• Text size      
  • Send this article to a friend
  • Print this article

Focus on Aberdeen: the oil and gas sector's effect

FOR an area that has had human settlement for more than 8000 years, it could be argued many residents in Aberdeen have never had it so good.

The accolades in the past 12 months alone include the best city to live in Scotland, the happiest place in the UK and being named as one of the super-cities leading the UK economy out of recession.

Read our four page special report here

While much of the rest of the country battles with UK Government austerity measures and the dampened consumer confidence that has brought, it can often seem to outsiders as if the north-east's main outpost has its own mini-economy which powers forward regardless of any external factors.

Indeed research from accounting group UHY Hacker Young has shown Aberdeen was the only large city in the UK to grow its economy during the financial crisis between 2008 and 2009, with gross value added per person rising 1.1% from £28,422 to £28,731.

The citizens also tend to have more money coming into their bank accounts, with wages in the city continuing to outstrip most of the UK and Scotland, according to National Statistics in the Annual Survey of Hours and Earnings for 2012.

The average gross weekly wage in Aberdeen was £716.70 with the lowest 20% receiving £383.40 and the highest 20% getting £945.80.

The equivalent in Scotland was an average of £584.90, the lowest 20% at £331.60 and the higher earners on £740.70.

Meanwhile, across the UK, the average was £609.30, with the lowest 20% receiving £335.40 and the highest 20% taking in £780.80.

No discussion of the Granite City's economic position can take place without acknowledging the huge impact of the oil and gas industry which produces billions of pounds of revenue each year and employs tens of thousands of people.

With more than 1000 energy-related businesses, agencies, government bodies and research institutes – including a rising number in the burgeoning renewables sector – the ripple effect covers the whole city and is partially responsible for lower unemployment and a growing population.

While the strong oil and gas sector and the multi-billion-pound investments in the North Sea are undoubtedly huge factors in Aberdeen's current success they can often obscure the fact that there is more to the city than engineers and oil rigs.

While the harbour caters for a lot of energy industry traffic it is also an important goods, fishing, livestock and cruise-ship hub. Outside of the oil and gas sector, transport giant FirstGroup and fund manager Aberdeen Asset Management are two FTSE businesses which maintain their headquarters in the city while the likes of Stewart Milne Group is another major employer.

Strong commercial property prices in the city – regularly higher than £30 per square foot for prime Grade A offices – point to a need for greater provision for office space and the desire for companies to have the best on offer.

The development of the massive Gateway business park at Dyce, beside what is one of the fastest growing airports in the UK, is still a few years away from fruition but Aberdeen has been one of the few places in the UK outside London where speculative development has continued in recent years and has been successful.

That trend can be seen in the recent announcement by Knight Property Group that it plans a £30 million overhaul of the former Capitol Theatre on Union Street to provide 70,000sq ft of city-centre office space.

Aberdeen also boasts two universities with world-class teaching and research facilities across a number of subject areas.

That concentration of knowledge and some of the work being done in the university research institutes has helped in the life-sciences sector which, although still small, is seeing a great deal of investment.

Alongside the thousands of students who flock to Aberdeen each year, there are around two million tourists who come to the city, spending in excess of £360 million annually.

While in the north-east these visitors hopefully partake in some of the local food and drink products and dine in the restaurants where long-established city haunts like La Lombarda and La Stella compete alongside more recent additions such as Musa and a range of high street names.

The cultural life of the city includes a number of music festivals, the Word literature festival plus a diet of exhibitions and touring performance across various venues, museums and galleries including the near 200 year-old Music Hall. The sporting attractions mainly centre on golf and football although a new Olympic-standard aquatics centre for the city is scheduled to open next year.

The debate over the merits of Donald Trump's investment to the north of Aberdeen have been well worn but the links golf course has enjoyed favourable reviews with early indications suggesting it will be a popular draw for golfers from around the world.

The retail offering in Aberdeen has been enhanced by the Union Square shopping centre where Scottish businesses including jeweller Rox and clothing company AB10 sit alongside Apple, Marks & Spencer, Hugo Boss, H&M and Next.

Other malls in the city have upped their game with a number of revamps and improved offerings and the city is placed at number 27 in the UK, according to data from CACI, with retail generating £680m annually.

Yet in spite of all the positives a quick straw poll of those in the city would produce a long list of gripes.

Even the most fervent Aberdonian would admit Union Street could do with some sprucing up while the bitter dispute over what to do with Union Terrace Gardens was not resolved to anyone's real satisfaction.

Then you can add in the traffic snarl-ups with the mere mention of the Haudagain roundabout likely to bring normally mild-mannered citizens to the boil.

Factor in the frustrations from campaigners both for and against large road projects such as the Aberdeen Western Peripheral Route and the Third Don Crossing bridge and it is clear transport and connectivity remain major issues. On top of that you can add a lack of hotel rooms and the widening gap between rich and poor encapsulated in worries over affordable housing in a city where average prices have almost doubled since 2002.

The under-performance of the city's football club would also likely come up in any conversation about problems Aberdeen may have.

That's without mentioning the homelessness and substance-abuse problems that blight all our nation's cities.

Like the rest of Scotland there are parts of Aberdeen where deprivation runs deep and drips through from one generation to the next. There are many challenges in the city but on the majority of factors Aberdeen is far from a grey lady.

Much like its bright, spacious public gardens and parks – regular winners of the Britain in Bloom contest – Aberdeen remains a constantly changing and engaging place with much potential for reinvention and growth.

There is work to be done to realise some of the ambitious plans for the city but Aberdeen is embarking on them from a relative position of strength.

Tom Smith, chairman of the Aberdeen City and Shire Economic Forum, said: "We have a game plan for the next 20 years.

"We know what we are trying to do and how we are going to try to do it."

Contextual targeting label: 
Finance

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis.
If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.

159739