Paul Sweeney debate16 May 2025 09:35
It is a pleasure to contribute to this debate. The main area that I wish to raise with colleagues across the Parliament is the future of the Wood Group, which is one of Scotland’s largest and most iconic companies. I am surprised that it has not been the subject of more discussion and debate in the country to date.
Headquartered in Aberdeen, the Wood Group is one of Scotland’s largest companies and the largest legacy of what we achieved as a nation from the 1970s North Sea oil boom. It has now grown to become one of the most diversified global engineering contractors. It is based across 60 countries, employs 35,000 people and has a global headquarters in Aberdeen that employs 4,500 people.
In 2017, the Wood Group acquired Amec Foster Wheeler, which was an American rival, for £2.2 billion. Although the Wood Group had been very successful in recent years, Amec Foster Wheeler’s heavy liabilities unfortunately left it with significant debts and liabilities. The acquisition was initially viewed as being good for the company due to Amec Foster Wheeler’s experience in oil and gas and in environmental and infrastructure projects, but because it had many contracts at fixed prices, profit margins were wiped out as inflation rose.
As a result, the Wood Group has suffered significantly. The reduced revenue and the liabilities from those old contracts have led to significant weaknesses in the company, which has seen its market value plummet, and £1.4 billion of debt facilities will expire next year, meaning that the company’s share price has crashed and it has fallen out of the FTSE 250. That has opened up an asset-stripping takeover opportunity for Sidara—a smaller engineering consultancy that is based in Dubai—which came in last year with a £1.5 billion offer for the company. It has now returned, marking the offer down by 85 per cent to just £242 million for the larger Wood Group.
That takeover would be strategically inept, and the Scottish and UK Governments should take action to support the Wood Group’s board to resist it due to the company’s strategic importance to Scotland and the UK. It is one of the UK’s primary engineering resources for renewables, carbon capture knowledge and North Sea decommissioning. Sidara has a global headquarters in Dubai and a British head office in London. If its takeover happens, there is a very high chance that the Aberdeen headquarters will close down because a second UK base will not be required, and that would mean that shared global functions such as finance, human resources and information technology would be transferred to Dubai.
We have seen all too many examples of the so-called branch plant economy in Scotland. If the Scottish Government is serious about a just transition, it needs to look at options to step in and save the Wood Group. There is a practical way to do that. The Wood Group currently owes around $1.1 billion to lenders and around £800 million in net cash and bank
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