“Rejuvenated” UK subsea energy engineering firms are preparing for a recruitment drive expected to deliver a major jobs boost for the sector, a new survey says.
Almost 9,000 new positions could be created by 2022, taking the industry’s headcount to a new peak, according to trade body Subsea UK’s latest business activity review.
The report’s findings were greeted with widespread enthusiasm by government agencies, industry experts and regulators.
North Sea trade union boss Jake Molloy was also encouraged, but queried where all of the new recruits would come from.
Subsea UK said the industry had “weathered the storm” of the 2014-17 oil price slump and was ready to capitalise on opportunities presented by the energy transition and international markets.
Revenues for the sector have gone up thanks to the oil and gas industry’s gradual recovery and an increase in offshore wind work.
Exports went down between 2017 and 2019, but the majority of companies who took part in Subsea UK’s survey expect to grow their overseas sales.
Subsea UK chief executive Neil Gordon said Brexit was unlikely to dent those plans, as most of the sector’s exports go outside the European Union.
But Mr Gordon did say companies were “in the dark” about the impact of Brexit and new trade agreements, adding that uncertainty was the “biggest threat” to business.
The organisation’s report was compiled based on a survey involving 668 companies and annual accounts for the 2018-19 fiscal year, filed with Companies House.
It found that the sector’s headcount has remained largely flat at about 45,000 in recent years, but 78% of firms intend to bolster their workforces in the near term.
Most of the new jobs are likely to be created in north-east Scotland, where 63% of the companies who took part in the survey are based, though strong growth is also expected in north-east England.
If the recruitment plans come off, the subsea industry’s headcount will increase by 9,000 to 54,000 by 2022, surpassing a peak of 53,000 recorded in 2013, before the downturn struck, sparking widespread redundancies and company failures.
Mr Gordon acknowledged that the last five years had “taken their toll” as low crude prices forced companies to slash investment and delay or cancel major projects.
But the decision by the Opec cartel and its allies to reduce production from the start of 2017 offset a global supply glut, helping oil prices recover and putting projects back on agendas.
The growth of renewable energy, particularly offshore wind, has also created revenue streams for the subsea supply chain, which emerged from the downturn more efficient and diverse.
Improved trading conditions helped UK subsea engineering and manufacturing firms sell products and services worth £7.76 billion in total in 2018-19, up by £216 million on 2016-17, but lower than the £8.9bn reported in 2013.
Most contractors expect revenue to grow in the next three years.
The value of exports has fallen to £3.36bn in the latest report, from £4.16bn in 2016-17, as some companies prioritised serving core, domestic customers over international expansion.
It means exports now account for 43% of total annual revenue, compared to 55% in 2017.
Encouragingly, four-fifths of larger contractors and 71% of smaller firms are confident of generating more sales from overseas trade in the next three years.
Revenue from renewables rose by more than £500m to £1.8bn in 2018-19, making up 23% of the total.
Around 80% of large subsea companies predict revenue growth from renewables, with a fifth expecting an increase of at least 20%. Almost 70% of SMEs expect some form of growth.
Mr Gordon said the push towards net-zero was full of exciting opportunities to develop solutions that accelerate the energy transition, particularly in carbon capture and storage, hydrogen, wave and tidal.
He called for the UK subsea industry to do more to capitalise on the “underwater aspects” of offshore wind projects, showcasing its “technical excellence to the rest of the world”.
Striking a note of caution, Mr Molloy, regional organiser at the RMT union, said he was concerned about the “slash and burn tactics” adopted by the industry during the downturn and their impact on the domestic employment market.
Mr Molloy is worried that skills shortages will be used as a justification for bringing in workers from overseas.
He stressed that hiring foreign labour was not a problem, as long as they are not exploited and paid below the going rate – a trend he has observed in the maritime sector.
Mr Molloy urged employers to help train workers and apprentices to equip them for the transition to net zero.
David Rennie, global head of energy at Scottish Development International, said the report highlighted the subsea sector’s importance to Scotland.
Mr Rennie added: “While export levels have fallen, it is encouraging to see that most companies who take part in the survey expect growth. It’s particularly encouraging to see the increase in activity in the renewables sector.
Paul de Leeuw, director of the Energy Transition Institute at Robert Gordon University, was encouraged by the enlarged renewables footprint.
But he warned that industry concerns had to be addressed during the Brexit transition phase to allow the companies to cash in on overseas green energy opportunities.
Bill Cattanach, head of supply chain at the Oil and Gas Authority, said he was pleased to see the sector had “turned a corner” after several tough years.
Mr Cattanach said: “With wider opportunities expected to be generated through the transition towards net zero, and diversification activity into other sectors, this recovery is set to continue.
“The challenge for UK business will be to remain at the top of the technology tree, leveraging all the assistance which is available through our fantastic universities, our technology centres and the vast network of innovative businesses throughout the country.
Fabrice Leveque, senior policy manager at Scottish Renewables, said: “The majority of the value of an offshore wind farm project is in its planning and construction, and its 20-year-plus operations and maintenance phase.
“Scotland’s supply chain is already producing goods and services to capitalise on that, and as offshore wind deployment increases towards the Scottish Offshore Wind Energy Council’s target of 8GW by 2030 – an eightfold increase on today – the sector holds enormous opportunity for businesses across the country.
“This report shows the start of that journey, and industry looks forward to capitalising on links which are being made with companies already working offshore to support their transition to the low-carbon energy system which is needed to tackle climate change.”
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