WHEN UK-based Sonhoe chose Teesside as the place to invest £2bn in a specialist oil refinery - the first of its kind in Northern Europe - it spoke volumes about the region’s skills base and industrial experience.
A wide range of businesses were already putting their faith in the area when the announcement was made.
Sembcorp Utilities UK has invested £60m in a biomass power station, and a £250m Ensus 1 bioethanol plant development is well under way at Wilton.
Sabic is building a £200m polyethylene plant at the Wilton International site - the largest of its type in the world. The company has also applied for planning permission for a new polypropylene plant and hopes to secure a further £200m investment for Teesside.
And now, Wilton International has been chosen as the location for the lucrative deal to build an oil refinery processing previously untapped heavy crude oil from the North Sea, Latin America, the Middle East, Africa and other oil-producing areas of the world.
Until now, when high demand and low supplies ensure prices remain high, processing this type of oil has never been economically viable.
But when it became so, Sonhoe searched the globe for a suitable location before Wilton on Teesside was eventually chosen.
According to Joe Docherty, chief executive of Tees Valley Regeneration (TVR), that decision is as significant as the one made by ICI to locate here. In fact, it was the “legacy of ICI” that ticked the final box for Mike True, managing director of Sonhoe.
“At Wilton you have the legacy of the ICI complex and so much infrastructure in place,” he said, as the biggest single investment in Teesside’s industry was announced.
“The area has a skilled workforce which understands how to build and operate the facility we are proposing.
“The area has the experience and capability to build and operate this and we are receiving strong political support for the project.”
Teesside is also close to sources of the crude oil - the North Sea - and Teesport has a deep water facility in addition to many years’ experience in handling hydro-carbon products.
And as Mr True’s comments suggest, the choice to locate on Teesside rested heavily on its skills and industry experience.
As he himself put it, “This is the sort of thing that Teesside does”.
But with predictions the £2bn investment in the region could be doubled to a staggering £4bn, as even more industry leaders are attracted to the area, questions about how we can ensure we have enough skilled people to fill the thousands of jobs resulting from the development also arise. As reported in last week’s business supplement, a shortage of skills is already a key issue for the Tees Valley’s engineering and process industries, with the Institution of Mechanical Engineers (IMechE) predicting that by 2015, there will be a skills gap of about 13,000 engineers.
A report from the North East Process Industry Cluster (NEPIC) recently showed almost double the number of workers are needed in the process industry by 2014.
But the sector faces a shortage of 20,000 workers by then.
IMechE chief executive Ruth Spellman, said: “The announcement of the £2bn project in Teesside and the creation of hundreds of jobs is further proof that we must act immediately to encourage more young people into engineering.
“What we are facing is a bigger problem of encouraging young people to enter the science and engineering profession and it is down to industry, academia and the Government to do something about it.”
It is also vital if the region is to capitalise on the opportunity it has been given.
For many local industry experts, the new oil refinery - which will also produce high quality, low sulphur diesel, naptha and kerosene - will provide Teesside with the opportunity to retain its engineering and process industry talent, as the decline of industry in recent years has led to an exportation of skills.
Joanne Fryett, head of member relations at the North East Chamber of Commerce, said: “This is fantastic news, not only for the Tees Valley, but for the wider North-east as well.
“What it brings to the area is opportunity, particularly on the side of construction and skills development and adding to the mix of jobs on offer. This will allow us to retain some talent in the region. It is about this idea of new industry in the region.”
Ms Fryett added that the quality of the training and educational facilities we possess would stand us in good stead when it came to providing more skilled workers for the development.
“What we have to look at is the length of time this project will take. It is not as though we need all these construction workers today,” she added.
“We have enough colleges and universities in the area that will adapt and be there and ready to deliver the relevant programmes.”
Gillian Miller, regional skills director for the Learning and Skills Council (LSC) North East, added the proposed oil refinery would bring much needed investment into the Tees Valley.
She said: “We are committed to raising skill levels in the North-east for the benefit of individuals, employers and the region’s economy.
“There is currently a shortage of qualified people entering the process and construction sectors and we have been working for some time with our partners to try and reverse this situation.”
The LSC, along with the Tees Valley Engineering Partnership and NEPIC, has also been promoting industrial careers in schools, encouraging young people to think about careers in engineering and the process industry.
Promoting more technical careers to young people is also advocated by the Confederation of British Industry (CBI) who believe that improving careers advice in schools could help bridge the skills gap.
Sarah Green, regional director for the CBI North East, said: “It is critical that government – both regionally and nationally - work with businesses to encourage young people to consider the excellent careers they can have in engineering and to tackle some of their misconceptions about these jobs and those sectors such as energy and chemicals which are often termed ‘heavy industries’.
“CBI is calling for government to take five actions to tackle the longer term skills issue including providing bursaries for engineering students, improving careers advice, more investment in labs in schools, separate science GCSEs and more specialist science teachers to inspire youngsters.
“The CBI believes that action in each of these areas could increase to 25% the proportion of A-Level students taking at least two sciences or a science with maths, and double the percentage of STEM students at university from the current 13%.
“Meeting these targets would help deliver the 2.4m newly-qualified staff with STEM skills that CBI analysis shows are needed by 2014.”
Encouraging young people to take an interest in skilled employment in this way could see the dawn of a new era in the Tees Valley chemicals industries.
And it could be vital if the region is to achieve TVR chief executive Joe Docherty’s vision.
“This is not a sunset industry - it is not ship building or coal. It is an industry of the future,” he said.
“It also signals a renaissance of the Tees Valley chemical industry and there is the potential to build on this and make the area the energy capital of Western Europe.”
It is clear many business leaders across the North-east share this optimism.
But as many others have highlighted, ours is a future that begins by investing in the region’s skills today, so we can reap maximum benefit from the many opportunities presented by investors like Sonhoe.