Over the past few months, I have been carrying out a review of Scottish exporting on behalf of the Scotland Office and I hope that its conclusions can be brought together early in this new year.
It doesn’t require much study to discover the slightly alarming extent to which Scottish exporting statistics depend on just two industries – whisky, and oil and gas.
This imbalance has been exacerbated by the decline of the electronics industry over the past decade.
Just as the Scottish economy in general is disproportionately oil-dependent compared to the UK as a whole, so too is our exporting effort.
A large proportion of the 300,000 jobs which the sector supports depends on the success of North Sea companies in winning work overseas – maybe as many as half.
Yet, within the oil and gas supply chain as in the Scottish economy more generally, there are lots of firms which should be exporters but are not.
They are perhaps caught in the trap of believing that when things are good in the home market, there is no need to go chasing round the world.
That is a risky assumption. Apart from its more immediate values, work in other parts of the global industry is a useful hedge against the day when times get tough at home – as they have done in the past and will invariably do again in the future.
This was the reasoning that drove the first big movement by companies in the North Sea supply chain into exporting in the late 1990s.
When the future of the UK Continental Shelf looked very bleak for a while due to the very low price of oil, it really was a case of “export or die” for many of the companies which had developed in Scotland.
Recovery came more quickly than expected but, by that time, roots had been put down in various locations around the world and, by and large, the companies which started thinking globally at that time have stayed in the game – often with great success.
But it is a process that requires constant renewal.
The most recent survey by the Scottish Council Development and Industry confirmed the extraordinary degree of importance that attaches to exporting our oil and gas expertise and equipment.
In 2011, international activity accounted for a record 47.6% of the Scottish supply chain total, up from 32% in a decade.
In monetary terms, international oil and gas sales were valued at £8.2billion. Just to put that in perspective, total Scottish exporting is valued at around £25billion while Scotch whisky accounts for £6billion.
However, only 11% of total international sales was delivered via SMEs with fewer than 250 employees.
This points to huge potential for more firms to spread their wings and raise their ambitions.
And it is the role of Government agencies, both Scottish and UK, to help them do so and to ensure that entry into international markets is made as feasible as possible.
Equally, the horse has to come before the cart. The ability of Scottish companies to become international players depends to a high degree on their initial success in entering the domestic supply chain.
Once they are doing the job, or supplying the equipment, in the North Sea, they are in pole position to fulfil the same roles anywhere in the world.
But how much of the North Sea supply chain is genuinely indigenous . . . Scottish, or indeed British . . . to start with?
That really is a crucial question and it is very difficult to get an answer – perhaps because it would be a bit of an embarrassment.
Norman Smith’s analysis in his book “A Sea of Lost Opportunity” is closer to the truth than governments like to admit – though the sheer scale of the numbers involved helps to disguise that fact.
For those who are not aware, Smith was once head of the long defunct Offshore Supplies Office, a government creation designed to promote local content in the North Sea.
There has been no shortage of initiatives to strengthen the local presence in the supply chain but, from an exporting point of view as well as participation in the large-scale investments now anticipated in the North Sea, it is clear that we have to do better – a 2014 resolution perhaps for UKTI, Scottish Enterprise, UK Oil & Gas and indeed everyone who can influence the situation.
We are told that 2014 will be important to Scotland for all sorts of reasons but there is none more fundamental than the ability of our people to work, earn and live in reasonable prosperity.
And that is why, amidst the interminable constitutional argy-bargy, sight must not be lost of the essential tasks involved in supporting our key economic sectors. We will still need them when the referendum is over.
Perhaps one aspect of the constitutional debate is worth a mention in the exporting context.
According to the SCDI report, Scottish companies are active in 106 different country markets around the world. In every one of them, the UK has diplomatic, consular and commercial representation – all essential to the business of sending goods, services and people into these countries.
It is in the nature of oil and gas that the industry pops up in some pretty inaccessible places, otherwise regarded as diplomatic backwaters – and certainly not the kind of places that Scotland would have the relatively small number of embassies and consulates described in the White Paper, in about one-third of the UK locations.
As in many other respects, it would be foolish to understate the value of what we have got and stand to lose.
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