The UK subsea sector has grown by 40% over three years, according to a report unveiled at an industry gathering in Aberdeen yesterday.
Subsea UK’s survey of 761 companies showed the sector to be one of the UK’s highest performing, having seen its economic impact grow from £4.3billion in 2006 to £5.9billion – and 31% of an £18.9billion global market – in 2009.
The findings of the industry body’s 2010 subsea business activity survey were revealed at Subsea 2011, the UK sector’s flagship event at Aberdeen Exhibition and Conference Centre.
Subsea UK chief executive Alistair Birnie said it was anticipated that the industry would grow to £7.5billion by 2013, with the smallest growth expected in the renewable-energy sector.
Aberdeen and Aberdeenshire is home to 38% of a subsea industry supporting almost 50,000 jobs, with 40,000 of these people employed directly in subsea-related activity.
Nearly 300 subsea companies are located in the city and shire, with a major cluster at Westhill.
“Surf City”, as the Aberdeenshire town has become known – standing for subsea, umbilical, risers and flowlines – is now recognised around the world as a subsea centre of excellence.
The south-east of England and London host the next largest number of subsea companies, with other significant hubs in the east and north-west of England.
Mr Birnie said he had been “gobsmacked” at how positive the survey had been in the middle of a recession and his organisation had checked each individual survey return with Companies House figures and come up with the same result.
“These findings underline the huge economic significance of the subsea industry to the UK. It is highly impressive that despite the economic downturn, subsea businesses in the UK have grown by almost 40% between 2006 and 2009 and the sector is now larger than ever, commanding a third of the global market.
“Much of the growth has been driven by exports which are increasingly important to the health of the sector.
“If the forecast of around 8% year on year growth is achieved, the sector will reach over £7.5billion in revenues with the potential to create an additional 10,000 jobs.”
Important export markets for UK subsea companies are Europe, especially Norway, Africa, North America and Asia. Future export growth is anticipated to come mainly from South America and Asia.
Mr Birnie said the renewables market was not a significant driver of the UK subsea industry with total subsea-related turnover from UK companies approximately £420million. Almost 40% of those who responded did not provide any goods or services to renewables with one-third saying the segment accounted for between 1% and 9% of their turnover.
Almost half of the respondents expected at least 20% growth in subsea turnover in the next three years but an increase of only about 10% (£42million), was predicted in turnover from the renewables market.
He said: “With such a buoyant oil and gas market, it is hardly surprising that renewables accounts for only a small percentage of turnover although there are growing signs that this will increase in the future.
“There is a lack of confidence in the renewables market that has come through during the course of this study. It is not clear where new business is going to come from and in some cases where companies are already in the business they expect a gap within the next two years.”
He said some had indicated they were being very cautious and might go after new business in oil and gas instead.
“The sentiment certainly was that they were not as confident as they were two years ago that they would make substantial profits.”
Aberdeen-based subsea specialist flexlife launched a new product at Subsea 2011 show that aims to help maintain offshore asset integrity and safeguard the environment.
FlexGuard incorporates flexlife’s award-winning ultrasonic scanning technology in the form of a collar fitted permanently to flexible risers. The company forecasts flexGuard will generate additional revenue of more than £11million annually by 2014.