Robert Collier, Chief Executive, Aberdeen & Grampian Chamber of Commerce (AGCC), UK
Mr. Robert Collier, chief executive of the Aberdeen & Grampian chamber of commerce (AGCC), discusses the attractiveness of Aberdeen for conducting business, the evolution of the AGCC, and the positive consequences of increased investment in the UK oil & gas sector on the regional economy.
The AGCC is one of the leading chambers of commerce in the UK, which is born out of the absolute support from the business community. Five years later, how has the chamber evolved?
The British Chambers of Commerce (BCC) has designed an accreditation system to evaluate and improve the performance of local chambers of commerce. This system entitles those chambers of commerce that meets the standard to become a member of the BCC accredited network of chambers of commerce across the United Kingdom. Accreditation defines the quality standard for the operations of the chambers of commerce who form the BCC network and according to these standards the AGCC is currently number one in Scotland out of seven, and number 13 in the UK out of 53.
In terms of training delegates, we are the leading chamber for the UK—we have a large operation in helping members to develop their staff. In addition, the AGCC is ranked number one for its events; we have built a strong reputation for organizing business breakfasts and other events.
However the AGCC has gone through quite a substantial restructure of operations last year in order to build on its strengths. One of the reasons was that we got stuck at around 1,150 members for years. Our aim has been to increase this number so that we can help more businesses.
What are some of the changes that have taken place?
One of the changes is the introduction of relationship management. We moved from two junior administrative staff to four senior staff, delivering relationship management for members in early 2013. This growth gives us the opportunity to represent more of the business and conduct a more thorough job. Businesses receive good value out of the services the chamber offers at lower costs.
Historically the AGCC has had a strong track record in international export support with a particular expertise in Africa. With the UKCS province being classed as being in the mature phase of its lifecycle, it is vital that UK companies with proven expertise and products are encouraged to enter rapidly expanding international markets, such as West Africa, to protect their revenue streams. Our unique UK West Africa Action Group (UK WAAG) formed in 1997, which recently has been re-branded as Africa Business Centre (ABC), has always supplied the necessary information and ‘in country’ support services our members required in order to penetrate these challenging markets.
This service has significantly changed. Since 1997 the AGCC has given its members full market support while research indicated that only 8 percent of our members required a hand holding service as new entrants to exporting to Africa. On the other hand, 54 percent of our members just wanted the chamber to provide them with access to African markets without detailed high-cost hand holding afterwards.
Over the last year, our experienced international business team organized trade missions to Uganda, Tanzania, Mozambique and South Africa. In addition we have a historically strong relation with the Falkland Islands and its chamber of commerce. For developing markets we are intending to provide market entry support to the Middle East, specifically the Gulf States and Saudi Arabia. Moreover, we are looking at India, South East Asia, the Baltics, Scandinavia and we have a developing expertise in the Chinese market.
Naturally we are also looking at the Latin American market. In November 2013 we have organized an oil and gas trade mission to Brazil. This five-day mission will provide a comprehensive introduction to oil and gas opportunities in Brazil, including briefings with key stakeholders and players in the country, provide market insights, and one-to-one meetings. The aim is to equip delegates with all relevant information and contacts to support their future entry to the market.
We summarise this change of emphasis by saying, ‘we were ten deep in the African market and today with similar resources the chamber is diversifying its strategy to become one deep in ten markets’.
What exactly does it mean to be the ‘voice of the industry’?
It means lobbying for a better operating environment. There are four layers of government: Europe, UK, Scotland and local, which can seriously hamper the business climate. There are real examples of this such as the 2011 changes in the offshore fiscal regime in the budget of that year. In fact, people tend to forget that in 2005 Gordon Brown made exactly the same mistake—he reversed those changes in six months, the 2011 government took a year.
With regards to our internal changes, instead of policy and communication being linked together, our communication effort is now focussed towards our member companies. Additionally, we have introduced a research function dedicated to supporting members and our policy work. We are starting to promote an evidence-based approach to policy rather than simply communicating the opinions of business to government.
