North East Manufacturing – The Oil & Gas Downturn

Oil & Gas

The world-leading UK oil & gas supply chain generates tens of billions of pounds a year in sales, supporting hundreds of thousands of jobs across our country. Sadly, over 70,000 jobs across the UK oil and gas sector have now gone since the turn of 2015.  Oil prices sit below $30 per barrel, oil is at its lowest price since 2004. As a result organisations involved in the sector must employ a very different strategy than before.

The Prime Minister has signalled his on-going commitment to the UK oil and gas industry.
It was reassuring that Deirdre Michie, Oil & Gas UK’s chief executive embarked on a fact finding mission to the North East last week (16th February).
Ms Michie said, “The North East is a centre of excellence in engineering, manufacturing and technology and represents an important activity hub for the UK oil and gas industry. My fact-finding visit to the region this week provided a valuable opportunity to learn how firms are tackling the current challenges and to share the cross-industry initiatives to improve efficiency from which they can benefit.”

Chance of the downturn affecting organisations

Hopefully, further measures will be implemented. Helping the industry address the difficulties it currently faces with the low oil price. Ensuring we work towards a more enduring future.
In the meantime business owners must address what keeps them up at night.
There is a chance that the downturn could affect organisation’s ability to compete. The company must relay to staff and customers that there is a plan to weather the low price environment whilst remaining financially healthy. In addition investors must have the confidence that everything possible is in place to navigate these difficult times.

Addressing is easier said than done. Often differing opinions in the boardroom could lead to the issue being ignored, neglected, or ineffectively addressed. If this is the case how do you raise the level of urgency across the senior management team?
Collaboration is key here, network and share experiences, discuss ideas with your peer group. Leading industry players must step up and engage with the supply chain if the status quo is untenable.

In your own organisation, discuss and assign an executive to focus. Be accountable for business performance and the level of urgency assigned. Request a report on the company’s vulnerability and resources to deal with the issue. Allocate resources and budget to a proposed solution to innovate and identify the expected results to be achieved.
In challenging economic times, defence mechanisms will be heightened here. But remember “the definition of insanity is doing the same thing over and over again, but expecting different results”.
Fight against the pressure of budget cutting and deferring of projects, can you afford to play it safe?

Darwin once said, “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.”

Far North are proud to support clients such as ATL Precision Engineering who in the midst of the downturn have innovated and collaborated with a real sense of determination. To not only survive this downturn but capitalise on it, looking to become stronger than ever before. Thankfully this positivity and resilience to stay ahead in a way that only necessity can, is commonplace in the North East.
Once the price of oil increases, the efficiencies you implemented in your company during these tougher times will be there to capitalise on… Ensuring long term success.

History tells us is that oil and gas prices will recover, carpe diem!

Manufacturer? We’d love to help you with a strategy.
https://far-north.co.uk/services/business-model-innovation/

Blog by award winning Entrepreneur, Speaker and Business Coach Ian Farrar, host of the chart topping Industry Angel Business Podcast.

Ian is also the founder of Sales & Marketing consultancy Far North Ltd.