Big future ahead for little port

Mar 26 2008 by Karen Dent, The Journal

The North East’s ports are expecting to benefit from a boom in business this year and Sunderland, although small, is determined not to be left behind. Karen Dent looks at the issues behind its expansion.

THE latest company to arrive at the Port of Sunderland says it opted to go there instead of its busier neighbours so it has room to grow.

Transglobal Holdings has taken over the 2.25-acre plot occupied by Fina until the oil company moved out at the end of 2005 when its lease expired.

Transglobal is the parent company of Total Global Steel (TGS), which will produce cut and bent reinforcing steel rods for use in the construction, steel fabrication and structural engineering industries.

It plans to build a steel mesh factory before the end of the decade and will run its own steel stockyard at Sunderland and create 40 jobs as it does so.

The business chose Sunderland over its regional and national rivals for a couple of key reasons, according to senior director Martin Lonergan.

“We looked for somewhere that needed us as much as we needed it,” he says. “Three or four years down the line, the Port of Sunderland probably won’t have a lot of space.”

The agreement of the new lease is an important stepping stone in the regeneration of the Port of Sunderland, which is aiming to take a slice of the expected upturn in cargo passing through the UK’s ports.

As the Port Authority, Sunderland Council recently agreed to build a 1,900 square metre warehouse facility to cope with increased demand for space from its biggest customer. Sodra, the Swedish forestry group which imports more than 100,000 tonnes of woodchip annually, signed a three-year, £6m contract with the port in 2006.

That contract is up for renewal next year, but Sodra, which is expecting tonnage to increase further this year, has said it would like to consider an extension to 2011 as long as the port has sufficient storage facilities to cope with its expected rise in demand.

Phil Barrett, the city council’s director of development and regeneration said: “We’re in negotiations at the present time. They have told us they are very satisfied with the service the port provides for them.”

A new role of port business manager was also agreed in principle by the council earlier this year and Barrett says an appointment is expected within the next few months. There has been a shake-up among the port’s senior staff in the last couple of years to cope with retirements and the upturn in trade.

“Tonnage is around half a million tonnes annually at the moment but we can certainly do a lot more,” says Barrett.

The council has been in discussion for some time with potential private sector partners to run the facility on its behalf. But Barrett points out the situation has altered radically since the port was first advertised.

“At the time, the port wasn’t operating at a good trading position but the trading position has changed. We’ve improved the profits by £1m in the last three to four years. The private sector can have a role to play but terms we would seek with a private sector partner are now very different than they were three or four years ago,” he says.

In the short to medium term, that could mean the council will continue to run the port itself and take advantage of its improved financial position. Last year, it spent £850,000 on a crane, which Barrett says is “certainly a significant investment”.

“We are still in dialogue with prospective partners, we’ll certainly make a decision in the current calendar year,” says Barrett.

But Coun Lee Martin, the leader of the Conservatives on Sunderland City Council, believes that selling the port outright would be the best option to secure its future.

“I don’t think they’ll get someone to put in the investment needed without owning it outright,” he said. “Will we give them a 20, 30, 40-year lease? As soon as we’ve done it, we’ve tied our hands. It needs something altogether more radical than that.

“In the last 18 months, certainly the council would claim it is performing better. It is turning a profit, but it is minuscule. It only employs 49 or 50 people – the port of Tyne, Teesport, even Seaham Harbour – they are capable of generating a lot more than that.”

Entrepreneur Sir Tom Cowie echoes Coun Martin’s views. The tycoon, who built up public transport giant Arriva, owns North European Marine Services (NEMS) -– a business importing metal through Sunderland and storing it for the London Metal Exchange.

The former Sunderland Football Club chairman said: “The thing I find so difficult to understand is that we’ve got Newcastle going like a rocket and a tiny place like Seaham Harbour is bustling.”

NEMS has 6,500sq ft of warehousing space at the port, which Sir Tom says is currently more empty than full. He says the business is keen to obtain permission to use some of its warehouses for other purposes.

Coun Miller is convinced there is plenty of potential for the port in the future economy of the city. He said: “This is the biggest urban regeneration site in the North of England.

“One thing we haven’t done in Sunderland –- apart from Nissan – is that we haven’t replaced a lot of the blue collar skills lost in the 70s, 80s and 90s. The Port of Sunderland really gives us the opportunity to do that.”

Three or four years down the line, the Port of Sunderland probably won’t have a lot of space.