Bifab hit by downturn in oil and gas industry and lack of government support

I read Willie Rennie’s Perspective article on the problems at Bifab (“SNP’S claims it would save Bifab now look like empty rhetoric”, The Scotsman, 18 July) with great interest. I agree with some of what he wrote but not everything, and offer the following comments.

Bifab have been a very important part of the Scottish energy industry for many years, both at Burntisland and later Methil in Fife, and also at the Arnish yard in the Western Isles.

They had a very successful period fabricating platforms and other equipment for the North Sea oil and gas industry. In recent years they have struggled, with serious implications for employment and the local economies involved.

Mr Rennie puts most of the blame for that on the SNP Government.

However, I believe that is unfair in some important respects. I believe there are three main reasons for Bifab’s current situation:

1. Downturn in the North Sea oil and gas industry.

2. Bifab’s own problems. 3. Poor support from the Scottish Government, particularly from Scottish Enterprise (SE) and Highlands and Islands Enterprise (HIE).

Reason (1) is well-known. Bifab and other companies have tried to compensate for that by diversifying into other fabrication markets, notably offshore wind farms.

There have also been reports that Bifab’s bids for their recent contracts were much too low, which resulted in big financial losses for the firm.

I agree with his comments about (3). I have been particularly disappointed with the contributions of both SE and HIE, not only specifically towards Bifab but other Scottish companies involved in these industries.

At the height of the North Sea oil and gas industry the UK had a body called the Offshore Supplies Office (OSO), which had a target of 70 per cent UK content for the fabrication and related industries.

It was reasonably successful in realising that target. At peak the oil fabrication industry in Scotland employed about 10,000 people, with yards at Nigg, Ardersier and Kishorn, in addition to those in Fife.

The UK share of the current North Sea oil and gas fabrication market is now less than 25 per cent and the share of the offshore wind market about 15 per cent. The Scottish shares are even lower, which is why there are currently only a few hundred people. Most of the equipment for the new oil and gas fields and offshore wind farms is imported.

The Scottish Government, particularly the two development agencies, have done little to increase these market shares.

However, some of the problems have been caused by Bifab itself.

TONY MACKAY Professor of economics, Haugh Road, Inverness