The Energy Industries Council (EIC) has now published its fourth edition of the Survive and Thrive Insight Report that charts the course 40 EIC member companies have taken to grow against a backdrop of continued market uncertainty, UK-China trade tensions, OPEC disagreements, low oil and gas prices and COVID-19, compounded by very tight margins, fierce competition, and Brexit.
This year’s Survive and Thrive Insight Report provides invaluable first-hand information from the UK supply chain from 40 representative energy businesses, detailing the eleven growth strategies employed to grow their businesses during a market crisis.
The interviews for this research were largely carried out during the COVID-19 lockdown, and although most of the report focuses on growth strategies employed by businesses before COVID-19 struck, the research highlights several key post- COVID-19 lessons for industry.
The research shows 49% chose diversification, specifically de-risking their revenues to rely less on oil and gas, as their most used growth strategy.
Although 90% of companies interviewed were active still in oil and gas, with 26% having already diversified into renewables, the report highlighted 72% of businesses diversified into non-energy sectors such as infrastructure, industrial and pharmaceuticals.
Only 18% of business leaders chose to fully embrace the Energy Transition even though it is expected to create many diversification opportunities for the supply chain in future years. It’s quite clear from the research business leaders are still in the stage of learning the language of energy transition, and the vast majority are not yet able to convert this growing interest into contracts and wins.
For the fourth year running EIC member companies surveyed still perceive developing new export markets as their riskiest growth strategy with the slowest return to profit, preferring to adopt alternative growth strategies such as diversification, services and solutions and optimisation.
The strategies more commonly employed by the 40 companies were: diversification, being the most popular strategy this year at 49% – followed by service and solutions (44%), innovation (41%), collaboration (39%), optimisation (39%), culture (33%) and technology (28%).
Other strategies were less well adopted: digital surprisingly was down at 26%, transformation (28%) and energy transition (18%) were low. Once again, export was the least used growth strategy at 15%.
As well as detailing these individual growth strategies and lessons for industry, the report provides invaluable first-hand information from the UK supply chain about what it needs from government to thrive.
The strategies put in place in this edition of Survive and Thrive have generated a massive GBP 2.4bn, up on the GBP 1.8bn in savings and new orders in 2019.
Resilient and adapting
EIC CEO Stuart Broadley comments, “It is always inspiring to speak to entrepreneurial business leaders about how they develop amazing new strategies to grow in challenging markets. Arguably, today’s conditions are the most challenging we have ever seen, but this research shows that businesses are already adapting and are relatively resilient to this uncertainty.”
“Although businesses expect tough times ahead, leaders are investing in business development, R&D and their people throughout, and see diversification and innovation as key to survival in the short term, with many still seeing growth and new opportunities,” Broadley adds.
Other key findings and recommendations in 2020 include:
- Only 15% of companies exported their way out of a crisis.
- 39% of companies optimised to grow their business.
- 46% of companies were SMEs.
- 54% of companies adopted an innovation strategy including technology and digital.
- Companies should start adapting and stop waiting for COVID-19 to end and plan new business process now.
To download the fourth edition of the Survive and Thrive Insight report, visit the EIC Market Intelligence Reports page.