PFC - Doing very nicely thank you.

[youfoolishboy]

Brightest they have been for years currently, I may not have to leave the country this year for a change! Could be the last flourish of UK O&G engineering though, going forward governments are doing their best to stamp out large contracting companies in this country and they will succeed eventually.

[Clitheroekid]

governments are doing their best to stamp out large contracting companies in this country and they will succeed eventually.

Why are they doing this?

[youfoolishboy]

Taxing contractors who have no job security, holidays or sick pay, paying to live away from home and regularly have periods of unemployment as though they are fulltime employees is not fair taxation. However its not the workers that will decide this. If the government forces the rules they applied to the public sector on the private sector the contractor companies in oil and gas will leave the UK as they do not want the extra cost of employees they currently run on about 80% contract workers. The drift already is to low cost centers in India and the Far East this will just make the move quicker.

[youfoolishboy]

Have not seen it but I know many people who are having to got to India to try and sort out the problems for a few weeks and they all come back amazed at the size of the operations out there. General mood over here is we are marking time. We will specialise in FEEDs for a while until the Indians work out how to actually design a plant, though cultural issues are the biggest problem I see which may take longer for them to iron out. I hope that the big contractors' offices in Europe are first to go though as they all run mostly on staffies and the UK maybe kept in reserve due to our flexibility, changing employment laws here though will just hasten the end, but government intervention may stop this on the continent as they are more protective of key industries than the UK.

[youfoolishboy]

I disagree about the FEED work in the UK, the one FW Reading are PMCing is 5 years and four contractors working on the FEED and preFEED simultaneously.

[dspp]

Crudely speaking from here I expect developing economy Asian wages to double in real terms, and Western wages to halve. Whether that takes place over 10-years or 20-years I do not know. The faster it happens the faster the Westerners will have wage parity. If it is a slow process the Westerners will simply have no jobs. This is after all the reversion to the long term mean. That is the new reality in many areas in my opinion. The only counter-hope is that the developing economies get caught in a middle income trap, a la Brazil. However I see just as many signs that the Western economies will catch themselves in a high entitlement trap. You both (and me) are definitely in the front lines on this.
- dspp

[dspp]

Dspp, that is the working thesis of funds like FEET, if you think that with some confidence then loading up on emerging markets consumer products makes great sense.

One of the interesting features of capitalism is the possibility that the periphery may overtake the centre. The UK was once a peripheral nation on the edge of Europe: Now London is the centre of global capitalism. Japan was once a backward isolationist place. Yet it now it is at the forefront of technology. No doubt things could switch again in future.

I agree. I have a fair non-UK exposure through index trackers for this reason.

I am also keen on multinationals. And in this particular case on recovery plays who may be useful bolt-on acquisition targets, hence my PFC

regards, dspp

[youfoolishboy]

I to am negative on the outlook for engineering, and work in general, for the West. I have a son who I am trying to think of what career to help him into and to be honest I am flummoxed. Engineering as we agree is on the death spiral in the West but Law and Medicine will also suffer due to computing power and outsourcing to the East where possible. The example I look at is programmers, I have friends in the industry and they were the first to suffer the cheap Indian labour effect. They now seem to have settled down with smaller projects and less manpower with lower rates but not halved as suggested. The rise in wages in India etc is already coming property and living costs are rising fast in there so wages have to follow, these are university educated people in a country where not everyone has a basic education so they have to have the money to live well or nobody has.

Personally I see solutions for the current working engineer to get to retirement as
1 Get more into operations than design as that can't be outsourced the same. Obviously cheap labour can come into a country but in the UK there is a large source of engineering labour here already and immigration rules maybe tightened post Brexit.
2 Leave and goto a country where there are more protectionist labour laws and move towards operations there.
3 Start up a new business outside of engineering.

Currently I am looking into doing number 3 with another engineer.

[dspp]

My kids? They are both in civil service roles.

Whilst I understand that as the solution for an individual, it is not a viable solution for an economy. Therein lies the problem. For myself I am not fussed, I am organised. For my daughter I am as worried as you are. Fortunately amongst other things she has many passports. At this rate the UK is heading down the Swiss route, just with about 50m hangers-on.

Meanwhile back in PFC-land I see there is an opportunistic go at GKN by Melrose today. How long before someone has a go at PFC, and who ? Cheap GBP, increasing $/bbl, what's not to like.

- dspp

[youfoolishboy]

Fred
I reckon there will always be work in operations. Fawley is getting a major refurb just now after years of negelect. There are a lot less plants I agree but there are a lot less engineers and a lot getting old and retiring cutting numbers and crucially experience. I forgot the other plan move into nuclear plants, security clearance will keep out many non Brits. I have been trying on and off for a few years to no avail mind you.

