Hundreds of offshore jobs at risk in Great Yarmouth on dark day for energy sector
- Credit: Archant Norfolk
A major offshore company has slumped into administration on a dark day for the region's energy sector, putting as many as 280 people out of work.
News that Red7Marine Group, which provided oil and gas products and services, has appointed administrators came less than 48 hours after Fugro, which provides geo-surveying services to the oil and gas industry, announced it was pulling out of the region, putting more than 100 jobs at risk.
At the same time, further doubt has been cast over the future of Gorleston energy services company CLS Offshore and its 100 remaining staff after HMRC vetoed a CVA (company voluntary arrangement) proposal under which directors had offered to pay creditors about half the collective £5m debt owed to them over five years. Director David James has pledged to continue the battle to save the company he founded.
The latest redundancies - a direct result of the global crash in oil prices - will hit the east coast hard, with not only skilled offshore workers without jobs to go to on Monday but administration and office staff, cleaners and contractors all affected.
Red7Marine staff were told that the company had collapsed yesterday morning.
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They were informed that Tom Jack, Sam Woodward and John Sumpton of Ernst Young had been appointed joint administrators of the company. And while a sale of its inland marine engineering services division was immediately agreed to a private investor, Red7Marine Offshore, which has two sites in Yarmouth, did not form part of the sale.
It is understood that in addition to nearly 50 directly employed staff, the total affected is likely to reach about 280 with the inclusion of crew which manned the firm's three vessels and more than 150 sub-contracted divers. Nine employees have been retained to help the administrators in winding down the business.
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Administrator Mr Jack said: 'In the period leading up to the administration, the group's cash flows came under significant strain due to falling demand for its services as a result of the collapse of the oil price, ongoing investment in the group's fleet, and a number of unexpected charges.
'Despite attempts to recapitalise the group, the directors were unable to do so and have been seeking alternative investment to support a turnaround of the business. This was not possible to achieve on a solvent basis and the group has therefore been placed into administration by the directors.
'It is with regret that the offshore business could not be sold and has ceased trading. We will support all employees affected by redundancy at this difficult time, including helping them to make claims for amounts owing to them from the Redundancy Payments Service.'
The firm's fate is a stark reminder of the ups and downs of the energy sector.
As recently as autumn 2014, before the oil market crisis gripped, Red7Marine reported its investment in a fleet of remotely operated vehicles (ROVs) to expand its North Sea operations. A month earlier, the company had also announced the acquisition of a new saturation diving vessel, Red7Alliance.
Earlier this week, the global slump in oil prices was felt by staff from Yarmouth company Fugro, who were told that after undertaking a review it was consolidating some of its smaller offices into larger sites.
The Yarmouth site in Morton Peto Road is one such smaller site and bosses said the majority of its work will be moved to sister offices in Holland and Portsmouth.
Andy Wood, Fugro managing director, said 107 jobs were at risk of redundancy but it was hoped a 'significant' number of staff would be offered opportunities elsewhere.
He added: 'Hopefully good numbers of those will be offered a chance to relocate. Sadly its inevitable a number of those will not be able to relocate or won't be able to find suitable alternatives. There will clearly be some final redundancies at the end of this process.'
Yarmouth MP Brandon Lewis said it was a 'sad day' to see so many jobs going but he was confident the industry was still a resilient one for the area.
He said: 'The oil industry is going through difficult times but at the same time there has been some very good news around a decommissioning base being set up in Yarmouth and jobs from that will come on stream fairly quickly.'
Mr Lewis said there was a lot to be optimistic about in terms of Yarmouth's tumbling unemployment figures but stressed the importance of extending every help to workers affected by redundancy.