UK subsea sector optimism continues to improve
The latest survey on the UK’s Subsea sector has revealed an improved outlook for the industry with less anticipated redundancies, greater optimism and new geographical markets.
Industry body, Subsea UK, surveyed its 300 members in early July and then again in late November 2020 to provide insight into how the supply chain was faring in the midst of the public health and economic turmoil of last year.
In July, 73 per cent of respondents did not anticipate making redundancies in the near future. This figure has increased to 80 per cent with only 12 per cent planning to make people redundant and 8 per cent undecided.
Optimism has also increased by 7 per cent, with 63 per cent of companies now feeling fairly optimistic about the next six to twelve months, compared to 56per cent in July last year.
Slightly fewer subsea companies now believe the recession will last for the next 12 – 18 months (66 per cent compared to 68 per cent in July) with 13 per cent believing recovery will be quicker and 21 per cent anticipating recovery taking longer than 18 months.
Employee health and well-being remains the top priority for subsea companies with cash-flow becoming an increasing concern.
In November, 25 per cent of respondents said cash was their main priority, compared with 19 per cent in July. Lack of visibility on projects and project deferrals were the third area of concern with client behaviours becoming more of an issue.
Exploring New Markets
Half of the respondents also revealed that their target markets had changed over the five-month period as a result of the pandemic.
In terms of geographic markets, Europe remains the top market among 54 per cent of respondents, a rise of 8 per cent since last July. The Gulf of Mexico follows and then Asia Pacific, South America and the Middle East.
Oil and gas is still the dominant market for the subsea industry. However, activity in offshore wind has increased and 28 per cent of firms see this as their priority market, compared to 21 per cent in July 2020.
Subsea UK’S chief executive, Neil Gordon, said:
“These findings are very encouraging as we move into 2021 and underline the resilience of the UK’s underwater engineering industry.
“It will be interesting to see how the new national lockdown impacts on the industry which, despite the more positive mood, is still fragile due to low margins, lack of resources, cash and investment and, in many cases, considerable debt as a result of the last oil and gas downturn.
“The UK Government’s recent Energy White Paper presents some exciting opportunities for our sector which has a key role to play in the energy transition and the green recovery. Along with other industry bodies and relevant organisations, we will focus our efforts on working with government to ensure the subsea supply chain is at the heart of the country’s energy strategy and measures are in place to ensure it can maximise the opportunity. “
Rovco is one Subsea UK member which has capitalised on the rapid growth in offshore wind and believes the survey reflects the relatively buoyant mood in the industry as a result of diversification into this market. The Bristol-based provider of remotely operated vehicle and hydrographic services, supported by artificial intelligence-based technology products has reported more than trebling its revenues in the last 12 months.
“Having initially started out in oil and gas, almost 90 per cent of our business now comes from the offshore wind sector. As a result of winning significant work in the renewable energy industry in the last year, we have increased our headcount by 40 per cent, creating over 20 new jobs,” said Brian Allen, Rovco CEO.
Osbit, a North-east of England design and engineering firm, is cautiously optimistic after bolstering its engineering team throughout the pandemic. Owner and founder, Dr Tony Trapp, said: “We’ve not made any redundancies nor furloughed anyone and have added considerable expertise to our team by recruiting some excellent engineers who were let go following the collapse of a couple of firms in the North-east, where it’s been particularly challenging for the supply chain.
“We are now in a much stronger position than we were this time last year and expect to announce wining a multi-million pound offshore wind contract shortly. Oil & gas remains our largest market but offshore wind is growing rapidly and, with bigger equipment required, there is a huge opportunity, not just in Europe but in the US and Far East.
“Having lost out on much of the manufacturing opportunities in the UK offshore wind zone, the supply chain must grasp this exciting prospect for underwater engineering know-how. The opportunities are huge.”