Being big doesn’t entitle you to push small companies around, one of the north-east’s top entrepreneurs has said.
Saltire Energy chief executive Mike Loggie said operators squeezed the service sector “all the way down” to lower costs during the downturn.
Now operators have “got what they want”, they must “protect suppliers” and the products and services they provide.
Mr Loggie, who founded the Portlethen-headquartered oil drilling equipment rental business in 1986, said he would like to see a coherent strategy put in place to help look after service firms during lean years.
He said, without mollycoddling suppliers and allowing them to charge excessive rates, there should be some mechanism to protect them. “It’s not right to just continually browbeat them until they go out of business.”
Mr Loggie said Saltire Energy was as busy as ever during the downturn, including in the North Sea.
The only difference compared to the boom years was the “push for discounts throughout the industry”.
Saltire’s equipment was being discounted by an average of about 36%.
Add that back on, and Saltire would be in “exactly the same place” as it was before the crude price collapse.
Mr Loggie believes the discounts have bottomed out, but won’t disappear anytime soon.
“Rig rates going up will be a catalyst,” he said.
“Once the big service companies start pushing their rates up we’ll just piggyback on that.
“People will be more accepting of an increased price, but it’s a little bit early for that, yet.”
Saltire recorded pre-tax profits before exceptional items of £6.78 million in the year to June 30, 2017, compared to £8.26m the previous year.
Revenues totalled £22.5m, down 25% on 2015-16, but Mr Loggie is confident Saltire will start to grow again in the next few years.
The company has continued to invest in equipment and international operations, with clients throughout Europe, in Africa, the Middle East, the Far East and Australia.
Mr Loggie said: “We have tried to keep up our expansion plans during the downturn. We’ve tried to take a longer-term view of oil and, as far as I’m concerned, there is no replacement for hydrocarbons. We will require hydrocarbons for a long time.
“We have to replace the reserves we are depleting, so there will have to be investment.
“We increased our capital expenditure and market share in most places.
“I didn’t think cutting capex in the downturn would be a smart idea because you’ve still got to look after your customers, no matter what.
“Our capex is mainly on equipment. We are continually buying new equipment, expanding our range and the volume of new equipment.”
Despite getting a rough ride on prices, Mr Loggie thinks the downturn has had some positive impacts.
“It has been a long and deep recession but we should take a positive view on it,” he said.
“The cost of running the industry was out of control, and this has tidied it up.
“People are being very circumspect about taking on staff, but doubtless that will disappear over time.
“Overall, I think the expectations are very good.
“I think North Sea industry will be fine as long as we continue to look at costs and don’t get carried away with paying too much and having too many people doing the same job.”
Mr Loggie lamented that industry wasted a chance to make a “Klondike”– in reference to a North American gold rush – by letting costs “run away with themselves”.
“We’ve wasted the opportunity of making profits,” he said.
“Everybody could have done so much better but I think the lessons will stick for a while.”
The arrival of new, private-equity-backed players has also given Mr Loggie cause for optimism. He praised newer companies for being “very commercially minded” and “great to work with”, but said Saltire was very happy to work with the “stalwarts”.
Mr Loggie’s leadership of Saltire has earned him numerous awards.
In July 2016 he was crowned overall EY Scotland Entrepreneur of the Year, and in October of the same year won a top prize at EY’s UK-wide awards.
A month later he took the title of entrepreneur of the year at the Entrepreneurial Scotland Awards in Glasgow.
An authority on the subject, Mr Loggie said the downturn won’t have stopped the real go-getters from succeeding.
“There are always opportunities out there,” he said.
“If you go looking for the opportunities, no matter how good or bad the market is, you’ll find them.
“Maybe it’s easier to find them when the market is poor. The guy who’s keen on finding something to feed his family will always find an opportunity which they might not have bothered finding in the good times.
“We’ve heard amazing stories about people who have lost their jobs and gone on to great things.”
Saltire, Aberdeen Football Club’s shirt sponsor, continues to do its bit to create amazing stories in society.
More than 1,000 schoolchildren from disadvantaged backgrounds take part in its sports programme every year.
Saltire is also an avid supporter of the Befriend a Child charity.
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