Small and medium-sized enterprises (SMEs) make up the backbone of Scotland’s energy supply chain and two thirds of them are concerned about the future of their business.
According to the latest research from law firm Aberdein Considine, businesses are concerned about how policy is impacting their businesses.
However, of the four sectors surveyed – energy, retail, food and drink, and hospitality – businesses in the energy sector were less concerned about viability than the average.
Over 80% of small businesses surveyed across all sectors feared their futures were at risk due to mounting economic pressures and uncertain market conditions.
Rod Hutchison, partner and energy sector lead at Aberdein Considine, said that the findings “reflect the increasing uncertainty around the future of the energy sector in Scotland”.
Aberdein Considine partner Ritchie Whyte.
He added: “This highlights the urgent need for targeted and practical support to ensure the sector not only survives but is well-positioned to thrive in the years ahead.”
Law firm partner Ritchie Whyte said higher rates of concern across sectors are due to retail and hospitality businesses having faced even more challenging issues than energy firms.
“Although I know energy is having a difficult time, it may be that the forces at play that have impacted retail and hospitality in particular over a number of years now – the decline of the high street, etc.- have just meant that there is a higher proportion of those businesses in that viability struggle than as seen in energy,” he said.
SMEs call for change in Holyrood policy
Respondents pointed to a number of issues that are causing financial challenges, including increased costs, supply chain disruption, access to finance and uncertainty arising from policy and regulatory changes.
More than a quarter of Scottish energy SMEs said that supply chain disruptions were their biggest financial hurdle.
Almost two fifths of respondents (39%) from the energy sector claimed that Scottish Government policy changes are the biggest factor in limiting business growth.
Hutchison added: “With over a third of respondents citing shifts in Scottish Government policy as the biggest obstacle to continued growth, we hope policymakers take this on board in the run-up to the next Holyrood election and work collaboratively with industry to provide greater clarity and confidence for the future.”
Scottish Renewables head of energy transition and supply chain Emma Harrick.
Despite concerns over the impacts of government policies on businesses, the majority of all respondents said that they believe both the Scottish (87.8%) and UK Governments (85%) prioritise business needs.
Recently, trade body Scottish Renewables found that 60% of domestic energy supply chain firms did not think that the UK and Scottish governments were enabling the right market conditions for Scottish businesses to compete and secure contracts.
The trade body’s head of energy transition and supply chain, Emma Harrick, claimed that long consenting times for green energy projects were the reason for the results of her organisation’s survey.
It was not all doom and gloom from the law firm as 66% of energy firms said they remain optimistic about the benefits associated with the energy transition.
A total of 53% said they are planning to invest in sustainability and ESG initiatives over the next 12 months.
Job stagnation and a return to the office
Despite investment, around two thirds (67%) said that they are not planning to grow their workforce.
This corroborates findings from Aberdeen and Grampian Chamber of Commerce, which reported 61% of firms in the region expect headcount is likely to remain the same over the first quarter.
Scottish Renewables found that securing enough “skilled talent for the growing industry” was the second biggest challenge for firms scaling up with 28% claiming it was an issue.
The primary stumbling block found by Scottish Renewables was project pipeline uncertainty within the renewables market.
Aberdein Considine also found that SMEs across the board, but in particular energy firms, are looking to get workers back into the office.
Energy sector businesses overwhelmingly said that a return to full-time office working will be a priority over the next 12 months, as 84% agreed with the statement.
Whyte said firms have a “shared intent among firms to stabilise operations and support long-term future growth.”
He added: “A return to full-time office working seems to run counter to broader workforce trends, but it perhaps highlights a focus across the industry towards strengthening collaboration and enhancing productivity.”
Source: https://www.energyvoice.com/markets/574611/two-thirds-of-scottish-smes-in-energy-fear-for-the-future/