2023 Global Subsea Industry Headwinds and Opportunities

Sean Bergin, top
Tom Soja, bottom

SubTel Forum Magazine, Issue 130
May 15, 2023

As we stare down the second half of 2023 and look towards 2024 and beyond, there is no better time to consider the implications of the fundamental changes that are happening within our industry and also the external factors that influence the shape of our sector. There is a lot to unpack and digest, but the shifting dynamics in the subsea space could broadly be dissected into the following components: technology, chokepoints/routing, cost of construction, production and vessel availability, cost of capital/inflationary pressures and also tech layoffs. All of these elements are factors, or at least considerations, in building any business plan when developing a new subsea cable system. Let’s take a high-level look at each of these components, in no particular order, which shape the landscape of the industry and attempt to understand if any headwinds may actually be masquerading as opportunities.

TALENT: It’s the people that make our industry tick, so this is as good as any place to start. Currently, our industry is dominated by a more senior demographic. Just go to any subsea focussed conference and scan the crowd and you will note that the majority of the people in our sector are without doubt male and forty-years old plus, plus. Are we putting enough effort in to attract a broader (and younger) demographic to the industry? It’s important that we do focus on new talent particularly as our industry evolves, and evolution obviously requires fresh ideas. “What got us here will not get us there” comes to mind. It’s not like there aren’t enough displaced folks in the tech industry (of all genders, races, and ages) that would be able to fit right in with minimal upskilling. Consider significant layoffs in the tech space (congruent sectors to subsea) in 2023 alone – around 80,000 of them and this is just the last 4 months. Add to that further planned layoffs due to bite in May and June, and we are looking at a significant amount of available talent for our industry to draw from. Although it’s an unpleasant picture, it certainly does create an opportunity for the subsea industry to look at gaining some ‘fresh blood’ to help shape the future from an extremely diverse and talented pool of resources. Sure, they aren’t subsea experts, but who of us was when we joined the industry? Where is the opportunity here? Ironically, the submarine cable industry provides a large part of the physical components that comprise the virtual ecosystem that is the Internet and global communications infrastructure. Certain economics and other business aspects do have crossover between the physical world and the bits and bots of the tech world. Those types of talents are welcome, particularly in business model innovation.

MACROECONOMICS: We are operating in an environment of higher-than-normal inflation, supply chain limitations, and heightened geopolitical tensions. Times are challenging, no doubt. How many companies that have been the backbone of our industry for the last decade or so, will be economically viable within a decade from now if they continue on their current path? What is really being done to evolve the business models that drive our industry in light of the challenges we are currently facing? I am sure these questions are what many shareholders, Boards and CEOs are grappling with at the moment – how to balance the need for short term profitability whilst managing long term transformation and growth aspirations. In the subsea space, this is a complex issue given evolution of technology, the cost of construction and supply chain challenges.

You can read this article and other fantastic features in Issue 130 of the SubTel Forum Magazine