Constructing a solid platform for success

County Durham’s Hargreaves Services and Teessidebased SSI UK are respectively keeping alive the region’s centuries- old tradition for supplying coal and steel – the building blocks of the industrial revolution.

Even train building is about to make an unexpected return when Hitachi Rail Europe opens its £82m Newton Aycliffe factory early next year.

By the 1990s, it looked as though Tyneside’s global reputation for building huge offshore platforms could be lost for ever when the industry suffered a major collapse and one yard after another closed.

But news last week that a former Wallsend shipyard would soon start work on a North Sea oil and gas platform deal worth millions of pounds was the latest example of this region’s refusal to give up its industrial heritage without a fight.

Last year, OGN Group, which operates the Hadrian Yard, built the first central North Sea platform to be made at a single yard in the UK for 25 years.

It has planning permission for a factory to make parts for offshore wind farms, which, if the conditions are right, could create up to 600 skilled manufacturing jobs.

So, how has the business found a foothold in a fiercely competitive market so quickly?

In common with many of the team at OGN, Craig Melville, chief commercial officer, has seen periods of both boom and bust in the offshore industry.

“What triggered the late 1990s collapse in this part of the world primarily was that there was a downturn in our customers’ requirements,” said Mr Melville.

“In the 1970s, 1980s and 1990s, all of the big platforms and infrastructure were in place, and technology was moving forward, which meant the requirement for these huge platforms just wasn’t there any more.

“It was a market-driven thing. Yard after yard closed. If there is no business there, then what choice do you have?

“It was sad, but no one’s fault necessarily.”

New technology and government tax breaks helped to open up North Sea reservoirs and fields that had previously been deemed uneconomical.

The jacket, from the Forties Field oil platform built by OGN, previously being moved down the River Tyne

Mr Melville said: “The industry troughed and began bouncing up again.

“We were there waiting to catch that recovery, and we timed it well.

“So from 2009 onwards, we have been trying to capitalise on our position, both as a company in terms of our experience as a management team and a labour force, and try to bring that to the attention of the major oil companies in Aberdeen and London to say ‘look, we haven’t just evaporated, we are still here’.

“From modest beginnings, we are looking to support the industry again.”

Buying the former Amec yard in 2009 sent a message that OGN, formerly SLP Production, wanted to be considered a serious player.

“This place used to produce a lot of big structures for the North Sea. The names of Hadrian Yard, the north bank of the Tyne and Wallsend all resonate around the industry.

“It was easy for people to make that quick connection and be pleased that we were breathing life back into such a well-known site.

“But we knew that we had to be competitive and deliver the goods. We weren’t going to get projects on the strength of this site’s past reputation.

“My direct responsibility was to go out and persuade the senior management of big oil companies that we could do it for them, they weren’t taking a huge risk, they are not guinea pigs – we had a hugely experienced team here.

“It was tough. I won’t dress it up – you need skin like a rhinoceros and to be tenacious with people.

“I was getting an audience with people and we were putting in a lot of time without very much coming back.

OGN Group’s new apprentices, in orange boiler suits, with foremen and training providers

“It wasn’t soul destroying, it was an incredible journey. We had basically nothing, so anything was going to be an improvement on that.”

Being invited to bid on a contract for industry behemoth Apache was a breakthrough moment.

“When they invited us to bid, that’s when we realised that the Dragons’ Den-style pitch we were trotting out was starting to be heard. It was a real heartwarming feeling,” said Mr Melville.

“We started getting a bit of traction, which quickly accelerated.

“The companies that we are working with are major bluechip global energy companies.

“We’ve now done two big projects for Apache, as well as work for Talisman and En- Quest.”

OGN hopes to hear before Easter if it has landed another major order.

As work rolls in, one of the next challenges facing OGN is to ensure it has enough skilled workers.

Mr Melville said: “When we have one or two projects in our yard, it’s manageable.

“There is a skills shortage and an ageing workforce in our industry. But we manage that.

“It’s when we get to multiple projects, like we are now, with three major customers on this facility, that’s when it starts to stretch itself a bit.

“But it is also dependent on how busy our competitors are.”

Mr Melville said that, if the likes of Heerema, in Hartlepool, and OGN were at full capacity, then the region’s skills base would be at breaking point.

“I don’t even want to think of that day,” he said. “If we were all very busy, then I think we would start attracting people from outside the area to come and work here.

An artist’s impression of the proposed offshore wind jacket plant

“That’s great, but in the long term you need control over your pipeline of talent through an apprentice programme.

“If we win another project this year, that means we will have four going at the same time. We have never had that.

“In that scenario, with other good prospects on the horizon, we will be able to strengthen our apprentice programme in the knowledge that we have a good chance of work for the next 18 to 24 months.

“There aren’t many industries at the moment that can look forward with that type of optimism and relative confidence.”

The firm has 12 apprentices on its books, and that number could rise sharply if it decides to use its expertise to supply the offshore wind industry.

Like many potential suppliers, OGN is keeping its powder dry until the much-heralded sector begins to take off.

“It a bit of a chicken and egg situation,” said Mr Melville.

“The Government last year gave a degree of certainty to developers that they have a market that they can target.

“We can only go as fast as the developers.

“We are seeing even in this quarter that is starting to pick up. But we are not going to plough millions of pounds into a facility unless we have a high degree of confidence that there is a market for companies like us. We are not quite there yet.

We went ahead with the planning permission and it’s ready to go.

“The next six to 12 months is about taking the pulse of our customers and, if we get the right feel, we will plough ahead.

“There won’t be another facility anywhere in Europe that can do the throughput that this can handle. We won’t be messing around – this would be bigleague stuff.”

The Government has pledged £4.5m from the Regional Growth Fund if OGN goes ahead with the facility.

A decision on whether to build it will be made in the next six to 12 months.

OGN Group is carrying out fabrication services on EnQuest Producer, a 249-metre floating production, storage and offloading vessel, creating about 600 jobs

Not content with helping to revive one North-East industry, OGN is also keen to play a leading part in the growth industries of the future.