Despite citing cyber security, tax increases, skills shortages, energy costs and regulation as their biggest challenges, the vast majority surveyed for the report were optimistic of their firms thriving.

The UK-wide survey looked at what business leaders believed should be the government’s top three priorities in its upcoming Industrial Strategy.

In May, 1,000 manufacturing business owners and C-suite were surveyed to understand both the challenges and opportunities that they currently face and what lies ahead for the sector over the next 12 months.

In Scotland, the view of 71 respondents showed the short-term outlook remained difficult, with political action sought in areas such as increasing supply chain options, investment in strengthened IT systems and in upskilling existing staff.

Manufacturing is one of the key sectors for Stuart MacPherson, audit and accounts director, based at MHA in Aberdeen’s Carden Place. Commenting on the findings, he said: “The growth outlook figures are encouraging with 74.6% of respondents expecting to grow above inflation in the next 12 months.

“It suggests a degree of confidence despite the constant stream of uncertainties over recent years from Covid to the Russia/ Ukraine conflict, resultant material price volatility and supply chain issues, and the recent US tariff announcements.”

Some of the key highlights from the Scottish figures show:

• The top challenges impacting manufacturing business – cyber security (40.8%), tax increases (36.6%) and regulation, skills shortages and energy costs (all 31%).
• Actions needed to address these challenges – increase supply chain options (47.9%), upskilling existing staff (45.1%) and investment in strengthening IT systems (38%).
• In Scotland, 74.6% of respondents expect investment in R&D to grow by 3-10% more than previous 12 months, with process and material development topping the key areas.
• Since the Autumn Budget, Scots manufacturing businesses have increased investment in upskilling (64.8%), increased investment in technology (67.6%), a 66.2% increase in AI investment, 70.4% rise in machinery investment, and a 67.6% increase in sustainability investment.
• Apprenticeship programmes are high on the agenda with 47.9% of Scots manufacturers surveyed (compared to 44.3% UK-wide). 46.5% are also investing in AI to close the skills gap (44% across UK).
• In sustainability, 49.3% are using recyclable materials where possible, 47.9% are adopting renewable energy sources and 46.5% are reducing energy consumption. 

Mr MacPherson added: “The statistics show that manufacturers are not resting on their laurels. They continue to invest in R&D and technology – innovating and driving forward for the future.

“This will hopefully put them in a good position to take advantage of those marketing opportunities that will undoubtedly emerge despite uncertainty.”