As the leading oil and gas staffing provider, RI magazine recently approached us to do a profile piece on how to succeed in a tough market and stay one step ahead of the competition. You can read the piece below.
On paper, the oil and gas industry looks like a tough market to be in. In the last three years, the number of jobs supported by the UK’s offshore oil and gas industry has fallen significantly, according to trade body Oil and Gas UK, while 16 oil and gas companies became insolvent last year, reported accountancy firm Moore Stephens last month. In the past few years we have seen multi-specialist and oil and gas specific recruitment companies alike downsize and diversify as they felt the impact of oil price drops and technology developments has meant job automation has become a concern in some areas of production. Despite this, there are signs that the industry is on its way back up, with recent US government data showing payrolls in the oil and gas sector rose for the month of November.
Impact of the economic slump
John England, US energy & resources leader and US and Americas oil & gas leader at Deloitte LLP, believes the concern now lies specifically with whether skilled workers will come back to the global industry as it begins to recover.
England believes the oil and gas industry is on a “slow path to recovery” and that supply and demand balances are “still slow to return to a sustained equilibrium”. He has stated that The Organization of the Petroleum Exporting Countries (OPEC) decision to cut production should help “accelerate the drawdown of global oil inventories, even if OPEC countries do not completely deliver on their announced production cuts.”
There is uncertainty over how the market will fare going forward, however, there are companies still performing very well under the circumstances. One such company is NES Global Talent. Listed at number five in Recruitment International’s Top 30 Oil-Gas-Petrochem table within the Top 500 2016 publication and placing at number 46 in the publication overall, though the publication places entrants by UK turnover. In fact, NES Global Talent had a UK turnover of £128 million in 2015 and a worldwide turnover of approximately £650 million.
Slick work from NES
NES Global Talent currently works in 69 countries and has 46 offices in 28 countries. 90% of the company’s work is temp/contract-based, with two-thirds of the business in the oil/gas/petrochemicals market. The remainder of the business is diversified among the power, life science/pharma market, infrastructure, construction, IT and manufacturing.
Last year the company listed on the Sunday Times Top Track 100, won Best Contract Recruitment Company at the RI Asia Singapore Awards and ranked 13th out of 60,000 companies on LinkedIn’s ‘Most Socially Engaged Staffing Agencies’ league table. 2017 has started out stronger than ever for NES, with the acquisition of Frontica Advantage – a well-respected global human capital solutions provider to the oil & gas market. The deal has enhanced NES Global Talent’s global mobility, Managed Solutions (MSP) and Recruitment Process Outsourcing (RPO) propositions and further strengthens their leading position in the human capital solutions market for top engineering talent. With a strong track record and an aligned culture, the acquisition of Frontica Advantage was a natural move for the company, says Tig Gilliam, CEO of NES Global Talent. All four previous acquisitions completed by NES Global Talent; Frontica last year, Sure Flow Consulting Services and Sure Flow Oilfield Services in 2015 and Energy People and RC Consultants in 2014, have been motivated by their synergy with NES and much focus will be on bringing the combined offerings to the clients and candidates that NES serves.
Development goals for 2017
Gilliam confirms the company will continue to consider acquisition targets this year: “We’re always looking for the right partners.” So, what are they looking for? Geographic expansion of NES’ current footprint is a primary factor, in new markets where the activity may be significant, strong engineering talent is in demand and which presents interesting opportunities, emphasises Gilliam.
Discipline expansion is also part of NES Global Talent’s strategy and its acquisition of Sure Flow, a Canadian based business in 2015, was a typical example of this. Sure Flow function within the operations sectors of oil and gas, covering a full suite of services from Consultancy, where they provide Drilling, Completions and Well Supervision personnel, to Oilfield Services where there is a need for operators, power engineers and construction personnel, and the acquisition provides NES with the ability to access and utilise this skillset to complement their already broad offering in the North American marketplace.
NES Global Talent has also pursued a strong diversification strategy over the last few years. Gilliam say the company has worked hard to continually improve the diversification of its business and now has successful global divisions in power, manufacturing, construction & infrastructure, mining, IT and life sciences.
“Our objective is to make sure every office has diversified in to sectors that can complement our teams’ core skillsets and effectively serve our local markets. We have built up most of the work in our sectors organically, based on the excellent reputation of our consultants, but we remain very interested in finding the right sort of companies to acquire that could work within our management structure” Gilliam explains.
Are contractor cutbacks affecting NES?
Gilliam states that whilst there was certainly a period where clients were looking to reduce contractor pay rates, NES has worked with both its clients and contractors to provide ongoing support and to develop relationships and stay at the forefront of service delivery by acting as a consultant and advisory in tasks other than candidate sourcing, such as benchmarking salaries and mapping talent in the market. New projects are, he admits, definitely slower than they were in 2014, but Gilliam states there the momentum is moving in the direction of new project starts which is something that certainly wasn’t a given in the last few years.
Where there is a will, there is a way, seems to be the mantra of NES Global Talent and the view of Gilliam personally: “When the volume of opportunities go down, the great recruiters are still able to find opportunities and manage long term client relationships. Our best performers in 2014 are still some of the best performers in 2016.”
No use crying over spilt oil
So, what does Gilliam expect from the oil and gas sector going forward? “Oil prices are already up 60% from a year ago, back in the range of 50-60 US dollars, he says. “This is the range where clients can productively initiate projects with expectations of acceptable financial returns.” He anticipates that we may not see the sort of projects start that we did in 2013 or 2014, but that as long as the market is stable there will be clients who are making progress with projects. He believes there are indicators that we are moving in the right direction, for example profitability was better in the last quarter than in the last few years, despite Brexit and adds that the jury is still out on Donald Trump’s potential impact on the oil and gas industry following his election as US president. However, the results of a recent worldwide NES survey showed contractors were feeling positive about the US election results with 48% stated they personally felt positive about the result and 63% believing it would have a positive effect on the oil and gas industry. Respondents from the US were even more positive with almost 70% stating it was a positive result and 78% feeling it would be good news for US oil and gas and would create more oil and gas jobs.
Upstream projects remain the most challenging as they require more investment in terms of time, energy and resources. “If you look at new project activity then midstream and downstream has been more active both in the US and in Europe, the Netherlands and Belgium, where that activity is a bit more consistent than upstream. A lot of upstream projects started in 2010 and then there was almost nothing in 2014, 15 and 16. Midstream and downstream generally involve shorter projects.”
Gilliam says, “It’s really tough to guess where the oil price will end up next month but that’s exactly why we put so much emphasis on continuing our geographic, discipline and sector diversification strategy.”
Bridging the engineering gap
As touched upon by England in his report for Deloitte, the STEM skills gap has, of course, been made more acute by the recent affairs of the oil and gas market, which has put off young people entering the oil and gas industry. NES works with UK universities through its internship and summer placement scheme to help STEM students enter the industry and educate them about the benefits of working within it. Vicki Codd, Marketing Director at NES Global Talent, says, “We’ve been very keen to talk to students about why it’s still a really good market to go into. After all it is still a unique and a very interesting industry with a lot of opportunities for the right candidates.”
NES’ 2017 financial year began in November 2016. Aside from integrating Frontica Advantage, so far it has made a significant investment in new recruiters and sales resources and anticipates it will finish the year with more acquisitions and an all-time high contractor population.
Gilliam says, “We expect the oil and gas market to still be difficult in 2017; it will take some months to make decisions on starting projects. We’re very much investing in the business and continuing to diversify and make targeted acquisitions as we continue to build out a world class community, with our managers, sales and recruiting staff.”