North East offshore sector will emerge stronger from downturn, expert predicts

The North East offshore sector will emerge strong, leaner and fitter from the current oil price downturn, says one of the region leading industry figures. Peter McCusker reports.OSBITs cable lay deck spread and quadrant supplied to Technip Offshore Wind

The North East offshore industry suffered a major blow last week with news of 200 redundancies at Wallsend fabricator the OGN Group.


This news mirrored much of the dismay felt in the region during previous oil price downturns in the ‘80s and ‘90s which wiped out the North East’s fabrication industry, with the loss of thousands of jobs.


While the OGN news is disappointing for the workers and the region, one feature of the 14-month oil price slump is the relatively small number of job losses at some of the North East’s major offshore companies.


Whilst the likes of Tyneside subsea suppliers Bel Valves, GE Oil & Gas (formerly Wellstream), Technip (formerly Duco) and SMD have all had to make job cuts, they have not been of the magnitude seen north of the border.


In Aberdeen the operators and tier one contractors such as the Wood Group have taken the axe to thousands of staff while North East supply chain companies have been trimming tens from their workforce.


A hallmark of the North East’s offshore supply chain is its world-leading technology and this unique skill set - particularly in the subsea space - may have inured the region from the more widespread turmoil, at least for now.


In fact one subsea company which is still performing ahead of its peers, winning major orders and recruiting staff is Riding Mill-based Osbit Power.


This company provides engineering solutions for the offshore industry and was launched by one of the forefathers of the region’s subsea sector Dr Tony Trapp, co-founder of world-leading, underwater robot maker SMD.


He said: “There has been a huge reduction in capital expenditure, developments are being abandoned and it has been very damaging particularly in Aberdeen, more so than here in the North East.


“This is a huge global industry and there has been a marked reduction in work, but the market is huge and there is work out there.


“Osbit Power is small, and the North East is small, but we have a good supply chain and good universities.


“Here in the region we have some very specific technology skills and some world-leading core technological competencies.


“What has happened along the Tyne in the last five years (in relation the development of the subsea supply chain) has been very impressive and while we may see a bit of a lull for a couple of years, it may well be short term.


“This is a very cyclical industry. There will be another boom and you just have to survive it. This may go on for a long time, but it won’t go on for ever.


“The North East offshore sector which emerges from the current oil price turmoil will be leaner, fitter and stronger - although there will be some further casualties along the way.


“We have got to continue be the best at bringing new technology through and keeping the costs down.”


Source: Chronicle Live


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