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The “challenging pace of the energy transition” and accelerated “decline of traditional North Sea activity” are taking their toll on Aberdeen manufacturers, business leaders have said.
This follows news that Aberdeen-based Belmar Engineering had to let go of 48 workers as it entered liquidation.
Liquidator Michael Reid was appointed to manage the process with his firm, MHA, claiming that pressures from international competition, a dwindling order book and losses in recent years resulted in firm closing its doors.
An advisor to Belmar Engineering recently told The P&J that the firm went from a “£8 million a year business to having virtually no orders”.
Fellow Aberdeen manufacturing firm, Nexos, has previously spoken out about the challenges facing the region’s energy supply chain.
© Supplied by Google MapsNexos managing director for offshore Derek Mitchell has raised concerns that the Granite City would be unable to meet the demands of a major manufacturing project if one was awarded.
Mitchell told Energy Voice: “News of Belmar Engineering’s liquidation is deeply disappointing and will no doubt come as a blow to the individuals, families, and supply chains affected.
“It’s another stark reminder of the challenges facing the local manufacturing sector in Aberdeen—and more broadly across the UK—as businesses continue to navigate high operational costs and the challenging pace of the energy transition.”
The news from Belmar Engineering marked the second instance of a north-east supply chain firm entering liquidation this month as MHA also handled the closure of Banchory’s JIQ Manufacturing Limited.
‘Companies are going to fail’
However, this is a multifaceted issue, as the leader of Aberdeen and Grampian Chamber of Commerce (AGCC) explained.
Russell Borthwick said that, despite some negative headlines in recent years, these were standalone instances and that there are also some positives coming from the region’s supply chain businesses.
The AGCC CEO said: “I think an isolated instance of one company is probably not necessarily indicative of the bigger picture.
“But what I would say is, it’s very mixed.”
© Supplied by -He said there are “good things that are happening” in the region, pointing to Nexos as an example.
But Borthwick added that disjointed UK energy policy remains a concern for the supply chain.
“Because we have chosen, politically, to accelerate the decline of traditional North Sea activity more quickly than it needs to happen and before we’ve got scale, investment. projects and jobs in renewables, we are creating a void where people are going to lose their jobs and where companies are going to fail,” he said.
Supply chain firms move overseas while looking into UK ‘abyss’
© Supplied by NexosBorthwick pointed to data from trade body Offshore Energies UK, which found that the UK is set to produce just four billion of the 13bn to 15bn barrels of oil and gas the country will need over the next 25 years.
“The companies in the supply chain that are looking at that abyss, many of them, and we’re seeing increasing evidence of this, are choosing to then pursue overseas work,” Borthwick continued.
This is something that has been welcomed by international energy hubs, he argued, as “energy regions around the world look to the supply chain in Aberdeen as being the best in the world.”
He said that there is a concern that when work is needed in the UK, firms that are seeing work in other regions “are increasingly deployed overseas and others might have gone altogether.”
Borthwick added: “When the day comes when we do eventually cut through the red tape and start to build out renewables at pace, then we might not have the supply.”
Firms must ‘adapt’ to see success
With policy pressure squeezing North Sea oil and gas firms to issue less work and renewable projects caught in doldrums, what do firms need to do to stay in the UK and prosper?
“Success going forward will depend on how well companies can adapt—investing in automation, digitisation, and modular delivery approaches that offer customers greater speed, cost certainty, and repeatability,” Nexos’ Mitchell explained.
“We’ve made this a core part of our strategy at Nexos. Through our Modular Solutions Division, we’re designing and delivering prefabricated, transportable assets that serve both traditional energy projects and next-generation infrastructure such as waste-to-energy, hydrogen, and carbon capture.
© Supplied by AGCC“These are manufactured here in the UK—in carbon neutral facilities—and we see real opportunity for Aberdeen to become a centre of excellence for modular, lower-carbon project execution.”
With pressures nipping at the heels of Aberdeen suppliers, Energy Voice asked Russell Borthwick if UK government local content incentives are ‘too little, too late.’
He responded, pointing to the North Sea Transition Taskforce’s inaugural report by saying: “nearly but not quite, but it absolutely will require major surgery to current policy direction this year.”
‘The challenge now is retaining and modernising’
Keir Starmer’s Labour government has brought in incentives for renewable energy developers to spend more with UK supply chain firms.
Recent changes to the Allocation round scheme have introduced up to £200 million of investment to offshore wind developers for awarding work to “traditional oil and gas communities”, as the government looks to back “good jobs” under its plan for change.
Mitchell added: “Aberdeen has the talent, the infrastructure, and a legacy of world-class engineering.
“The challenge now is retaining and modernising that capability in a way that aligns with where energy and infrastructure demand is going. There’s no quick fix—but there is a path forward.”
© Supplied by SSE RenewablesMuch like Borthwick, the Nexos boss called for poilcy reform and government support to ensure that suppliers up and down the UK can prosper throughout the energy transition.
“What we need most is consistency: in policy, in project pipelines, and in procurement behaviours that reward innovation, not just the lowest cost,” Mitchell concluded.
“At Nexos, we remain committed to doing our part—building capability, creating opportunities, and helping lead the shift to smarter, more sustainable manufacturing for the long term.”
