Aberdeen’s embattled economy is trying to claw its way out of the North Sea downturn, but while doom-merchants talk down signs of a recovery Stuart Rennie believes there is hope on the horizon for forward-thinking businesses that are prepared to adapt to changing market forces.
Stuart, a sales manager with corrosion specialists Presserv, has worked in the oil and gas industry for almost 30 years. Here he outlines how Aberdeen, rather than fall victim to the ravages of volatile commodities, has become the ultimate comeback kid.
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Aberdeen: the oil and gas capital of Europe, a worldwide hub for excellence in offshore exploration. The energy sector has been an integral part of our community here in the north east for over 40 years, and many will not remember a time when the city did not float on a tide of black gold.
But perhaps what is not so widely known is that Aberdeen was a centre of innovation long before oil started flowing to its shores from the North Sea. And not only has it been a world leader in everything from the production of paper to silk stockings: the Granite City has demonstrated itself as the master of reinvention.
Commodities like oil are volatile: we cannot control the demand for the product or the price we buy or sell it for. But what we can do is adapt to the situation as it changes – and we know from history that the businesses that emerge unscathed from recessions are those who keep an eye firmly on the future.
The message, it seems, is clear: adapt or die.
The entire city is hurting from the downturn in oil production and the ever-decreasing price of oil which has seen the cost of a barrel plummet to under $50 USD. But, look to the past and all the signs are that Aberdeen can – and inevitably will – recover and will once again become an economic dynamo.
In my 30-year career in Aberdeen, this is the third oil crash that I have experienced. But we don’t have to look too far back in time for examples of other commodities that have hit rock bottom and forced industry in the north east to adapt.
Many of Aberdeen’s industries date back to the 18th century – at that time the city was a powerhouse of textile production. But the textile mills eventually gave way to paper mills – an industry that has now all but diminished.
Quota cuts and decommissioning have led to the decimation of the north east fishing fleet, and the days of the quayside being lined by herring quines gutting fish died out in the 1950s.
But look at the harbour and the last signs of life for the fishing industry remain: a handful of trawlers still land their catch at the local market and the processors that would gut and pack fish now process it in various forms from fish cakes to fish fingers.
With its maritime connections, Aberdeen was a hotbed of engineering innovation for ships. Yards were responsible for fitting out war ships as far back as the 15th century. Over decades it developed a formidable reputation for producing strong, fast-sailing vessels – one which was to come to the fore in the boom years of fishing.
Gradually the Zulus, Fifies, scaffies and drifters disappeared, but the many yards of the city modernised their designs to create the trawlers that we are familiar with today. Change came again in the 1970s with the need to build ever-larger cargo boats and supply vessels for the embryonic oil industry.
Now the energy sector has emerged as the dominant force in our city. But the winds of change are sweeping through Aberdeen, and not just because of the downturn in North Sea production. Oil won’t last forever; renewables, it seems, are the future.
Presserv UK has always kept one eye on the next big thing, and constantly looks at what it will do next. We’ve performed well during the oil recession – the skills that our workforce has in preserving equipment have come into their own.
An increased number of operators need to preserve assets that are unused for longer periods instead of the quick rotation that was commonplace over the past decade. There was a time when operators could rotate assets – use one, service one and have one on standby – but increasingly there is a need to have all or most of the assets in storage.
Our reach and demand for our services has grown significantly over the past year, particularly as we expand into new territories. Together with Cortec, a global market leader in corrosion solutions, we have developed new solutions, products and methods for preservation and corrosion protection.
All businesses in the north east – whether directly or indirectly related to oil – need to cut their cloth. But it’s vital that vast swathes of the cloth are not trimmed, or businesses will simply not be prepared for the recovery when it comes.
While there may be a knee-jerk reaction to make cuts to ride out the storm in the short to mid-term, those who have lived through the cyclical nature of the North Sea oil and gas industry know that’s not the best option to take.
Business plans need to be considered thoroughly: key workforce and competence need to be sustainable even in a volatile market place. Would your business be able to respond to the recovering market if oil jumped steadily to $150 a barrel by the end of 2018?
For many, bankruptcy and liquidation could well have taken a toll by then and the supply chain would be so lean that it could not cope with workload or demand from operators on contractors.
As Presserv UK has shown, the biggest strength that businesses have is the depth of knowledge in the workforce – along with our entrepreneurial ability to adapt and adjust to challenges.