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Interview

Councillor Jenny Laing, Leader of the Aberdeen City Council, UK

15.04.2014 / Energyboardroom

Jenny Laing, leader of the Aberdeen city council discusses Aberdeen’s positioning as oil capital of Europe, its search for skilled work forces, and how the city is renowned for its capability to build value beyond volume.

 

What are the main responsibilities of the Aberdeen City Council?

Local politics has the biggest impact on people’s lives. The City Council has full responsibility for education, housing, planning and has a big role in leadership as well. For Scotland in particular, there is a huge challenge to empower cities to take forward the Scottish economy. It is a huge challenge and tremendously exciting to be leading a city where the private sector is so pressing and dynamic, and there is the challenge of a much smaller public sector. The city is a very much private sector driven economy. Aberdeen has the lowest funded local council in Scotland.

One of the major elements we are responsible for is trade development. We have established links with most of the energy capitals around the world. Furthermore, Aberdeen is a founding member of the World Energy Cities Partnership, a non-profit organization whose members are globally recognized as international energy capitals and actively seek and develop opportunities to learn, exchange and engage in activities to the mutual benefit of the partnership.

Recently, Aberdeen and Halifax strengthened trade links through a renewed Memorandum of Understanding. Another priority market, due to the scale of opportunity, is Brazil. Early February 2014 we reviewed the existing Memorandum of Understanding with Rio de Janeiro in order to strengthen links between Aberdeen and Brazil.

What is the message you deliver to attract international companies to Aberdeen?

In terms of inward investment, we have seen a lot of interest from abroad. As an example, Aker, a Norwegian investment company, is tying up with Abstract to develop a 1 million sq ft business park on one of the most prominent sites in Aberdeen. There has been tremendous interest in Aberdeen from Korea, China and US investment continues at a high level.

The message we deliver is that Aberdeen is the place one needs to be. After forty years in the oil and gas industry, Aberdeen has become the Energy Capital of Europe. With more than a thousand businesses within the energy sector, Aberdeen is one of the most influential energy cities in the world.

The City Council is very proactive in attracting companies to the city offering a tailored service and relation to any company that wishes to come here.

Aberdeen O&G reputation seems to be growing in Brazil yet at the same time Aberdonian companies struggle to set foot in the Brazilian market. Where is the disconnect?

Aberdeen City Council has been working with Rio de Janeiro since 1997; the first Memorandum of Understanding was signed two years later. At the time we developed a scheme to support the development of small and expanding businesses within the oil and gas sector.

The scale of demand in Brazil for the type of quality services, products and technologies that Scottish companies supply is clear. But there are challenges to doing business in Brazil, challenges that have historically impeded the entry and expansion of Scottish companies in the market. Having said that, one of our discussions has been around the importance of the entrance barriers in relation to the Brazilian market place. We have had discussions with the Brazilian regulator but also with Petrobras to look at how we can work with them more effectively. Most recently we specifically challenged the State Energy Secretary in Rio de Janeiro on this issue. The secretary expressed an absolute intention to work with us to lower those barriers for companies going into Brazil.

Do you think that Aberdonian companies are too focused on the North Sea market, and therefore missing some international development opportunities?

We carry out an export survey every two years that we started in 1989. This survey collects data on current exporting activities and future exporting intentions and has demonstrated that growth and export in oil and gas companies is massive. In fact, oil and gas is one of Scotland’s biggest success stories, supporting 224,000 jobs and generating £8 billion worth of exports to 100 countries over the last year alone.

I have personally led three missions over the last 30 years to places such as East Canada where we get huge impact in terms of Aberdeen success stories working with Canadian companies and joint ventures. Mozambique is another market we are focusing on. This country has seen a remarkable turnaround in its fortunes in recent years and is emerging as a major player in Africa’s oil and gas industry. It is estimated that it will have the third largest gas reserves in the world and is already attracting significant interest from Aberdeen based companies.

