Aberdeen’s local dialect is missing a word which its Glaswegian neighbours have made their own. Loosely translated, ‘gallas’ means going about one’s business with a swagger.
The omission from Aberdeen’s vernacular demonstrates how, until now, Scotland’s most affluent city was not used to singing its own praises. While the granite-built city on Scotland’s north-east coast is best known as the oil and gas capital of Europe, local authorities and businesses are working together to communicate the many other opportunities Aberdeen has to offer a wider international business community.
A 30-year oil and gas boom period has transformed the region once known for fishing and farming into a globally recognised centre for the energy industry. But Aberdeen’s business community is pragmatic about its good fortune and recognises the city’s long-term prosperity relies on diversity.
A key component of the city’s strategy for long-term investment must be anchoring the major oil and gas operators in the region when oil reserves begin to dwindle, according to Aberdeen and Grampian Chamber of Commerce chief Geoff Runcie. “Aberdeen has the oil and gas engineering and technology knowledge that can be exported globally even if production here declines,” he says.
Although Aberdeen’s business past and present is very much linked to oil and gas, the town has capitalised on its energy technology expertise and academic institutions to foster a local renewable energy and life sciences sector. “Commercialisation of academic research is another way to help Aberdeen to diversify the cross section of its industries,” says Mr Runcie.
In October 2007, US pharmaceutical giant Wyeth acquired Aberdeen University-linked company Haptogen in one of Scotland’s biggest life sciences spinout deals. Wyeth is continuing Haptogen’s work on research into antibodies to develop therapeutic treatments for diseases such as cancer. The antibodies required for the research are extracted from a variety of indigenous dogfish shark, only found in the waters around Aberdeen.
“There are many reasons why Aberdeen was an ideal location for our research, not least the sharks,” says head of UK operations Dr Alistair Strachan. “Our proximity to the university is a big draw.”
Wyeth’s attachment to Aberdeen through its natural marine resources and scientific expertise symbolises the city’s past and present; Aberdeen’s historic fishing prosperity, which is still very much alive, and the city’s present engineering and scientific expertise.
Sub-sea engineering software company MCS also began life as a five-man university spin-off. “We quickly realised that to grow in the oil and gas industry we needed to move to the North Sea region,” says chief executive Patrick O’Brien. The company opened its first office in Aberdeen to be close to its customers and now has six global sites.
MCS developed proprietary software modelling technology to enable more effective risers from the sea bed to collection at the oil platform. From its technology roots, the large part of MCS’s service today is selling consultancy to oil and gas operators with proprietary technology serving as its business differentiator. The transition towards offering energy engineering expertise as a business proposition is something Aberdeen is very well placed to do.
“The reputation North Sea sub-sea engineering has all over the world is an incredibly powerful brand and gave us amazing credibility when we opened our Australian office two years ago,” says Mr O’Brien.
And the technical knowledge is not limited to the oil and gas sector. Technology and life science companies are increasingly being drawn to facilities such as Aberdeen’s Science and Technology Park, four miles from the city centre.
The 11,000 square metre flagship building at the entrance of the Science and Technology Park has been refurbished by oil and gas engineering hardware manufacturer Vetco Gray complete with gym and a Starbucks outlet. Although the firm has recently been acquired by US giant General Electric, it is committed to Aberdeen.
“The technology developed around the core competency of oil and gas engineering will ensure the area remains a sub-sea services centre,” says UK and Europe chief Matt Cobin.
Market changes driven by technology advances ensure the oil and gas industry in Aberdeen remains vibrant, says Mr Cobin. “Large operators drilling for big oil reserves are less common and have given way to more opportunity for the independent players such as Talisman to access the smaller oil pockets through improved technology,” he adds.
The sub-sea sector has grown 30% from £3.35bn ($6.6bn) in 2006 to £4.3bn in 2007. And as the pioneering region of sub-sea engineering, Aberdeen has plenty of expertise to sell globally.
Every deep water development in the world has some component of Scottish technology. The oil and gas industry requires vendors such as Vetcogray to be innovative and technology focused. Aberdeen is one of the firm’s three research centres of a total 13 sites worldwide.
“All our competitors have service businesses in Aberdeen even if they don’t have manufacturing facilities like us,” says Mr Cobin. The need for big players to have a presence in Aberdeen points to the city’s importance in the sector.
