Opinion: subsea industry still has a “long, hard slog” ahead

Hydro Group has hailed growth thanks to work in the defence sector but said the subsea industry it operates in still has a “long, hard slog” ahead.

The Aberdeen engineering firm saw 19% growth in sales turnover last year, primarily from work in military markets such as the Dreadnought submarine programme.

Defence contracts represent around 60% of the firm’s business, but managing director Douglas Whyte said the subsea industry – which it designs and manufactures cables and connectors for – is still plagued by volatility and a lack of new projects.

The company, which employs 125 people between bases in the north-east, US and Singapore, started 2019 with a £12.5 million backlog, which Mr Whyte said positions them well. The firm is working on Dreadnought-class submarines which will carry the UK’s Trident nuclear weapons after they replace the four-strong Vanguard fleet from the 2030s onwards.

Mr Whyte said he expects growth to continue as the benefits of that contract starts to come through, while the firm has sight on another potential four orders, worth around £45m to Hydro Group over the next 10 -12 years.

The company posted pre-tax profits of £118,363, up from a £50,000 loss the year before, on turnover of £11m, up from £9.1 million in 2017.

While the defence sector has positioned them for growth, Mr Whyte said the subsea industry still faces a series of challenges. He added: 

“I personally think it is still a long hard slog to get back to a reasonable return in the industry because there’s so much volatility going on. I don’t think you can find anyone who would say the industry is on the up and up. Or it might be going up, but an inch compared to three or four metres higher. What’s still lacking out there is new projects and it is new projects that fuels the expansion of the subsea industry.”