On the back of that we are developing an income stream for commercial research services. You can see the symbioses here: it creates an income for the chamber, better policy consultations and it produces a service that provides market intelligence to our members and can be specifically commissioned to answer strategic questions that the market has about how to optimise prosperity.
Have you had success in the past in actually introducing member suggestions into ratified legislation? Or have you only been a voice?
Variable. Politicians of today don’t know the cost of a pint of milk or a loaf of bread. They do not know what it takes to run an organization. Politicians need to learn to listen and start tackling the stock of unnecessary and over-complicated regulation. I believe that politicians have forgotten that without the generation of wealth deriving from the private sector, we would not have an income to pay for government.
How would you rate the importance of oil and gas related business to the overall economy of Aberdeen today?
There are around 40,000 jobs directly employed by oil and gas and in the wider supply chain a further 40,000. That said there are only 300,000 people living in the Aberdeen journey to work area.
These 40,000 directly employed support 120,000 jobs in Scotland and 440,000 in the UK. Out of these 440,000, probably around 300,000 are highly skilled wealth generating jobs all around the full extent of the UK driven by the hearth that pumps the system in Aberdeen. Therefore, Aberdeen is critical not only to the region but also to the economy of Scotland and the UK. In fact, 15 to 20 percent of all corporation tax in the UK is paid by the oil and gas sector.
Capital investment of £11.4 billion in the UK‘s oil and gas reserves in 2012 was the highest for 30 years; in 2013 investment will reach a record £13.5 billion. Has this increase in economic activity translated into more business in the Aberdeen region?
There are a bundle of reasons why Aberdeen and the region will remain important in the coming decades. The UK oil and gas industry has already produced 41 billion barrels of oil and gas from the UKCS. It has been estimated that a further 12 billion to 24 billion barrels remain to be recovered from undeveloped reserves and fields already in production. The big fields in the UKCS are exploited, which leaves smaller and more difficult fields requiring more effort, money and know-how to develop.
Larger companies, which have produced the first easy 50 percent of hydrocarbons, are transferring these assets to smaller companies that are taking out what they can of the slower and more difficult remaining 50 percent. If the oil prices continue to be high, there will be enough margin for the small and medium E&P to continue producing.
Aberdeen accommodates a cluster of operations; the level of exports is significantly increasing while companies retain their base in the region. Moreover, the complicated geology of the North Sea makes it an ideal location to educate geologists from all over the world.
Headlines 15 years ago were in the style of: “peak oil is past; North Sea production is going to decline”. This was true at the time and still is, in volume terms, but is not correct in value terms. Less oil is being pulled out but is of higher value. There is a strong value for the industry of keeping this cluster in the region, maintaining its expertise and exporting it worldwide.
What can be done to improve the regions reputation in order to attract more talent?
The oil and gas sector has an industrial, dirty implication to it. People tend to associate Aberdeen with refineries and other industrial plants. However, the industrial structures are 80 miles offshore and Aberdeen has significant heritage, which is attractive in its own right.
Attracting people is a challenge and even if we attract them, Aberdeen suffers from a housing shortage, driving up prices. For that reason we are looking at which parts of the supply chain are critical to remain in the Aberdeen cluster and which parts can potentially benefit the rest of the UK economy by exporting jobs to, for example, the Highlands or the North of England. In fact there are already quite a few companies such as Wood Group and Technip, which are locating operations to other parts in the UK.
How did you come to lead the chamber in 2009?
There is no point in having one career when you can have many. I moved to Aberdeen about 18 years ago to become managing director of RGIT, an organization that provides offshore survival courses. After this I commuted for six years as the CEO of Tourism South-east, whose mission is to provide services and expertise that supports the performance and growth of tourism businesses and destinations in that region. The opportunity to join the chamber in 2009 was too good to miss. We have an important role to play to optimise the performance in this region, and there is so much potential.