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2008 Issues Archive
17 September 2008
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Q&A
There’s no way to say this gently. Engineers are more gloomy about the outlook now than at any other time in the past six years. After four years of pretty consistent good performance and optimism, we’ve come down to earth with a bump, and things look bleaker than they ever did in the last downturn.
The charts in PE’s regular quarterly survey of workload and output tell the story loud and clear. On the left is the one that shows our readers’ views on what they have been experiencing in the past three months: the lines at the right-hand end are down, but they’re not at record levels. The chart on the right, though, shows what readers of PE think is on the way: and the graph has had to draw itself a new basement level to accommodate the mood change.
So it’s bad. Or is it? You’d have to be a pretty diehard optimist to see this survey as anything but bad news, but there are some shades of grey among the black.
Looking forward, our engineer-readers still see workload for their own companies going up in the next three months, and marginally they see the work for the sector that their firms operate in rising too. Prospects across business and industry as a whole may be dire but, for most readers, recession is still something that happens to other people.
These surveys follow the pattern of those by industry bodies such as the CBI and the EEF: we ask readers, with 352 replies this time, whether their own workload has gone up, down or stayed the same in the previous three months. We also ask them to rate workload for the sectors in which their company operates, and business and industry as a whole. We then take the positive reports of increased workload, subtract the negative ones who’ve been doing less, and come up with a balance that can be positive or negative. That’s what we put in the chart on the left.
We then ask readers to project workload for their company, sector and industry as a whole forward over the coming three months, and those balance figures form the basis for the chart on the right.
So to the figures. The thing to notice about the chart on the left is that the top two lines, in blue and pink, are still in positive territory. That means that more readers saw workload increasing in their own firms or sectors than saw it decrease in the past three months. If recession is on its way, then it hasn’t hit these people yet.
The top line, where readers inspect the runes at their own companies, has always been positive ever since we started these surveys: the +22 balance now is low, but not the lowest. The middle line measuring workload in the sector is now +6, but was negative in the 2002-03 period, which no one now remembers as more than a blip.
The less happy stat in the left-hand chart is the bottom line, where perceptions of workload across industry as a whole are well down, at -31, down from just -3 last time, though once again it was worse than this in the early days of our surveys.
The real gloom comes in the right-hand chart, which shows the results of the questions where we ask readers to project workload over the next three months.
But, even here, engineers are positive about their own companies, at +22, and their sectors (+3). It’s only when the engineers look out across the wide expanse of business and industry as a whole that they get jittery. Very jittery. The figure here, -45, is the most pessimistic ever.
To some extent, of course, that pessimism may be a slight reaction to several years of the good times: it’s not entirely backed up by the usual two questions that we ask each time to corroborate (or not) the survey results themselves. These two questions ask whether readers regard the past 12 months as having been a good time for engineering in the UK and whether they see the coming year as good or bad. Not surprisingly, there’s a lot of warm feeling about the past year, with a positive balance of +56.
But, despite the recessionary warnings, the numbers seeing the next year as good or bad for engineering are almost in balance: just a -1% negative balance with a lot of “Don’t Knows”. Things may not be as good as they were, but they’re not all bad.
Our last question gives a list of factors that might be influential and asks readers to pick the one they feel poses the biggest “threat” to engineering in the coming year.
For a long time after we started asking this question, fear of competition from low-cost countries was the big threat, at times cited by almost 50% of readers. It’s now down below 10%, so that threat is receding. So too is the possibility that skills shortages might stunt engineering growth: a year ago, around a third of readers saw this as a big threat, and now it’s down to 14%.
The top problem now is the impact of high energy costs: this is the No 1 factor for 26%. A further 13% rate high raw materials costs as the big problem. A growing number, 17%, blame the government.
The big change, though, is in the number of people writing in their own answers, now up to 14% of respondents, and virtually all say that some variety of credit crunch, exchange rate woes, recessionary pressures and – in the time-honoured tradition of shooting the messenger – media reporting of recession constitute the big threat.
The R-word is on everyone’s lips. There’s no getting around that. At present, most engineers seem to be spectators rather than participants. But can it stay that way?
JP
© PE Publishing, 17 September 2008