[youfoolishboy]

Fred
you are a ray of sunshine going to need a drink next time I read your posts :0)

ap
India is low cost and low skill, they specialise in getting things wrong, they are used as they are 3 or 4 times cheaper than me so can do it twice and still be cheaper. They use me to check what they do. They do lose a lot of money when the stuff they specify gets ordered before we get a chance to check it but nobody seems to mind as we keep using them.

[dspp]

Similar tale in my line of work, corporate driven immigration has reduced UK day rates to a sad level, driving me overseas to better markets.

IT?

The other issue is that the UK no longer has critical mass of self-sustaining mittelstand engineering/technical companies to support the HR ecosystem that delivers a workforce for jobs, and jobs for a workforce. Since employees can't take a X-year gap at an industry's will then the supply gets switched off and never restarted.

I recently passed on some CEng/EurIng level jobs (i.e. 4-year Hons degree; loadsa maths; typically 4-8 years of serious work & training; finally qualification) for medical sciences mecheng design roles* in Cambridge UK to the juniors in my network. Salary £45-55k. Contrast that with the typical GP salary for an equivalent point in the career which is £60k-£80k for a GP role that has infinitely greater job market security/liquidity/flexibility. Is it no wonder that there are very few juniors in my network ? I also pointed out the salary issue to the recruiter who shrugged - if they can't fill it in the UK they will either offshore it or use it as proof to get a visa to import. My US peers laughed when they saw the salary.

The most important thing you can help your kids with if they are interested in this line of work at a professional level (apart from interest/motivation/understanding) is a passport for either EU or USA. The former was just $%%^& over by 52%. Duh.

regards, dspp

PS. When I take on young apprentices, technicians, engineers a key concern I have these days is whether the package I can offer them is in their best interests. If I cannot offer enough years of job security into a pool of employment of sufficient size (outwith our company) then generally I consider it better (in duty of care terms) to offer the positions to middle-aged or elderly out-of-work folks: they are trapped in the industry(s) and have nothing to lose. We should not gull the youngsters in if we cannot deliver on the promises. Needless to say the politicians do not like being told these realities - they know it is an inditement of what they have done.

* PM me if you need the link

[monabri]

In the mid 90s, I participated in Grad recruitment for a well known aerospace company. We offered a starting salary of £18k. When I left in 2013, the salaries being offered were lower than this and there was no longer a full final salary pension. Even in the mid 90s, we struggled to get new grads to sign on the dotted line, quite often they would phone up on the day to say that they had had a much better offer and so they would not be attending the interview. Then, the few we managed to recruit all left after a couple of years for better paid jobs. Many of the older grads (well, doctorates) left for jobs in the city - the company couldn't deliver on their expectations and so they moved on!

In the mid 2000s, I noted that one guy who worked in my team was paid approx 25% more than I..... but he was some 10 years older. It became clear that engineering and science simply doesn't pay and that there was a definite "foot on the head" of salaries.

[youfoolishboy]

I know something, the oil price has risen and taken all my oil related stocks with it, I think there is a lot of that in the price.

[vrdiver]

Here we go again. Not bad for a company that was never going to win another contract eh

https://www.petrofac.com/en-gb/media/news/petrofac-secures-key-north-sea-contract/

Sounds good, but remember Carillion was still landing contracts right up to the end

VRD (who holds PFC)

[vrdiver]

Very good, love it. Pull the other one, it's got bells on it

Yes, it was somewhat tongue-in-cheek!

My point was just that "landing contracts" isn't a guarantee of business health, as I'm sure you're already aware. It's the quality of the contract and management's ability to execute it that matters.

I bought into PFC over the summer of 2017, because, like you, I think the "disaster story" is oversold. I do keep an eye on them, just in case anything extra crawls out from the woodwork, but I'm pretty happy with them so far!

[BobGe]

(Another) one in the eye for the PFC doubters -

Perhaps you misread the article:
"... ruling that he was not served notice of the charges..."
Hardly a vindication, is it?

[BobGe]

Hardly a conviction either?

Actually it rather was...

[Clitheroekid]

Hardly a conviction either?

Actually it rather was...

It's neither a conviction nor a vindication. As far as I can see all the judge said was that the proper process wasn't followed in serving Mr Asfari with notice of the charges against him, so that the subsequent penalties were unlawfully imposed.

However, I assume they will now re-serve the notice in accordance with the correct procedure, so that he will still have to defend the charges. A conviction is still, therefore, a possibility, and the case is likely to be hanging over him for some time. He won't be in the clear until either the Italian authorities drop the case or he's formally acquitted after trial.

[BreakoutBoy1]

I have now sold out of PFC: I am up 33% after just a few short months which is a nice result. This was a good little trade for me! Good luck to all holders.