Industry body Scottish Engineering has hailed a buoyant period for the industry, but cautioned that uncertainty over energy prices was threatening future growth.
The organisation said order intakes and output volumes had been robust in the fourth quarter, but some of its 400-plus member companies were still finding trading conditions “very tough.”
In its quarterly report, Scottish Engineering (SE) said the recovery which had been evident since earlier in the year had continued and levels of optimism in the sector were high.
While figures for the third quarter were “exceptionally encouraging” and had not quite been maintained in the latest period, SE said growth had continued in the manufacturing sector with a 1.6% uplift.
UK orders were positive for the 15th consecutive quarter and, over the same timeframe, SE said more companies had reported increasing their workforce than downsizing it.
Mr Buchan said it had been a buoyant period, and praised collaborative efforts between the engineering and education sectors including a Fife College initiative providing out-of-hours training for local employers for helping push forward the industry.
“While we continue to see improvements on the whole, there are still areas where our member companies are finding that trading conditions are tough,” Mr Buchan said.
“Fabricators and metal manufacturers in particular are seeing order levels drop.
“One area where I am very encouraged is in the collaborative efforts of the universities and colleges with industry.”
However, Mr Buchan used the quarterly update to caution that momentum gathering in the sector was being put at risk by concerns over energy supply and pricing.
He said certainty was needed over the issue in order to assist the sector along the path to growth.
“The energy question is becoming even more of an issue as price rises are passed directly to manufacturers, putting further pressure on competitiveness in domestic and export markets,” Mr Buchan said.
“The position is exacerbated further by the punitive level of the carbon price floor with, as yet, none of the promised relief and the scheduled closure of conventional power stations reduces the safety margin of capacity.
“As has been expounded before, we need a sustainable, secure, affordable and reliable source of power to support any ongoing recovery and, more importantly, growth.”
Minister for Energy, Enterprise and Tourism Fergus Ewing said: “I welcome these figures, which show continued buoyancy in Scotland’s manufactured engineering sector and point to further improvement, with order intake, output volumes, staffing and optimism all increasing in this fourth quarter.
“These statistics follow on from October’s PMI, which indicated a good start to the fourth quarter, reporting that private-sector output in Scotland continued to expand at a robust rate.”
Meanwhile, in an independent article prepared at SE’s request, Business and Energy Minister Michael Fallon singled out two Tayside manufacturing businesses for praise.
He said: “Manufacturing is, and must continue to be, integral to the recovery and future growth of the economy.
“I’ve seen this for myself at companies like Don & Low Ltd and Ravensby Glass Co in Dundee.
“The sector is changing, with manufacturing jobs becoming more skilled in response to a dynamic, fast-moving environment.
“The UK Government will continue to offer its support to ensure that the industry remains competitive and sustainable in the long-term.”