In fact, the future of North East Scotland is based on exports. We have established an organization, The North East of Scotland Trade Group, that brings together a wealth of experience in enabling businesses to internationalize and build upon the existing collaborations between Aberdeen City and Aberdeenshire Councils, Aberdeen & Grampian Chamber of Commerce, Scottish Council for Development and Industry, Scottish Development International, Scottish Enterprise, Subsea UK, and UK Trade and Investment. This partnership approach helps businesses capitalise on the international trade and export opportunities that exist for companies across the North East of Scotland. Today this organization organizes over 30 oil and gas missions a year.

What is the City Council doing to maintain the city’s attractiveness subsequently attracting international companies and its workers?

Our drive and ambition has seen us develop into a key hub for a world-class energy complex. However, the strong growth we have experienced has put our infrastructure under significant pressure. In response, the Aberdeen City Council has developed the Strategic Infrastructure Plan (SIP). The Plan focuses on the delivery of our Strategic and Local Development Plans and identifies five key infrastructure goals around housing supply, digital connectivity, skills and labour, transport and providing a better image for Aberdeen.

In terms of the attractiveness and marketing of the city to attract workers, visitors and investment, the poor state of the city centre has been another key infrastructure goal. To achieve this, a City Centre Regeneration Board has been established. Much is already happening as can be evidenced by the success of Union Square and the number of planning applications for both hotel and office space. However, the two main projects around creating a better image for Aberdeen are the city centre and the creation of a new Aberdeen Exhibition and Conference Centre, which will be the venue for oil and gas worldwide.

Another key part of Aberdeen’s continuing success is to have a sufficiently large and skilled workforce to drive the city’s economy. The supply of appropriately skilled labour continues to be the greatest threat to Aberdeen’s ability to maintain and grow its position as a global energy centre of excellence. The council has been working with ACSEF and the two Aberdeen based universities on a skills strategy.

Lastly the city aims to provide high quality digital connectivity at home and at work. Aberdeen and Aberdeenshire have the highest levels of broadband uptake in the UK at 74 percent and 72 percent respectively, but some of the slowest speeds. Public and private sector investment and a share of the Urban Broadband Fund will be used to increase speeds to 80mbps across the entire city.

How will this affect Aberdeen’s status as Oil Capital of Europe?

According to the UK competitiveness survey, Aberdeen is the second most competitive city for business in the UK. Other Scottish cities are far behind. In addition, Aberdeen is the second best placed city in the UK according to PWC’s good growth index. Furthermore, Aberdeen is the easiest place in the European Union to get a job with less than one percent unemployment in the city.

Naturally, we hope that there are spin-off benefits to other areas; we don’t want in any way to prevent other regions from advancing. But Aberdeen has an unbeatable offer for the private sector, which will maintain itself.

In my opinion, Aberdeen Harbour is the most successful harbour in the UK, and is also the busiest. The Aberdeen Harbour Board is currently undertaking a feasibility study to determine the viability of various expansion options. The plan would be to construct a modern, state-of-the-art harbour facility within the bay, which would then meet the demands of the 21st century and beyond. The plan to expand Aberdeen Harbour has been identified as a nationally significant development by the Scottish Government, due to its role in supporting international trade, its links with Orkney and Shetland, and the importance of its contribution to the economy of the North East, and to Scotland as a whole.

What have been some of the key lessons you have learned by dealing with oil and gas executives within the region; what could national politicians learn from the way Aberdeen has been dealing with the industry?

One of the lessons is the level of internationalization and scale of investment.

Another thing is to be aware of change in the industry. In the Scottish and UK context, the tax take is a smaller issue as the oil goes forward—the business is more important than tax. Often, the political debate everywhere is about tax but certainly the UK North Sea has reached a point where the bigger issue is the business. Aberdeen is close to unique in that appreciation.

How do you see Aberdeen’s future role as Oil Capital of Europe?

In terms of the service centre, there is no competition whatsoever; this is the European Oil Capital. Today, Aberdeen is the city around which the energy industry in the UK functions. Aberdeen is the knowledge center, the focus for the UK oil and gas industry. London and Aberdeen play a mutually reinforcing position in relation to the energy industry because London is the financial center for the global oil and gas industry while Aberdeen is the subsea capital of the world.

 

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