The great economic divide

Photo: Øyvind Hagen / Statoil Photo: Øyvind Hagen / Statoil Photo: Photo: Øyvind Hagen / Statoil

Photo: Øyvind Hagen / Statoil Photo: Øyvind Hagen / Statoil Photo: Photo: Øyvind Hagen / Statoil

Norway’s oil and gas sector brings growth to some businesses, while others struggle with high costs

On Feb. 9, Norsk Industri presented its annual assessment of current condition and outlook for the year.

“We see the [oil and gas] industry as Norway’s golden egg,” says Communications Director Finn Langeland of Norsk Industri (Federation of Norwegian Industries), holding up a gold-wrapped chocolate Easter egg.

Norway’s real gold is black, it is far from the shore and it is deep. High oil prices, new discoveries and sky-high investments on the Norwegian continental shelf lead to tensions in Norway’s economy.

“We have a dichotomy of the industry. There are those that deliver the oil industry, and then there are the others. Parts of the Norwegian industry is experiencing a distinctly Norwegian paradise in the form of ever-growing oil investments in Norway and abroad,” says Knut E. Sunde, of Norsk Industri.

He talks about the growing momentum for those who supply the oil and gas sector.

Some of this momentum shows itself in Krokstadelva in Buskerud in central Norway. Trelleborg Offshore Norway produces safety equipment, insulation and sprinklers, among other things. Eighty percent of their entire production goes to the oil and gas sector.

“We have gone from NOK 160 to 460 million in revenue in 10 years. There are major projects underway to ensure the future, so there is no sign of dark clouds on the horizon,” says Trelleborg Offshore Norway’s managing director Hans Leo Hals.

“There were entrepreneurs who started the company, and we are in tough competition with competitors to obtain the best people. The people here are local, but we have had to recruit from abroad for the highly specialized jobs,” he says.

Though Norway is known for its oil and gas industry, there is more to the Norwegian economy than oil.

“The rest of the Norwegian economy is complex. Those who do not have a unique product have a significant problem they need to get out of,” says Langeland.

Some find the solution to their “significant problem” is getting out of Norway all together. Thirty minutes from Krokstadelva is the Elart Metall, a metal foundry. They are a typical subcontractor to traditional Norwegian export companies. In March, they are closing their doors Norwegian doors and relocating to Sweden.

“We have experienced fluctuations and corrections in the market before, but this is something completely different. In March, we will pack up the equipment and move production to Sweden. By that time, I hope all of the nine employees have found a new job,” says CEO Trond Gewelt.

He says that the distance to Europe has become too large. The difference in labor costs, tax levels, low exports and low prices make the 58-year-old company can not hang on any longer.

“This is the division of Norwegian economy. It benefits Norway in terms of revenue and income levels, and it keeps labor costs up for all of us. This is the train for such niche businesses like us. Sweden next,” says Gewelt.

Both Norwegian Labor and Welfare Administration and the union have visited Elart to help the employees find another job.

“After we got the message it was a little scary, but we have received good support,” says Elart’s production manager Jostein Høgvik.

Source: Aftenposten

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