ABERDEEN is a resilient market.
It has been a tough couple of years and the downturn in the local economy has been extensive with job losses, cost reductions and a decimated property market. Yet green shoots are starting to appear and positivity is building.
There is life in North Sea assets. Only last month Hurricane Energy uncovered a significant recoverable oil field, just west of Shetland, which is estimated to produce one billion barrels of oil. Assuming production goes ahead this will be positive news for the North Sea oil and gas sector as it would extend the life of oil exploration on the UK Continental Shelf and could stimulate the wider economy in Shetland, Aberdeen and across Scotland.
Construction is widespread in Aberdeen with significant investment in key schemes such as The Western Peripheral Route and the new harbour at Nigg Bay, which highlights increased confidence in the market. In addition, recent figures suggest that the housing market is on the up with a seven per cent increase of house sales from the start of the year – showing further signs of recovery.
This could be down to increased diversification in the market. Oil and gas remains a key player in Aberdeen but other sectors such as food and drink have been building momentum and flourishing in the North-east. Entrepreneurial businesses have capitalised on the existing oil and gas international export infrastructure; labour resources; heritage of key sub sectors such as fishing, agriculture and whisky production; and additional support from initiatives such as Opportunity North East.
Tourism is another area of growth. With reduced business tourism, this sector has been significantly hit, but drawing on the natural and cultural assets the region has to offer the new tourism body is keen to secure a greater share of Scotland’s leisure market. In addition, key developments such as the new exhibition and conference centre and the new harbour will boost the industry further – bringing jobs and increased demand of hotels, restaurants and leisure activities.
However Aberdeen is not out of the woods as yet and there are headwinds ahead that businesses will need to circumnavigate. There are obviously developments such as Brexit and the potential Indyref2 which cause uncertainty in terms of business planning. However, the weaker pound and any future changes in policies, such as state aid rules, or taxation could present key opportunities for businesses.
Closer to home, with a more pressing deadline, the introduction of the Apprenticeship levy on April 6 will hit hundreds of Aberdeen businesses. The levy applies to businesses with annual pay bills over £3m and will fund training and apprenticeship schemes. The additional overhead, or tax, may not be welcome but it could present an opportunity to invest in local talent to tackle any skills gaps.
Despite uncertainty, there is a feeling of optimism in the market, but resilience, steely determination and entrepreneurialism will no doubt be needed to navigate any challenges and maximise any future opportunities. We look forward to discussing key business strategy with North-east businesses at The Ultimate Business Show 2017 on April 26.