Offshore Wind Conference on the Humber highlights skills

Earlier today, former Cabinet Minister and MP for West Hull & Hessle Alan Johnson gave an address and Rob Bell, CEO of Archomai,  was one of a panel of speakers moving the Humber offshore wind agenda from talk of IF it will happen to HOW to deliver sustainable growth in the Humber Region.

Andrew Morton of footprint renewables and Sam Pick of the Renewables Network – the organisers of the event – spoke of the huge offshore wind opportunity and Alan Johnson gave the vision for Green Port Hull, a £210 million purpose built facility to support this emerging industry and highlighted the positive impact on the Humber Region and beyond. Recalling Hull and Humber’s dominant position in the fishing industry of the 1950s he highlighted the long term importance of being involved in a nuts and bolts industry that is all about keeping the lights on and reducing carbon usage. This is not about making Hull and Humber the centre for call centres that may come and go; this is an industry for the long haul.

The morning session made clear that there are three good reasons why the Humber is important: location, location and location. That means close proximity to three of the key wind farms for Round 3 of the UKs Wind Energy strategy. Dogger Bank (9 GW); Hornsea (4 GW) and East Anglia (7.2 GW) are all within support vessel distance of Humber Port – which is the UKs biggest port complex. In other words, the Humber ports are no more than 12 hours steam time to the fields and, in supply chain terms, this is a bonus. The Humber has a good chance of being the home of the Green Investment Bank too.

Rob Bell started his talk with more detail on the context. Round 3 is a huge project targeting 32.2 GW of installed capacity and a 17% share in the UKs Energy mix – the Humber is close to 63% of this capacity. Round 3  is comparable to the 1970s North Sea Oil bonanza – worth over £100 billion (in 2010 values) or even the 26 GW “Dash for Gas” of the 1990s. Our enthusiasm for this emerging industry has to be tempered with realism. Back then, North Sea Oil MADE money whereas the offshore wind industry COSTS money – subsidy plays a key role.  All the more reason to look closely at our supply chain and, skills – using technology to improve performance.

simulating the real world

Cost is a major issue and North Sea operating conditions will not help. The diameter of a wind turbine blade is equivalent to the London Eye; it is likely to be installed in water up to 50 metres deep and this will mean foundations reaching approximately 170 metres and stretching half as high again as St Paul’s Cathedral. All that and then, the waves rising over 10 metres and winds of up to 100 kms per hour – this is going to test the engineering spec to the limit – a tough ask when cost is at a premium.

The talk switched from the potential of this industry to the challenges of maximising the opportunity from those involved in services (research; geological surveys; legal support and recruitment) through to technical support (manufacturing; sub-assembly on the quayside; specialist and support vessels to the windfarms; Operations and Maintenance right through, eventually to de-commissioning). He highlighted three key issues:

