Seajacks, Gardline and SMS - how Great Yarmouth offshore firms are reacting to the oil and gas downturn

Ships moored up along the quay in Great Yarmouth where oil, gas, marine and offshore businesses have

Ships moored up along the quay in Great Yarmouth where oil, gas, marine and offshore businesses have their bases.Picture: James Bass - Credit: Eastern Daily Press © 2014

Dramatic falls in oil and gas prices over the past year may have been good news for consumers, but they have forced the energy industry in the East to take stock. SABAH MEDDINGS reports

Chief Executive of Seajacks Blair Ainslie. Picture: James Bass

Chief Executive of Seajacks Blair Ainslie. Picture: James Bass - Credit: Eastern Daily Press © 2014

While the sight of extra vessels in Great Yarmouth port may look impressive, it is a stark sign that times remain tough for offshore firms, who would rather they were at work.

For Seajacks chief executive Blair Ainslie, cutting his company's cloth accordingly while holding on to talented staff has led to some difficult decisions.

The firm, which operates five self-propelled jack-up vessels, has laid off about 50 people, and there are three vessels in the harbour Mr Ainslie would rather were at sea.

It is a common picture in the region's ports, with fewer contracts meaning firms are struggling to fill their order books.

Dave Howlett, managing director of SMS. Picture: Submitted

Dave Howlett, managing director of SMS. Picture: Submitted - Credit: Archant

Like many firms, EDP Top100 firm Seajacks has had to look for new opportunities and has turned to the offshore wind industry while oil and gas prices stay low.

The firm said in the year to the end of March 2015 turnover was $127.7m (£86.2m), down from £137.3m the year before.

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The arrival next month of the Japanese-owned company's fifth vessel, 28,000-tonne Scylla, will increase business by 30 to 40pc, according to Mr Ainslie.

At $250m (£174.7m), the company says Scylla is the biggest offshore wind jack-up vessel to date, and will lay foundations for the next generation of larger wind turbines. Her first job will be installing German offshore wind farm Veja Mate.

'Having a vessel in high demand has helped us to ride the storm a little bit easier that we are experiencing for our smaller vessels,' said Mr Ainslie.

Now the firm employs about 80 people onshore and 160 offshore, but Mr Ainslie said this would increase when the market improved.

'It's about battening down the hatches and making sure we have a well-structured and financed company to take us through the difficult times,' he said.

Mr Ainslie echoed calls for help from the government, adding a different fiscal policy for gas would be sensible.

'Oil we need for fuel, plastics and chemicals. But if we're talking about something that's as important as gas for heating and for lighting then I think for the UK as a whole it's vital we have our own supply and not rely on imports from Europe. If you decouple then it might give the gas industry a better chance.'

He said holding on to skilled staff was key to riding the storm. 'I have $800m of steel but it's worth nothing unless I have got people who know how to operate and manage it,' he said.

International oil prices have fallen to $33 a barrel (£23) due to overproduction, and the lifting of sanctions against Iran has increased supply still further.

It has meant across Norfolk and Suffolk between April and November last year 26 companies went into administration and 800 people were made redundant over the same period

And Johnathan Reynolds, director at energy consultancy Nautilus, said there were likely to be many more people affected by reduced hours and unpaid leave.

'Companies we talk to are finding the current conditions really quite challenging,' he said. 'Projects that were anticipated are not being taken forward.'

East of England Energy Group chief executive Simon Gray said there were big opportunities in renewables, but for those reliant on oil and gas it was 'really tough'. 'There are a number of vessels here [in Great Yarmouth] for the wrong reasons, sitting there doing nothing. While it looks impressive those vessels should be out there doing work.

'But if you go down to the SSE control room for Greater Gabbard Offshore Windfarm it's really busy. Oil and gas is very depressed.'

Gardline

The reduced demand in the oil and gas sector has led to a fall in activity for Great Yarmouth-based Gardline Shipping.

The firm, which operates across the offshore industry including surveys, ship chartering and digital mapping, saw turnover drop £20m to £210m for the year ending April 30 last year.

It also went from a £16.8m pre-tax profit to a pre-tax loss of £7.6m for the same period.

In its latest accounts, posted on Companies House, the group said it continued to seek projects worldwide and outside of the oil and gas sector.

'Measures continue to be taken to ensure that costs are closely controlled and structural changes have been enacted which has resulted in some exceptional adjustments in the year,' it said.

However this week Gardline Group and Dalby Offshore Services have struck a deal to create a new servicing facility for the offshore wind sector in Great Yarmouth's Trinity Quay, called Trinity Marine Services.

It will be pitched as a base for clients involved in servicing works on offshore wind projects.

The site will have office facilities, warehousing, a conference room, accommodation and workshops.

SMS - bucking the trend

While some energy firms across the East are struggling, others are thriving.

Specialised Management Services (SMS) took on 11 people last year, taking its work force up to 107.

Managing director Dave Howlett said although it was challenging, there was still work out there 'if you know where to look' – with talks ongoing with Iran for possible work.

'Jobs are getting more difficult to pick up and margins are reduced,' said Mr Howlett. 'When work dries up you either sink or swim. We are pretty good at swimming.'

Predicted turnover for the year ending September 2015 was £16.6m, and profits were £2m. Mr Howlett said turnover at the firm, which manufactures equipment for maintenance and installation services, was likely to be about £16m for the next year. He said: 'We certainly seem to be bucking the trend. We have some pretty big projects in the pipeline to see us well into next year.' He added that standardising some of the manufacturing had allowed the firm to cut costs and delivery times.

How has your company been affected by the downturn? Email sabah.meddings@archant.co.uk

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