Local supply chains need time to evolve

Ever tried changing careers? If you have then you’ll know this problem. To get the job you need experience of doing it, but to get that experience you must already be doing that job.

The rationale is simple. It’s difficult to get an employer to take a punt on someone with no track record. The same is true in business, as problems at TAG Energy Solutions show.

More importantly, this situation there highlights exactly why it is so tough to set up a local supply chain in a global market.

Let’s go back to the start.

TAG was set up in 2011 to produce foundations for the offshore wind sector. The UK government wanted to establish a domestic supply chain for offshore wind after finding out that 80% of project capital expenditure for wind farms in UK waters went to European firms. TAG intended to benefit from a promised flood of work.

But that hasn’t happened. TAG has struggled with few orders, and made 74 redundancies in September. More job cuts may follow. The firm has denied it is in administration, but is reportedly working with an insolvency restructuring specialist to work out its future.

TAG’s main problem has been getting developers to choose it over big European players.

Offshore wind farms are huge projects, technically difficult, and developers and investors have a lot of money riding on completing them on time and on budget. Mistakes can be very costly, and those costs can quickly rack up. Developers like to opt for suppliers and contractors that they already know and trust.

With such competition, new entrants like TAG will always find it tough to break through.

Tougher still when developers of wind farms in UK waters have no vested interest in buying from the UK. Yes, you have some UK developers in this market, like Scottish Power and SSE.

But you also have Denmark’s Dong, Sweden’s Vattenfall, France’s EDF, and so on. UK manufacturers have to compete with their rivals from across Europe, and those without a track record, like TAG, will usually find themselves coming up short.

There are ways that governments can encourage the development of local supply chains — but encouraging new firms to set up on the vague promise of future orders isn’t one.

As we’ve noted previously, there are lessons to be learnt from other sectors, and the automotive market is one of them.

Here, overseas firms have led investment in factories. That might not be ideal but it’s an important step in the right direction. It’s also why the commitment by Siemens to set up a new blade factory in Humberside is important.

Sure, it isn’t a UK firm, but it creates UK jobs that help British people learn skills and make vital business connections. With time, those skills and crafts get refined, the business and supply chain develops and a local commitment and base begins to emerge.

Businesses, like job hunters, need a track record. It’s a truth that, sadly, former and current TAG employees are all too familiar with.

Ever tried changing careers? If you have then you’ll know this problem. To get the job you need experience of doing it, but to get that experience you must already be doing that job.

The rationale is simple. It’s difficult to get an employer to take a punt on someone with no track record. The same is true in business, as problems at TAG Energy Solutions show.

More importantly, this situation there highlights exactly why it is so tough to set up a local supply chain in a global market.

Let’s go back to the start.

TAG was set up in 2011 to produce foundations for the offshore wind sector. The UK government wanted to establish a domestic supply chain for offshore wind after finding out that 80% of project capital expenditure for wind farms in UK waters went to European firms. TAG intended to benefit from a promised flood of work.

But that hasn’t happened. TAG has struggled with few orders, and made 74 redundancies in September. More job cuts may follow. The firm has denied it is in administration, but is reportedly working with an insolvency restructuring specialist to work out its future.

TAG’s main problem has been getting developers to choose it over big European players.

Offshore wind farms are huge projects, technically difficult, and developers and investors have a lot of money riding on completing them on time and on budget. Mistakes can be very costly, and those costs can quickly rack up. Developers like to opt for suppliers and contractors that they already know and trust.

With such competition, new entrants like TAG will always find it tough to break through.

Tougher still when developers of wind farms in UK waters have no vested interest in buying from the UK. Yes, you have some UK developers in this market, like Scottish Power and SSE.

But you also have Denmark’s Dong, Sweden’s Vattenfall, France’s EDF, and so on. UK manufacturers have to compete with their rivals from across Europe, and those without a track record, like TAG, will usually find themselves coming up short.

There are ways that governments can encourage the development of local supply chains — but encouraging new firms to set up on the vague promise of future orders isn’t one.

As we’ve noted previously, there are lessons to be learnt from other sectors, and the automotive market is one of them.

Here, overseas firms have led investment in factories. That might not be ideal but it’s an important step in the right direction. It’s also why the commitment by Siemens to set up a new blade factory in Humberside is important.

Sure, it isn’t a UK firm, but it creates UK jobs that help British people learn skills and make vital business connections. With time, those skills and crafts get refined, the business and supply chain develops and a local commitment and base begins to emerge.

Businesses, like job hunters, need a track record. It’s a truth that, sadly, former and current TAG employees are all too familiar with.

Ever tried changing careers? If you have then you’ll know this problem. To get the job you need experience of doing it, but to get that experience you must already be doing that job.

The rationale is simple. It’s difficult to get an employer to take a punt on someone with no track record. The same is true in business, as problems at TAG Energy Solutions show.

More importantly, this situation there highlights exactly why it is so tough to set up a local supply chain in a global market.

Let’s go back to the start.

TAG was set up in 2011 to produce foundations for the offshore wind sector. The UK government wanted to establish a domestic supply chain for offshore wind after finding out that 80% of project capital expenditure for wind farms in UK waters went to European firms. TAG intended to benefit from a promised flood of work.

But that hasn’t happened. TAG has struggled with few orders, and made 74 redundancies in September. More job cuts may follow. The firm has denied it is in administration, but is reportedly working with an insolvency restructuring specialist to work out its future.

TAG’s main problem has been getting developers to choose it over big European players.

Offshore wind farms are huge projects, technically difficult, and developers and investors have a lot of money riding on completing them on time and on budget. Mistakes can be very costly, and those costs can quickly rack up. Developers like to opt for suppliers and contractors that they already know and trust.

With such competition, new entrants like TAG will always find it tough to break through.

Tougher still when developers of wind farms in UK waters have no vested interest in buying from the UK. Yes, you have some UK developers in this market, like Scottish Power and SSE.

But you also have Denmark’s Dong, Sweden’s Vattenfall, France’s EDF, and so on. UK manufacturers have to compete with their rivals from across Europe, and those without a track record, like TAG, will usually find themselves coming up short.

There are ways that governments can encourage the development of local supply chains — but encouraging new firms to set up on the vague promise of future orders isn’t one.

As we’ve noted previously, there are lessons to be learnt from other sectors, and the automotive market is one of them.

Here, overseas firms have led investment in factories. That might not be ideal but it’s an important step in the right direction. It’s also why the commitment by Siemens to set up a new blade factory in Humberside is important.

Sure, it isn’t a UK firm, but it creates UK jobs that help British people learn skills and make vital business connections. With time, those skills and crafts get refined, the business and supply chain develops and a local commitment and base begins to emerge.

Businesses, like job hunters, need a track record. It’s a truth that, sadly, former and current TAG employees are all too familiar with.