The MD of a consultancy that specialises in helping companies, especially in the upstream oil&gas supply chain, find international markets is warning that local economies wholly or largely dependent on a single industry or company tread a dangerous road.
David Smallman, of Pathfinder Team Consulting, who is also the European representative for the Louisiana Economic Development office in Lafayette, said in all the media comment on the recently announced move of production from Diageo’s Johnny Walker whisky facility in Scotland that it was noticeable that little or no comment was made regarding lack of forward planning by the local/regional government agencies – and, by extension, the local population.
“This situation is not unique. The same situation is seen across the world and through the years, and yet we seem incapable of learning a basic lesson that forward planning is essential if you are not to get caught out by events that you know, sooner or later, will happen,” Smallman told Energy.
“Any community that is dependent on one company (or industry), in the same way as any company that is dependent on one customer/client, is a hostage to fortune,” he said, indicating that Aberdeen potentially fitted that category, given its heavy dependence on offshore oil&gas and the impacts of three downturns – mid-1980s, late-1990s and the current recession.
“Time and time again, those responsible, both the elected and their bureaucrats, fail their communities by not actively engaging in the business of attracting viable sustainable commerce to their locality. It is possible to be loyal to a key local employer while also encouraging other businesses and markets into the area.
“As in the case of Johnny Walker, the local media, local politicians and, by inference, the local population turn on the board of the company and blames them for their predicament. Doesn’t this seem a little unfair?
“After all, nothing in this world ever stays the same. Every company evolves and therefore so should communities. Diageo is a good case study of an evolving company; it is part of their success.
“The energy sector is currently alive, and mostly kicking, in its key markets around the world, but those whose communities and companies are closely aligned particularly to the oil sector have ridden a rollercoaster over the last 18 months.
“Pressure is on for a variety of reasons and from many points of the moral and ethical compass, as well as politicians who see short-term electoral gains, to reduce our dependence on the ‘black gold’.”
Smallman asks whether communities heavily dependent on this sector really are prepared for a future that may see other technologies as the primary suppliers of energy?
“Are the communities, supported by regional and national government, paying more than just lip service to ensuring that the transferable skills available are moved into new areas of technology development?
“Where are the shining examples of communities that have planned ahead – and by ahead, that means further than the four to five-year election cycle – to ensure that investment and, from it, jobs are readily available in their community.
“All too often, local and national politicians (in the UK) tell us it’s not their job to assist the ‘private’ sector by encouraging new start-up and micro companies with financial assistance, whether in kind or real hard cash, as this is ‘lining the pockets of entrepreneurs’.
“We expect the jobs of the future to come from those prepared to risk their cash, and often homes, in order to give others an income and to evolve those businesses into the world-leading companies of tomorrow. Some of them make lots of money in the process; most of them don’t.
“In doing this, sometimes, in order to evolve, they have to move on. With proper planning and a population educated to understand the cycles of economic development, the moving-on will not come as a shock and leave areas devastated. Rather, just be seen as part of the growing sustainable community.”
Smallman acknowledges that Aberdeen, at least, is trying to address such issues via its ACSEF initiative, and that the city possesses significant educational and life-sciences resources.