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Plugged in to a world of uncertainty

Douglas Fraser | 22:02 UK time, Thursday, 10 March 2011

Some heavyweight players in the Scottish economy are this week showing the advantages of having a global reach.

Results from Weir Group, in the sweet-spot of oil and gas, power and mining, reflect a company that doesn't do all that much in Scotland any more, but is at the heart of the world's growth areas.

Contrast that with publishers Johnston Group, owner of The Scotsman - turning an operating profit at least, but its strategy to combat falling newspaper advertising and revenue (ad spend down 7% last year, and the public sector cuts exacerbating that in the fourth quarter of 2010) has been cutting costs.

Standard Life turned in some impressive figures on inflow of assets and savings, which chief executive David Nish is presenting as an unleashing of the pent-up potential of the Edinburgh life and pensions company.

Spooked market

And then there's Aggreko, headquartered in Glasgow and with a Dumbarton assembly plant. More than 300 workers at that plant have some good news with an increase of £60m in this year's capital expenditure, to £320m.

The ebullient chief executive Rupert Soames spooked the market a bit by suggesting that the company is none too certain about the impact of international events.

He doesn't seem to have any inside knowledge of what's going to happen in Libya, Saudi Arabia and the Persian Gulf - any more than the rest of us. He was stating, as he puts it, "the bleedin' bloody obvious" when he said the world's looking a bit more uncertain now than it looked a few months back.

With his company's global reach in providing temporary power, he doesn't have any generating kit at the mercy of events in North Africa. But he does have a modest amount - 140 megawatts of capacity - in Yemen, and more in the Ivory Coast, where civil hostilities are hotting up.

And if oil prices are to continue their upward rise, then in a business based on oil-burning generators, you have to wonder at the impact.

Sporting megawatts

In the safer territory of North America, Aggreko's reporting on a bumper year of Winter Olympics in Vancouver, a hot summer requiring lots of air conditioning, a boom in Alberta oil fields and the energy-intensive business of cracking shale for natural gas, plus the clean-up around the Gulf of Mexico after Deepwater Horizon did its worst. The company would be going some to get that lucky in one year again.

On sport, Aggreko was helped also by supplying a lot of megawatts to the World Cup in South Africa and the Asian Games in China.

Soames points out that a business that does extremely well out of major sporting events is at a slight disadvantage from their tendency to fall in even-numbered years.

So this year won't deliver the bonanza of revenue gold medals from the world's great stadiums. The London Olympics in 2012 will, however, with Aggreko recently signed up as exclusive temporary power supplier.

Energy flutter

The Ledger's noted before Rupert Soames' outspoken warnings about the lights going out if Britain doesn't tackle its rapidly-approaching crunch-point in retiring old power generating capacity. That could be great news for Aggreko, but less so for the nation as a whole.

Does the chief executive think that situation is changing at all?

"What's changed," he says, "is that Paddy Power is now taking odds on power cuts in the UK by 2015."

And will he be having a flutter down at the bookmaker himself?

It seems he's taking a big enough gamble on our energy future by other means.


  • Comment number 1.

    My first real employment, the workforce was circa 6k and this was what was and still is refrerred as a heavyweight player in the Scottish economy, now that very same place has 900+/- 100. I recall bean counters of their day working out how much cheaper it was to slice off parts of the operation to far & wide sweat shops of the world! Yes they took on making the nuts & bolts stuff, but some of these nuts/bolts/washers have been known to cause catastrophic failures simply because certain standards had fallen in manufacturing/production! Fortunately I don't fly now so have reduced the odds of falling out of the sky..........

  • Comment number 2.

    Just an observation...

    We've got a country that faces a real chance of serious electricity generation shortages by 2018-2020 so what does the Government do?

    It decides to have a transport policy based on using MORE electricity and is paying people £5000 to buy electric cars and is electrifying more railway lines.

    Both the UK and Scottish Governments need to do some joined up thinking and then get a grip of the situation; and quickly.


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