Falling prices, low orders, dropping employment levels and low business optimism were the main findings of Scottish Engineering’s last quarterly survey, published in September. But amid the gloom, Peter Hughes, who joined the lobbying body as chief executive in July, remains confident.
‘Things are tough in Scotland and the quarterly survey confirmed that,’ he says. ‘But the climate is better than the rest of the UK. Complaints continue about the high pound affecting exports, although the recent 0.5% cut in interest rates is a step in the right direction.’
Some companies are doing rather well, says Hughes. He cites the Weir group, Motherwell Bridge, Clyde Blowers and McKechnie as being undervalued by the City. Hughes blames the downrating of companies by analysts for takeovers in the engineering sector. In a recent speech to the Institution of Mechanical Engineers, he labelled city analysts as ‘over-rated, overpaid louts’. He also said few members of the Bank of England’s Monetary Policy Committee, which sets interest rates, live in the real world.
Hughes does live in the real world. A metallurgist, he also understands the pressures of running a business. He led a management buy-out of a foundry business in Fife in 1983, which he ran for 15 years before joining Scottish Engineering.
He also leads a busy social life which brings him into contact with a wide range of the community. He’s an active member of the local church, a folk musician, sportsman he was a former Scotland schoolboy and youth International and a lecturer and public speaker.
Hughes’s CV is packed with achievements, including an OBE for services to the steel industry. Since joining Scottish Engineering he has been using his networking strengths to the benefit of the lobbying group.
‘We’re launching a number of networking schemes which bring companies together. These may focus on one sector or go across sectors.’ The aim, he says, is to enable firms to discuss issues of common interest and exchange ideas. Matters such as employment law and training are covered. ‘Too many companies work in isolation. Networking can be very useful, especially for small firms lacking the resources of bigger companies.’
Scottish Engineering is also involved in a move by Scottish Enterprise, the national economic development agency, to build centres of excellence and encourage innovation and home-grown business in key industries. ‘We need to ensure that R&D is firmly embedded in Scotland to secure the long-term future of manufacturing jobs,’ says Hughes.
Scotland’s electronics sector has been hard hit by a weakness in this area. Among the biggest job losses have been Hyundai’s cancelled investment last year in a new semi-conductor plant in Fife, which was to have created 2,000 jobs.
And in August, US firm Viasystems announced the closure of its Borders factory, which makes printed circuit boards, with the loss of 1,000 jobs.
However, Hughes is confident of a future for Scotland’s Silicon Glen. ‘A rationalisation is taking place between supply and demand but the market is basically sound. There will be an increasing demand for computer and electronic products.’
Hughes says Scottish engineering firms need to continually re-evaluate their core business. ‘Companies are primarily in the business of making money and jobs are dependent on profits. Sometimes it’s too easy for industrialists to lose this focus.’
He believes industry must ensure it has the skills it needs. Scottish Engineering research shows that Scotland is suffering from a lack of traditional skilled apprentices such as electricians, as well as CNC machinists and IT specialists.
‘Engineers have got to get out into the world of education because it’s their supply base,’ says Hughes. ‘Don’t just sit and whinge about the lack of skills, get out and do something about it.’ Hughes has links with several UK universities. He was on the board of governors when the former Dundee Institute of Technology was upgraded to a university.
Looking ahead to Scottish Engineering’s next economic survey, to be published in December, Hughes sees no sign of any improvement in the business climate. Nor will there be any let up in job losses. Up to 12,000 jobs have gone from the Scottish engineering sector over the past few months, Hughes estimates. ‘The 0.5% interest rate cut is too late to save those jobs and more will go.’
But Hughes adds: ‘Scottish engineering firms have shown great resilience over the years and they will survive despite the problems.’