Mounting pressure to cut costs could break the supply chain’s resolve to fight back against the downturn, the chief executive of Micron Eagle has said.
Andreas Nagel, who heads up the firm which provides specialised hydraulic engineering, said: “We have got to lighten the load or the camel’s back will break – it will just collapse because we can’t carry a load this heavy.”
Speaking at this year’s Offshore Technology Conference (OTC), Nagel said the answer to recovery wasn’t a single sweeping industry-wide solution, but instead a series of smaller achievable gains.
Micron Eagle has bases in Aberdeen and Houston.
“For example, the business rates in Aberdeen should be lowered to reflect the business we are currently doing,” he said.
“All of these taxes were started in the good times and then everyone agreed it needed to go up every year.
“If it can go up it must be able to come down again.”
He added: “We’ve been paying indirect and direct taxes, but not getting very much back.
“Everybody is talking about the bypass being finished in Aberdeen but that should have been built 40 years ago.”
The industry veteran said oil and gas was the most heavily affected commodity-based sector.
“I don’t understand why the oil and gas sector, which is commodity based, fluctuates so differently than other commodity-based markets,” he said.
“Grain is a commodity based market. It’s prices go up and down, but it’s not as big as a problem, because it’s subsidised. The renewables industry is subsidised.
“I’m not necessarily saying to subsidise the oil and gas industry, but don’t pressurise the oil and gas sector with extreme taxes and then not give it the flexibility it needs to cope in these curves.”
The flexibility in a downturn would help prevent the market from overheating in the upcycle, according to Nagel.
“When it comes back little talent will demand high prices and it will all be out of kilter again,” he said.
Nagel said his biggest focus was finding ways to retain his “highly skilled” workforce.
“These are highly skilled technical people, which is a huge investment,” he said.
“These guys are learning every day, but it has come to a point where a lot of companies can’t afford to keep them any more.
“I’m quite happy to keep mine as long as I can cut something else. I just need to keep them until we get through this spiral, so we’ll just have to live off the fat.”
The firm is investing in new technology and markets, including increasing its footprint in Houston, in a bid to counter the dip.
Simplifying the process for government grants and widening the criteria for support programmes are two other ways to lighten the supply chain’s burden, according to Nagel.
He said: “With the apprentice scheme, if you already have one you don’t get the support. If you don’t have one you do get the support. Why not just say this something everyone can have access to?”
He added: “I don’t have all the answers, but if we all do a few simple things differently we will all be able to handle this downturn much better.”
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