The Wealth Beneath Our Feet - full report (6.4 MB ... - Venture Taranaki

An evident feature of Taranaki’s O&Gindustry is the collegiality of thesupply chain. This is not to say thatcompanies don’t compete, but ratherthat an acknowledgement existedwhere, through co-operation, thecollective capability was greater thanthe individual parts.Timelines in O&G projects are often tight, and the scaleof projects can prove a test for individual companies.Partnerships reside between companies concerningworking relationships, project structure, collaborativemarketing, the sharing of market intelligence and themanagement of peaks and troughs. There are benefits byworking together.Despite advances in communication technology and theincreased flexibility of long distance travel, there are clearsynergies available for O&G service providers that arelocated in close proximity to each other and key clients.The following table summarises the positive externalitiesavailable by locating in close proximity to potentialclients, and to complementary, and competing,service providers.The importance of geographic proximityLocated nearPotential ClientsComplementary ServicesCompeting ServicesBenefits Include••Reduced transportation and communication costs••Clients demand local knowledge••Increased flexibility to be able to meet client needs••Scale economies from a greater client base••Referrals••Collaborative marketing••Collaborative industry training programmes••Economies of scale from a greater service base••Access to a larger pool of skilled labour••Ability for potential clients (especially international) to more easily visit andcompare competitive service offerings••Faster recognition of new competitive initiatives and / or new technologies••Potential supply chain synergiesIt is no coincidence that Taranaki, representing the entire upstream O&G market is home to almost all of New Zealand’sO&G service providers (and FTE employees).Taranaki represents the logical location for companies involved in O&G, which recognises the merits in obtaining theidentified synergies. As exploration expands to other regions, strategic hub and spoke relationships between Taranakiand the emerging areas is anticipated to emerge.32The Wealth Beneath Our Feet