2014 has brought mixed fortunes for Scottish engineering

Posted on 29 Dec 2014 by The Manufacturer

It has been an uneven year of fortunes for Scotland’s engineering sector, with exports subject to international turbulence that managers believe will continue into the New Year.

Tom Johnstone, the outgoing chief executive of SKF – the Swedish industrial company with operations in 28 countries around the world, has a keen grasp of the engineering sector.

Looking at the geographical scope of the group’s business, Johnstone sees a “mixed picture” globally. The Scots-born chief executive would not say exactly how he things the forthcoming year will shape up. He did, however, comment: “There are so many mixed signals at the moment. It is very hard to forecast.”

The latest survey from Scottish Engineering showed a sector getting back on track in the final quarter of 2014, with an increase in employment and domestic demand. However, the initial fragility of this recovery was underlined by poor export activity, hampered in large part by weakness in Europe and conflict in Russia.

Johnstone believes that the situation between Russia and the Ukraine has “clearly” impacted confidence, with impacts beyond the sanctions that have halted certain exports into the country. The country’s economy is slowing, a feature that has already deteriorated other markets close to Scotland.

“We don’t see a strong Europe any time in the near future,” Jonstone said. “Europe remains relatively anaemic.”

It’s better news for firms exporting to the United States, where the economy is “moving along the right direction”.

Latin America is “quite challenged”, however, with Argentina and Brazil particularly troubled. Growth in India has slowed, though the new government there is having a positive impact.

As for China, Johnstone said activity varies from one sector of manufacturing to the next. “Areas like renewables, high-speed rails and automobiles are all seeing good growth in China,” he said. “Sectors like mining and metals are not so good.”

Johnstone joined SKF in 1977 as a graduate trainee at the group’s now-defunct factory in Irvine. His work took him to Gothenburg in 1987, where he has lived for all but two of the last 28 years.