Public perception of the breadth of business opportunities available in Aberdeen does not always reflect the reality. A clear economic strategy formalised in an overarching master plan by the Aberdeen City and Shire Economic Forum (ACSEF) may help to draw attention to the investment opportunities.
The organisation’s manifesto published in May last year drew from the input of 1200 businesses to identify seven key components for improving the regional economy. “The top two priorities for companies investing in the area are the quality of life and the general economic growth of the region,” says ACSEF development manager Rita Stephen.
Quality of life
Aberdeenshire topped Bank of Scotland’s quality of life survey for 2007, which attests to its attractiveness as a location for businesses to attract employees.
In a poll of 138 local chief executives, maintaining a gross value added per head (GVA) of 2.5% and an integrated transport network were vital for attracting new business to the area. Transport improvements in ACSEF’s economic masterplan include a 25-mile peripheral road around the city linking the various business districts as well as providing better access to and from Aberdeen airport.
Planning permission for the project has been granted and completion of the road is said to be scheduled for 2012. “Planning permission to extend runway capacity to accommodate more modern aircraft at the airport has also been granted,” says Aberdeenshire councillor Anne Robertson.
The extension will enable long-haul and transatlantic flights to operate out of Aberdeen’s BAA-run terminal.
Improved infrastructure planning includes extending dual carriageway along the entire road from Aberdeen to Peterhead in the north. The road improvements will help an ambitious new initiative led by Scottish Enterprise Grampian called Energetica, which aims to establish a 30-mile science and technology corridor along the Aberdeen-to-Peterhead road.
Other initiatives include development of an international energy academy as well as the Energy Futures Centre, a state-of-the-art building to house key players in the renewable energy sector.
Attracting the new does not mean the old timers of the Aberdeen oil and gas landscape are falling off the radar. Some of the big name oil operators have divested staff as larger oil fields become depleted but overall activity is still very upbeat. With oil costing more than $90 a barrel, the big companies show no signs of withdrawing from the region.
Perhaps the most visible sign of commitment is oil giant BP’s move to relocate 1000 staff into a brand new 18,580 square-metre office complex in Dyce, just outside Aberdeen. The building is the oil company’s new headquarters for exploration and production activities in the UK, Norway and the Netherlands.
The global nature of oil and gas and the presence of some of the world’s biggest companies make Aberdeen an incredibly networked city with a strong reputation for entrepreneurialism, according to Aberdeen City Council communications director Louise Scott. “Setting up a business here makes it easy to internationalise because of our global oil and gas links,”she says.
The city is a founding member of the World Energy Cities Partnership, which can provide access to opportunities in the emerging oil economies as far flung as Angola. The city’s global reach means tourism is another sector that can help Aberdeen further diversify its business mix. The clichés which help export the Scottish brand abroad such as whisky, kilts, shortbread and golf may be hackneyed, but they keep a £547bn tourism industry, attracting four million visitors a year, rolling over.
And behind each cliché lies a very real business opportunity. Aberdeen is the home to a vibrant food and drinks industry and boasts eight distilleries with one more in the pipeline at Huntley. Scotland is also famous for its beautiful golf courses and they represent an outstanding business opportunity for Aberdeenshire. A proposed luxury golf development by US property tycoon Donald Trump has already prompted enquiries from other inward investors. Project officials claim the Trump resort has the potential to create up to 6000 jobs and an annual income of £60m.
But Trump’s development is not the only one in the pipeline. At least three developments by golfers Paul Lawrie, Tom Watson and Jack Nicklaus are in the planning stages and will include associated housing and hotels.
“Local business people would like to see more land available for commercial development but the council authorities are slow to release it and provide the right infrastructure such as water and electricity,” says Angus MacCuish, property consultant at FG Burnett.
Commercial land values have more than doubled in the past two years, according to Mr MacCuish, who sees the rise as bad news for Aberdeen’s competitiveness. But others see the lack of available land for commercial development as Aberdeen being a victim of its own success. And with developments such as the Energetica industrial corridor, the Science and Technology Park, the Futures centre and the city centre regeneration, there are plenty more relocation opportunities coming on line to investors seeking a presence in the region.
The only thing the business community of Aberdeen needs to do now is have a bit more ‘gallas’ about its achievements.