Aberdeen company Subocean is preparing to set up a satellite office in Germany in a bid to capture lucrative contracts with offshore wind developers on that side of the North Sea.
The office will be based in Bremerhaven, which is also home for the Luneort integrated manufacturing facility for large marine capability wind turbines.
Subocean’s managing director, John Sinclair, sees the German marine renewables market as being second only to the UK. However, he clearly hopes to piggyback with continental utilities engaged in various huge projects gestating in UK waters.
The decision to open in Germany follows close on the £17million cash injection by Lloyds late last year which is designed to accelerate growth of the already fast-growing firm while removing the risks associating with growing too fast – such as over-trading.
The business was founded in 2006, initially to supply personnel, then equipment, then become directly involved in construction projects. The first renewables contract came in 2007, but the market was very stop-start at that time. In 2008, Sinclair set a five-year plan with the objective of hitting £100million turnover a year.
“What happened was different,” said Sinclair.
“This year, we have an order book for £105million and already have £55million booked for next year and £15million for the year after.
“The five-year plan we had in place was blitzed and did it in three years.”
“We’ve gone from operating one asset to operating five (cable-lay barges and DP class-two ships); we’ve gone from 30 to 100 people. Offshore we’ve grown from 40 to 250 people and we see that growing further.
“We’re also currently taking on a third unit next to the existing pair in Westhill.
“The other thing we’re doing is relocating our equipment and workshops down to Great Yarmouth, which puts us right in the middle of the Round Two and major Round Three developments.
“I think our next five-year plan will probably have us heading for £300-400million turnover by 2014-15. That’s based on taking on one new asset every year. But we’ll only take those on if our forward contracts book warrants such a step. We’ve made a conscious effort not to over-commit. In the present financial climate, we’ve also asked for the help of our clients.
“Two or three years ago, the credit crunch meant that getting help from the financial sector became difficult, so we went to clients telling them that they needed us as much as we needed them. Therefore we needed some up-front money to ensure cash flow.
“What we’ve agreed with all the developers is that they enable a slightly positive cash flow, so avoiding the risk of issues like over-trading. As long as you go in and lay things out, they’re very fair.
“They’re in an interesting supply-demand dynamic; there’s a shortage of everything in the supply chain, so they need to help to develop that. The utilities are on a learning curve.”
Sinclair said that, while Subocean had been a success, wind developers still saw the oil&gas capability as being very expensive.
However, he said it was important to learn.
“Look at oil&gas in the 1980s: offshore construction took place between May and October, shutting down for the winter. Then what happened is that everybody wanted to get the oil&gas out of the ground as fast as possible, so they decided to work through the winter.
“That is now happening in renewables. Project budgets are organised for offshore construction from April through maybe October. In fact, they’re now having to work right through the winter. So the learning curve that the oil&gas guys went through is exactly what renewables folk face.
“The other big issue is that, if you look at the oil&gas market, there is a lot of sharing of knowledge. The renewables market hasn’t got there yet. There’s a lot of information that should be shared going forward that will ultimately help each developer. That’s a change that must happen.
“The big thing for me is the supply chain. Yes, we have the oil&gas market, but the big thing for me is resource … people and assets. Although the oil&gas market has a large resource, I believe its own demand will soak up its capacity, so it’s hard to see people moving across.
“The renewables guys need to get into the schools, universities, and encourage students into this new market.
“It looks as if offshore renewables will really take off in 2015-16, so we still have five or six years to get graduates signed up.”
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