Pete Flockhart, Bank of Scotland area director for Glasgow and the West of Scotland, looks at growing confidence in the manufacturing sector following last week’s Scottish Manufacturing Advisory Service conference.
Having experienced decline throughout the 1990s and early 2000’s manufacturing is once again at the heart of Scotland’s desire to be an export led economy and this week’s SMAS conference came on the back of increased manufacturing output.
The most recent Scottish Export survey by Scottish Enterprise stated exports rose by 5.8% to £26 billion in 2012, and that manufacturing contributed 59% of this – £15.4 billion to the total. In all areas, manufacturers we work with, like retinal imaging firm Optos, are now experiencing growing demand from overseas.
Yet challenges remain and as last month’s Wilson review suggested, more needs to be done to provide our manufacturers with the support and guidance they need to realise their international growth ambitions.
Input cost inflation continues to exert pressure on ever tightening margins, while significant investment and support is needed to plug skills gaps in the next generation through additional training and apprenticeships.
In September 2012, Lloyds Banking Group announced its commitment to growing our lending to manufacturers by £1billion in the following 12 months. This objective was reached in nine months, and we have since committed to lend an additional £4 billion to manufacturers by 2017.
Manufacturing already represents around 12% of the Scottish economy, yet contributes 59% of our exports and 65% of Business R&D spending. It generates high skill, high wage jobs that generate wealth and are critical to the success of the Scottish economy. But with additional support the sector could deliver even more.
To be in the best possible position to drive growth, manufacturers must be supported to improve their products, operations and value proposition to retain and grow both domestic and export markets.
Internationalisation and innovation are key to the future success of the Scottish economy. If we can address the sector’s issues now, we have a huge opportunity to build on manufacturing’s already strong performance to become a truly global player.