces safe consume management time, lower productivity, and rising cases now threaten availability of resource as requirement to isolate is feared to grow again, stripping out much-needed people for 10 days at a time. That’s an especially unwelcome challenge coming as it does when our sector is extremely busy across the board following three quarters of increased order intake, something that’s usually cause for celebration. One manufacturing leader remarked that they simply couldn’t enjoy their record levels of orders because of the multiple barriers that stood in the way of delivery.
That faster-than-expected pick-up in business has brought more rapid reductions in unemployment than we could have reasonably expected, reducing the much-feared impact on young people in particular. But the pace of this has overshot the balance point quickly, landing us in a deficit that underlines the challenges we have in Scotland: we are an ageing population, with a low proportion of young people and falling numbers of net in-migration. The answer to this barrier lies in really seeing the value of people and then underlining the need to replace them with automation and efficiency everywhere that’s possible, because they are just too valuable to waste on tasks that we can easily automate or eliminate. I’d argue that this is the case whether they are leaving school or well into their career – we will need them all – and it’s an area where the manufacturing sector needs to lead by example, helped and encouraged by us, the Scottish Manufacturing Advisory Service, the National Manufacturing Institute for Scotland, further education colleges and other training providers.
Was the term “supply chain” used in society outside of business circles before the pandemic? It’s in common usage now, an explanation for the lack of availability of new cars to shortages on shop shelves, and for manufacturing, it’s the restricted availability and costs of raw materials, components and the trucks and containers to move them around that provides the headache. It’s a challenge that has hit everything from steel to semiconductors, with the greatest frustration being that there is no clarity or agreement as to when this deficit and its impact is going to end. Whilst there is some evidence of stabilisation of prices, it’s not consistent, and prices and lead times remain high with too much variation for any kind of meaningful planning.
A strange year then in many ways – recovery at a rate that we wouldn’t have dared to forecast, alongside challenges and barriers that have soured the relief that such an upturn would normally bring. It might be too soon to say then what 2022 will bring, but what I can reflect is a feeling of enormous pride within the sector in the way that they have managed their businesses through the impact of Covid and are using that resilience to ensure that Scottish manufacturing is poised to step up and on. Our largest engineering companies can remind us visibly of that pride in progress with HMS Glasgow on the quayside at BAE Systems Govan, or the Venturer building that can manufacture two Type 31 Frigates side by side at Babcock Rosyth. These are great examples of our capability, but only the ones we can see, with many more inspiring examples in companies of all sizes and sectors across the country. For me, these wider examples that I have the privilege to see underline that, despite the difficulties of the last two years, our manufacturing and engineering sector has weathered this storm well and remains well placed to continue to do so.
Paul Sheerin is chief executive of Scottish Engineering