The Investors - Going under the sea

Dec 11 2006 By Graeme King, The Journal

A willingness to invest for the long term is putting two very different businesses on Tyneside and Wearside in strong positions in their respective industries. Graeme King looks at SMD Hydrovision in Newcastle and the Ailantus Hotels Group in Washington.

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The machines created by SMD Hydrovision look like they belong in a James Bond script, but the Newcastle company is a very real success story. In a world where we are always hearing that North-East manufacturing needs to change its focus from old-fashioned mass production to the value-added, hi-tech world of the 21st Century, SMD Hydrovision excels.

With hundreds of jobs being lost year by year to cheap foreign competition, it is heartening to find the likes of SMD Hydrovision leading the charge to keep the region's expertise at the heart of world manufacturing.

Sales have soared from £8m to £30m inside a year as the oil and gas industry enjoys something of a boom.

Staff numbers have also gone beyond expectations, with numbers now more than 100 when 85 was the predicted total earlier in the year.

SMD makes a variety of machinery, but is best known for its ROVs - Remotely Operated Vehicles - which can work in hostile undersea environments where divers either cannot go or find it difficult to go.

The company has recently celebrated its biggest contract for a single machine, building a huge £7m ROV (a more standard version retails for £2m) to work on pipe burial around the world.

Sales manager Mark Collins said: "Our order book is full right up to the middle of 2007, which is pretty much unheard of in this industry.

"Systems we do go to Brazil or West Africa, the Gulf of Mexico, but also for use in the North Sea. We have worked pretty hard to get here, positioning ourselves for when the market was strong. It's really quite exciting - years like this in our industry are really a blip, so we have to enjoy it when it happens.

"We have also just secured an order for the world's largest ROV system, known as the UltraROV.

"A more standard ROV generates 100KW of power - this one will generate 2MW. It will be ready in August 2007 and will specialise in pipe burial and sell for between £7m and £8m."

Mr Collins said undersea engineering companies Hallin Marine and Subsea 7 had been SMD's biggest customers this year, with each company now equipped with a fleet of ROVs.

He said: "The ROVs are used for subsea inspection and construction work, doing a similar job to a diver but usually in areas which are too harsh for a diver to be."

Mr Collins said the boom in the offshore oil and gas industry currently was good for SMD, but it was also making life difficult in recruiting good staff.

He said: "We are struggling a little to recruit. It's difficult getting the right people, but I think we are up at 100 now, with a few contract workers. In the oil and gas industry in Aberdeen, things have gone mad up there. Good, experienced people have migrated up there. Companies outside Aberdeen are finding a lack of suitably qualified people." SMD Hydrovision works from two bases in Newcastle, in Wincomblee Road in Walker and Davy Bank in Wallsend.

The manufacturing plant at Davy Bank is on the old Turbinia Works site, so has historic connections with Tyneside manufacturing.

Sales director Michael Jones said: "Our facilities feature 31,000sq ft of production space, clean rooms for electronics and hydraulics assembly, cranes for lifting up to 100 tonnes and 5,000sq ft of project offices.

"We also have direct access to the riverside for loadout and wet testing, meaning that with our large and skilled workforce we have an unequalled capability in production capacity and quality."

SMD Hydrovision has representatives worldwide, including China, Russia, Vietnam, Japan and serves the global market, with its products being used in North and South American waters and Africa as well as the North Sea.

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