Tyneside firm OGN has called for Government support as it bids to bring work on the UK’s high speed rail project to the North East.
The offshore fabrication specialists are hoping that HS2 contracts would help it through the difficulties caused by the current crisis in the oil industry.
But hopes that the Government would back moves to allocate a proportion of high speed rail works to companies within the UK hit an immediate blow when Transport Secretary Patrick McLoughlin - on a visit to OGN - said he was “unconvinced” that supply chain work should be ring fenced for British companies.
Russian businessman Alexander Temerko, who owns OGN, said the firm was well placed to provide components for the multi-billion pound rail project, in a move that could protect the company from further slowdown in the oil and gas sector.
Mr Temerko, a prominent donor to the Conservative Party, yesterday hosted a visit from Mr McLoughlin MP as he told The Journal that he hoped Ministers would support British companies in pursuit of HS2 work.
He said: “I definitely think we can become part of the supply chain for HS2. We can also invite many other suppliers from the North East. We want to be a champion for the supply chain in the region and encourage other companies in the North East to take advantage of this project.
“The Government, and particularly the Department for Transport, should be very supportive of British content. It’s a key interest of theirs to promote and protect British companies. It wouldn’t be right for a national project like this to use all overseas companies.”
Mr McLoughlin said that HS2 had been given clear instruction by the Government to make sure British companies figured prominently in the supply chain, but said ring fencing was “difficult” given the potential conflict with Britain’s exporting activities.
He said: “We need to make sure that all parts of the country benefit from what is a large scale investment. David Higgins, the executive chairman of High Speed 2, has been looking at the types of products we will need to build HS2 and it is clear from my visit that OGN has some very highly skilled functions.
“We’ve learnt a lot from Crossrail. It’s a matter of showing UK companies what we’re going to require and making sure they’ve got the skills and capacity necessary. I was looking at some new cutting equipment that OGN have invested in, and I know they will want to look at other opportunities for its future use. That means building links with neighbouring companies, and that type of work is going on.”
Nick Brown, MP for Newcastle upon Tyne East, said he supported OGN in its representations to the Transport Secretary, and hoped they would be listened to.
He said: “HS2 is being funded by the British taxpayer, and therefore it’s crucial that localities benefit from the work involved.
“I fully support OGN’s bid to secure HS2 work, and I hope the Government listens intently.”
Earlier this month it came to light that OGN’s plans for a multi-million pound offshore wind factory on Tyneside had been put on ice amid uncertainties in the renewables sector.
Mr Temerko said the falling price of oil has also undermined the commercial viability of renewables projects, leading to the company’s decision to shelve plans which had queued up £4.5m in Regional Growth Fund backing. OGN has subsequently withdrawn from the public funding.
The firm, which operates from Hadrian Yard in Wallsend, is currently waiting to hear if it has been successful in netting a £70m contract with Maersk to build a wellhead jacket. Mr Temerko warned that if the contract fails to come off, it would have a major impact on jobs at the Tyneside operation.
Despite this OGN has been investing substantially in plant and sees upcoming opportunities with HS2 as a means to build further longevity and consistency into its pipeline.
He added: “It’s a long term project, which means we can invest in things like an apprenticeship scheme. We have challenges with apprenticeships because young people need stability and clarity. They want to know that if they join a company and start an apprenticeship they will be there in years to come.
“For instance, at the moment we are in great need of skilled welders. That is despite a big apprenticeship scheme. We need the perception among school leavers to be right. If you train to be a welder then you want to be a welder all of your life, so you can provide for your family. A project like HS2 can give them serious confidence, because it’s not just a one or two-year thing.”