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Engineering services sector remains optimistic despite Covid-19

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The devastating effect that Covid-19 has had on many areas of the economy, hasn’t dented confidence in the engineering services sector, according to a new survey. 

During the second quarter of 2020, 60% of businesses in the engineering services sector saw a drop in their revenue versus what they had in the first quarter of the year. However, that drop was not as large as many businesses had predicted in the last survey that was taken in April. 

That’s led many businesses to be a lot more positive about the outlook of the economy going forward. While some businesses are bracing for an even further drop, some 67% of respondents believe that their turnover will increase or remain the same in the third quarter of 2020. Of course, that could be risked by a second lockdown, however. 

Steve Bratt, ECA CEO, commented, “The sharp downturn in turnover over Q2 was keenly felt across industry. The picture that is now emerging is one of a resilient sector that braced for impact in the spring and is so far weathering the storm whilst remaining cautiously optimistic about the future.

“ECA is committed to supporting contractors through this period and working collaboratively with the Construction Leadership Council to deliver on the recovery plan, and to press for continued Government investment and support for engineering services.”

Debbie Petford, BESA director of Member Services, added, “The resilience of the sector is evident in these latest figures and we are finding that our members are cautiously positive, despite the end of furlough looming large at the end of October.

“A key issue going forward will be retaining skilled workers. We already suffer from a skills gap and the threat of redundancies may drive skilled workers out of the industry or discourage trainees entering our sector. The government’s KickStart scheme, the CLC’s Talent Retention Scheme and our own new online learning solution, the BESA Academy are key initiatives which will help.”

Alan Wilson, SELECT managing director, concluded, “While the drop in Q2 was obviously a concern, these latest figures are at least encouraging, and show that the sector is fighting back against the impact of COVID-19 and demonstrating the resourcefulness needed to recover and rebuild.

“Less encouraging is the ongoing issue of late and withheld payments, which continue to be a problem for so many contractors. In the current climate, the industry relies on cashflow more than ever, yet small firms in particular are still waiting too long to get paid.

“SELECT will continue lobbying members of the Scottish Parliament to support legislation to ring-fence retention monies and end a 200-year-old measure that continues to be abused, with devastating consequences for hard-working contractors.”

Other survey findings

The use of agency workers and subcontractors continues to fall, in line with a downward trend observed throughout late 2019 and 2020. Although 9% of businesses said they were using more agency workers and subcontractors than in the previous quarter, 30% of respondents said they were using fewer than before.

Payment issues continue to be a challenge for businesses. Despite public sector rules mandating payment within 30 days; 32% of direct contracts and just 27% of indirect contracts were paid during this timeframe.

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