  1. The Supply Chain.Subsidy remains key to the development of the UK offshore industry and we cannot ignore the fact that no sooner than Phase 3 is agreed a realistic assessment of the potential highlights the need to drop costs within the supply chain by at least 30 per cent. He made plain – “Pop the corks and enjoy the canapes … but it’s back to beer and sandwiches – fast! Offshore wind energy is more Lidl than Harrods; and, the money no object of oil and gas could not be further from the ethos of wind energy.”Businesses, and Joe Public have yet to come to terms with this.The talk turned to examples from around the world. Frederic Tsui, a Director of Axon Offshore Training and well-connected in the Chinese Renewable Industry, makes the need to be cost effective his key priority. “In China, we had a very poor grid to connect to so infrastructure was a major headache – which is analogous to offshore wind in Europe. Then, the sense of a gold rush attracted loads of players into the market. The number of OEMs grew from zero to 80 in no time. This could not last and, globally, we are seeing a consolidation of the industry.” In fact, the top ten OEMs control 83 per cent of the industry already.The consolidation of Wind Energy is analogous to the retail industry – which has consolidated to nothing like the same extent. In Retail, there has been a supply chain drive to develop ever better, cheaper products and ensure that go to market as fast as possible. This is a tough regime for the SMEs that are so often the production capacity behind the BIG Retail and Branded Goods players. We can learn from this focus on costs. The same applies to the local Caravan industry – Hull is the biggest producer in Europe – and, Jonothan Rollinson of Point Engineering and the Humber Team Alliance highlighted the learnings that can come from such local industries in their drive fro global competitiveness. Rob Bell made the further point hat unit cost in the wind energy sector will be less important than life-time costs. This will be a key factor in the North Sea.
  2. Skills.Archomai have looked hard at the end-to-end supply chain in the offshore industry. This means mapping from component manufacturers to sub-assemblies at the quayside. Then, the shift to the wind farms out to sea; installation and then, operations and maintenance. This journey is characterised by heavy lifting and, because of this, Archomai are working closely with Axon Off Shore to explore synergies with the Oil & Gas offshore industry.Axon have a Training Centre in Stavanger and have opened one this week in Houston Texas.Axon have extensive experience with Statoil in developing simulators for drilling platforms and, for the heavy lifting involved. Tom Bremer, the CEO of Axons Training Division, puts it succinctly: “why start from scratch when we can adapt and use the simulators that are already available?” This will have a huge impact on generating a job ready workforce. Some will come from industries in decline and others from school leavers looking for long-term careers.HETA and others are doing sterling work in building competence and capability – the apprentice schemes are crucial to building careers and not just jobs. Archomai have been working with HOTA along the same lines – their experience with the Offshore Passport and, their excellent local facilities strengthen the Humber offer. Archomai champions the use of technology to speed up the process of building a viable Energy industry around the Humber – this means simulators. With businessmodelling of South Africa we have been looking at business analytics and supply chain optimisation software to be used throughout the supply chain and, with Axon and others simulators on cranes and support vessels – this means simulation and scenario planning.We cannot ignore the needs of SMEs in the skills equation. Given the decline of the engineering sector in the UK, many skills have been lost and, those that remain are over 50 years of age. SMEs will play a significant role in making components and equipment for the industry and they will need support to sharpen their competitive edge. This applies particularly in all of the support industries that may emerge from other more traditional industries such as fishing – excellent skills for support vessels and all sorts of services from equipment to sandwich shops!
  3. Humber Port.The Humber is well placed to play a role in the GLOBAL Renewables Industry. This offshore experience – in a challenging environment – will be of value elsewhere. Rob Bell highlighted that Archomai are working with AMET Maritime University, Chennai, India on a range of initiatives in the Indian offshore wind  industry; and, in a separate initiative with Axon, with the Kurdish Region’s Oil industry in Northern Iraq and elsewhere. The Humber has the ability; it needs to brand itself to get out there and be ready for business.The Global dimension to the story is crucial in Offshore Wind Energy. As highlighted earlier, 10 OEMs have an 82.5 per cent market share worldwide. Any player who is in the Humber will be in multiple markets and, will favour those players within the supply chain that can or, with enthusiasm, aspire to work globally. Back to Retail – this is what happened. Learn from one market to improve in another. The Humber has to be hungry to learn from others; energetic to adapt and determined to deal with constraints – political as well as technical.

The prize for the Humber is huge. As Sam Pick of the Renewables Network makes plain: “our projected 5,000 members can create 35,000 jobs, reduce development costs by 20% and secure contracts worth £14 billion by 2015”.

Eric Collis of HETA, the Humberside Engineering Training Association, made some telling points on the skills reality. Highlighting the “joined up thinking” of competitor nations like Germany; he warned against the fragmentation of the training effort and the short sighted emphasis on reducing the numbers of unemployed versus the need for highly skilled trades people. Turning to the challenge of off shore wind, he urged local companies need to make sure that their staff have a stake in the business – if not, the average earnings of £52k per year will be a reason to go elsewhere. Staff retention of highly skilled people will be at a premium and, the very best will be interested in the world beyond the Humber – this is a global growth industry.

The Humber needs to work hard to be a global player. Benchmarking is needed against other regions and from company to company. However, we must not leave out a clear need for the UK Government and Policy makers to be on a constant alert to match and improve on global competitors – they have to set the scene; be pro-active enablers. This has a knock on effect from the Energy industry into other areas of the Economy. For example, thinking of Renewables as a whole, to reduce subsidies too early or to a low level will feed back into consumer and company pricing. High energy costs could have an impact on the competitive position of the UKs fragile manufacturing sector – and that could increase costs when momentum has only just started to build.

The Humber has a unique opportunity to build back its own economy with growth in the offshore wind sector close to home. More significantly, the Humber can play a role as a leader in the Renewables sector worldwide. “Our learning curve now is steep – it will be the same elsewhere. And we should be ready to help.”

 

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