Subsea businesses reshape as jobs go and revenues wane

Neil Gordon (right) is the Chief Executive of Subsea UK
Neil Gordon (right) is the Chief Executive of Subsea UK
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The subsea sector is “weathering the storm” despite a slump in annual revenues and the loss of thousands of jobs over the past three years, an industry study today declares.

Subsea UK’s latest business activity review reveals that the industry generated revenues of about £7.5 billion this year, compared to almost £9bn in 2014. Over that period, meanwhile, job numbers have fallen from 53,000 to 45,000.

Exports account for more than half (55 per cent) of annual revenues, while sales in offshore wind have risen from £770 million in 2014 to £1.3bn today. Sales in renewables are forecast to increase with around a quarter of large companies anticipating more than 20 per cent growth in this sector, underscoring the diversification now taking place.

Advances in underwater technology, engineering and manufacturing have been helping recover more hydrocarbons from the North Sea since the 1980s, Subsea UK pointed out. This expertise has led to the creation of one of the UK’s largest industry sectors which is now involved in defence, oceanology and offshore wind.

The organisation, whose 300 or so members make up the bulk of the UK’s subsea supply chain, said the largest export markets for major companies are Scandinavia, West Africa and the Gulf of Mexico. For SMEs, this picture changes with south-east Asia being the primary export market, followed by the Gulf of Mexico and the Middle East, Scandinavia and West Africa.

Respondents to the latest study expect south east and central Asia to become more important export markets in the future, along with the Caspian and the Middle East.

Subsea UK chief executive Neil Gordon said: “It’s clear that, at the time of our last review, the industry was still riding the crest of a wave with revenues of almost £9bn. The oil price crash and subsequent, prolonged downturn globally which led to the deferral or cancellation of major subsea projects, particularly in deepwater, has had a material impact on revenues and cost around 8,000 jobs.

“However, the subsea sector has appeared to have weathered the storm by increasing exports and diversifying, particularly into offshore wind, where the skills and technology are eminently transferable.”

Some 80 per cent of large companies are expecting to grow exports in the next three years, with a third expecting export sales to increase by between 10 per cent and 20 per cent and a fifth by over 20 per cent.

Meanwhile, 65 per cent of SMEs believe they will increase exports, with the majority anticipating growth of between 10 per cent and 20 per cent and over a fifth anticipating more than 20 per cent growth in international sales.

Gordon added: “I’m confident we can still claim to lead the way around the world but we need greater recognition of subsea as one of the UK’s best performing industry sectors to help attract investment.”