Capitalising on supply chain opportunities

Rob Cadwallader, Mark Wilson and Rob Chedzoy recently met with Somerset Chamber of Commerce’s Chris Langdon to discuss forthcoming opportunities at Hinkley Point C for Milsted Langdon’s clients.

Following EU Commission approval in October, local businesses are now waking up to the enormity of what is about to happen on their doorstep. The EU approval was a huge milestone for the development of the project and many local businesses are considering the implications for their organisations.

Expected to create around 25,000 employment opportunities throughout the build, which will take up to a decade, Hinkley Point C will employ 5,600 people on site at its peak. Between £16 billion and £24.5 billion will be invested in the construction project which is between two and three times the £8.77 billion cost of the London Olympics and several times the size of Somerset’s economy as a whole.

The contracts and expertise required at Hinkley are wide-ranging and include construction, metal fabrication, facilities management, catering, temporary office fit-out, bus services and accommodation booking amongst many others.

EDF gave its commitment at an early stage to encourage and facilitate the involvement of local businesses in the supply chain and, where practical, to stimulate inward investment into the wider South West area. Therefore, numerous opportunities exist to tender directly for contracts either alone or, in many cases, as part of a collaborative supplier group. In addition, local businesses with relevant skills should identify larger companies, including existing customers, who may be involved in the supply chain, and ensure that they are positioned to act as subcontractors and suppliers.

For some smaller businesses, the influx of workers and cash into the local economy will cause an unprecedented increase in demand. For example, the nuclear sector has large economic and employment multipliers, meaning that a swathe of jobs will be created even for businesses not directly engaged in the project.

There are a number of practical steps which local businesses should address. Firstly, register with the Hinkley Point Supply Chain, run by Somerset Chamber. Businesses should take care to focus on their core specialisms and skills. Next, they should ensure that they have an understanding of forthcoming contract opportunities and the likely bidders, building relationships throughout the supply chain.

It’s important to get involved with established supplier groups, even for businesses which were not part of the process from the outset; there are still opportunities to join now. Also, consider whether there may be a risk of losing skilled staff and management as a result of the inevitable skills shortage that will arise when the project gets fully underway.

In fact, one of the engineering businesses involved in the metalworks contractor group said: “Be proactive, it’s no good waiting for opportunities to come to you. You have to go ahead and find the opportunities. No contracts have been let yet. It’s still at an early stage, so it’s up to you to make sure you’re registered with the Hinkley Supply Chain Team. Make sure you go to meetings where the Tier 1 contractors explain what they’re doing, and make sure you follow up. It doesn’t matter what your business is, Hinkley is going to have an impact. There will be a lot of good jobs going at Hinkley so you need to keep hold of your workforce. Hinkley is both an opportunity and a threat – you don’t have a choice, you’ve got to be involved.”

For companies looking to become directly involved, collaboration and joint ventures are almost certainly going to be required due to the scale of the contracts on offer. Collaboration throws up numerous questions; can local businesses, including competitors, put aside their differences and demonstrate that they can work together to rival larger national bids? Can an effective management team be put together to make decisions on behalf of all of the underlying businesses?  How can an untried collaboration of smaller entities demonstrate that it can provide a reliable service when it has not yet traded in that format?  These are questions that Milsted Langdon can help to resolve at an early stage.

We can assist with modelling the impact of new contracts, including financial projections and cash flow forecasts. Our award winning Business Innovation team is unique in its ability to help clients extract and present financial data in a user-friendly manner and uncover new insights into their business.

Our corporate finance team have well established links with the region’s banks and asset-based lenders, and our specialist tax team regularly advise on business structures, joint ventures, and tax planning. Whatever the nature of your business, we would be delighted to help you address the challenges ahead. Please contact Rob Chedzoy on 01823 445566 or

Posted in Hinkley Point C, News.