The latest figures have been described as "disappointing"

Sales fell by �550m to �14.8bn, a dip of more than a quarter since peaking at nearly �20bn in 1999.

Electronics exports are now at hardly half their peak 1999 level.

But factory exports rose by �0.2m to �8.6m, according to the Scottish Council for Development and Industry (SCDI).

Head of the SCDI Alan Wilson said: "The engineering sector was strong and signs are that whisky is recovering well from specific difficulties in a couple of markets."

It is a major concern that exports have fallen at a time of increased global trade Alan Wilson Scottish Council for Development and Industry

He said, however, that ministers and Scottish Enterprise should back medium-sized exporters who faced a "pressing need" to improve workforce skills.

They should also invest more in research and development and improve transport links.

The SCDI's figures for 2004 were published after quarterly Scottish Executive statistics two weeks ago suggested manufactured exports were still in decline, mainly because of the slump in the electronics market.

The latest totals confirmed the decline of the sector:

• 1999 - �11.2bn

• 2003 - �6.9bn

• 2004 - �6.2bn.

Mr Wilson warned: "Overall, this was another tough year for Scottish manufacturing.

"In particular our export performance was dragged down by the continuing decline in the electronics sector and the sluggishness of our main European markets."

He added: "It is a major concern that exports have fallen by a quarter since 1999 at a time of increased global trade."

The executive admitted the latest figures were "disappointing".

We fully acknowledge there has been an extremely difficult period for manufacturing Scottish Executive

A spokesman said the figures coincided with a period of weak demand in the key export market of the Euro-zone.

But he went on: "We fully acknowledge there has been an extremely difficult period for manufacturing."

The EU was still Scotland's biggest regional export market followed by North America and Asia-Pacific, excluding Japan.

The United States - where the first minister is on a trade mission - was Scotland's top national export market, with Germany in second place and France third.

The Conservatives said Scottish manufacturing was facing a full scale crisis.

Pro-enterprise agenda

Tory enterprise spokesman Murdo Fraser said: "The sector has slumped over the past five years under the executive's disastrous stewardship of the economy, in spite of Jack McConnell's rhetoric about making growth a priority.

"What we need now is a radical pro-enterprise agenda to boost our struggling companies."

He said a "bloated" public service and a "woeful" road network was preventing private firms from being able to compete and he called on the executive to cut business rates to English levels by next April, rather than 2007.