doc

Almost a quarter of Scottish manufacturers have lost or are at risk of losing staff due to Brexit, according to a new study.

Businesses surveyed said this was due to uncertainty over post-Brexit EU workers' rights and a drop in the value of the pound.

Nearly a quarter of respondents cited Brexit concerns and uncertainty over future trading tariffs as a key barrier to growth, the Manufacturing and Engineering Report 2017/18 found.

The survey was conducted by Henderson Loggie, in conjunction with the MHA association of UK independent accountancy firms and Bank of Scotland, questioning 50 Scottish businesses as part of a survey of 460 UK wide.

READ MORE: Theresa May 'too busy' to visit Glasgow to see poverty and inequality first-hand

It found that Scottish manufacturers are optimistic about growth prospects in the coming year, with 65 per cent predicting growth in the next 12 months.

Almost half (45 per cent) of businesses expect staff numbers to increase in the next twelve months, however 72 per cent of respondents have difficulty recruiting employees with the relevant skills.

Gavin Black, manufacturing lead at Henderson Loggie, said: "Scottish manufacturers are largely positive in their outlook and prospects for growth, and the sector is certainly gritting its teeth in what has been a difficult and uncertain period.

"However, we should not be complacent and the survey has found that despite the ambitions, growth is being constrained and companies in the sector continue to be under increasing pressure to cut costs, meet the rising prices of raw materials and embrace new technologies if they are to survive.

"The sector continues to have difficulty recruiting staff with the relevant skills, the pressure on which is likely to increase as some businesses are at risk of losing staff due to Brexit.

"It is encouraging that the businesses surveyed have ambitions to grow staff numbers over the next 12 months and continue to offer apprenticeships and grow talent from grass roots to try and fill the skills gap.

"The Scottish and UK Governments need to continue to support the sector and expand skills training for the future workforce in schools and colleges."

READ MORE: Theresa May 'too busy' to visit Glasgow to see poverty and inequality first-hand

The study found that Brexit has already had an impact on production costs.

More than eight in ten respondents reported that production costs will continue to rise over the next 12 months with the key driver for this being the increasing price of raw materials and components (directly or indirectly) through currency fluctuations.

Respondents plan to improve productivity and efficiency and increase prices to deal with the rise in production costs.

Craig Pollock, area director for manufacturing at Bank of Scotland, said: "Scotland's manufacturing firms have flagged potential risks, such as the UK's negotiations to leave the EU, rising production costs and staff shortages. These will need to be closely managed."

READ MORE: Theresa May 'too busy' to visit Glasgow to see poverty and inequality first-hand

Economy Secretary Keith Brown said: "These are very encouraging figures for our vital manufacturing industry. A strong manufacturing base is critical to Scotland's economic success and to creating skilled employment opportunities for the future.

"With Scotland enjoying resources few nations can match, we will continue to do all we can to support growth.

"In the last year, manufacturing output is up, in part due to the resumption of steel production at the Dalzell plant after the Scottish Government intervened to save this key strategic asset. We are also supporting expansion of the aluminium smelter at Lochaber and the development of a new Lightweight Manufacturing Centre in Renfrewshire.

"This is the first step to establishing a National Manufacturing Institute Scotland which will foster the leadership, ambition and skills to make Scotland a world-leading manufacturing location.

"However, Brexit is a major threat to jobs, investment and prosperity as a result of the UK Government's proposals to leave the single market and customs union - and this report underlines those concerns, with nearly a quarter of firms already reporting they have lost or at risk of losing staff as a result of Brexit.

"Losing membership of the world's largest single market would seriously impact Scotland's export potential. It would also restrict movement for a highly skilled workforce who contribute a huge amount to our companies and country.

"We will continue to press the UK Government to change course, and protect Scotland's interests."