DISCOVER Magazine #7

Getting fit for the future

Published in category: People
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In the previous edition of the Damen Magazine we heard from the Group’s Executive Board that many maritime sectors were experiencing difficult times. This continues to be the case, though there are signs that the first green shoots of recovery may be emerging. Despite the challenges, Damen has continued to invest during these tough times, taking on new yards and extending its portfolio in preparation, as always, for the long-term.

In this article we hear from Chief Executive Officer René Berkvens, Chief Commercial Officer Arnout Damen, Chief Operations Officer Jan-Wim Dekker and interim Chief Financial Officer Tom Touber about Damen’s recent and forthcoming activities.

Q. In summary, how have the past twelve months been for Damen?

Arnout_Damen_Chief_Commercial_Officer_DSGr ARNOUT: The last twelve months have remained challenging. There’s still little sign of renewed activity in the oil & gas industry. Though we can see the beginnings of recovery, there are still too many vessels idle so it’s not translating into new orders. Prices are under pressure in other markets too – the tug market, for example, is experiencing difficulties because operators in European ports are having to consolidate their assets in order to remain competitive.
Rene_Berkvens_Chief_Executive_Officer_DSGr RENÉ: 2018 should have been a transition year for us, but it seems this period shall extend into 2019. We see signs of recovery, but not as strong as we’d hoped. In general, turnover is OK, but profit is poor. There are a number of reasons for this, one example being increasing labour costs in some regions.
Jan_Wim_Dekker_Chief_Operations_Officer JAN-WIM: The industry is indeed still experiencing difficult times, but it shows the strength of the company and the Damen family that we continued to invest over the last few years, for example, in Damen Shipyards Mangalia, Damen Shiprepair Curaçao and Damen Verolme Rotterdam as well as in software such as CAD PDM and in our people – training them in preparation for the future.
Tom_Touber_CFO_ad-interim TOM: I think a positive over the past months has been to observe the resilience of the Damen business model during these difficult times. The strategy of not being reliant on one product type has really shown its effectiveness during this time.

 

Such a culture of trust is natural at Damen – everyone feels part of the family.

Q. What opportunities does the current market situation suggest?

Tom_Touber_CFO_ad-interim TOM: 2019 will be a year of consolidation and limited investment. There are still plenty of challenges ahead. Competition is fierce so it’s going to be difficult. However, I believe the situation represents opportunities for Damen. To use a sailing analogy; on a clear day, anyone can sail. It’s when the weather gets tough you find out who’s good at it. We have the right model to find our way forwards.
To ensure success we need to be smart and invest where it matters – where there is potential for growth. We also need to make sure that there is openness and close cooperation throughout the group so we can maintain control of costs and there are no surprises. Such a culture of trust is natural at Damen – everyone feels part of the family.
Arnout_Damen_Chief_Commercial_Officer_DSGr ARNOUT: Although 2019 will be a challenge, I expect 2020 will show a return to healthier figures. They won’t be outstanding, it’ll take longer than that, but they will be improved. Still, there are even now a number of markets showing signs of promise. Offshore wind is now picking up, for example. We’ve had a successful launch of the new FCS 2710 in Europe and also in Asia. And there’s a lot of discussion in North America about offshore wind, too. We are well positioned to support this, having partners in the US who have been building Damen-designed vessels for some years.
Jan_Wim_Dekker_Chief_Operations_Officer JAN-WIM: Even as some of our main markets continue to struggle, we are preparing ourselves, looking closely at every aspect of the industry and our organisation, to make sure we are fi t for the future.
Our industry has great relevance for the future. Rising sea levels would suggest growing importance for the industry, more dredging, more waterborne public transport – especially with more people living in heavily populated cities close to the water. Renewable energy is also growing in importance and there are clear trends towards increased defence and security.
Rene_Berkvens_Chief_Executive_Officer_DSGr RENÉ: There are renewed opportunities for ship repair and conversion projects. We are already seeing a healthy increase in calls and things are looking good ahead. This goes not only for our yards, but for our Harbour & Voyage Repair division as well, which is seeing exponential growth in its activities.

 

Q. What have been the highlights of the past year?

Arnout_Damen_Chief_Commercial_Officer_DSGr ARNOUT: All the sectors of our new CRO (Cruise, RoPax & Offshore) division are looking good. We’ve booked contracts in all three sectors within the first year, including an expedition cruise vessel and a complex offshore vessel over 10,000 dwt, currently under construction in Mangalia.
Rene_Berkvens_Chief_Executive_Officer_DSGr RENÉ: It has been an exciting start to operations in Mangalia with the CRO projects and there are other projects in the pipeline. This will certainly increase employment opportunities in the region. Also, the further alignment of activities between Amels and Damen, for example on SeaXplorer production and repair and refi t has been a particular highlight that will provide a good focus on the market.
Tom_Touber_CFO_ad-interim TOM: It’s been good to see the yachting market performing so well. It’s no coincidence – the closer integration of Damen and Amels benefi ts both the product portfolio and the standards of operational excellence.
Jan_Wim_Dekker_Chief_Operations_Officer JAN-WIM: It’s been good to see Concordia Damen get off to an excellent start in inland shipping and river cruising. And Damen Technical Cooperation (DTC) and Damen Services continue to grow in relevancy. Damen Schelde Naval Shipbuilding, with the help of DTC, has been notably successful in the modular construction of the POLA vessel for Mexico, enabling the Mexican Navy to meet their local content requirements and facilitating the construction of a complex naval vessel in record time.

 

Q. This magazine has a focus on sustainability, a very topical subject right now. What do you think sustainability means to Damen and to our industry?

Rene_Berkvens_Chief_Executive_Officer_DSGr RENÉ: Sustainability is high on society’s agenda and also on our agenda. We’ve been working towards increased sustainability for quite some time. We were early to the game with green innovations such as hybrid tugs, the Ecoliner and research programmes into subjects such as fuel efficiency, hydrodynamics, command & control and fuel monitoring.
Going forwards, digitalisation – with technologies such as remote monitoring offering closer scrutiny on efficient sailing and fuel savings – will help make our products more sustainable over their entire lifecycle. Some of these vessels will be in operation for 30 years or more so it’s important that they are able to run efficiently and cleanly throughout this time. It is absolutely crucial that sustainable projects go hand in hand with profitability – for us and our clients. No business is sustainable if it is not profitable.
Jan_Wim_Dekker_Chief_Operations_Officer JAN-WIM: As well as supplying sustainable solutions to our products, we are looking closely at our processes also. We are looking at segregating waste for recycling and incorporating solar panels to our production facilities. In Galați we have an electricity reduction programme in the production processes. We are constantly analysing our approach to sustainability and, as with this magazine, aligning it with the UN Sustainable Development Goals.
Arnout_Damen_Chief_Commercial_Officer_DSGr ARNOUT: We see a lot of people coming out of universities with a desire to work for sustainable companies. This is good for us as, with our close involvement in sustainability, they are attracted to us. We have a clearly defined goal at Damen of improving quality at the same time as reducing costs. Incorporating added sustainability goes hand in hand with this; more efficient production leads to cleaner processes and, thereby, lower costs for innovative, more sustainable products.
Tom_Touber_CFO_ad-interim TOM: At Amels in Vlissingen (where Tom has been based), we have taken the approach that ‘sustainability begins at home’. We’ve supported beach-cleaning activities on a regular basis, sponsored local marine wildlife sanctuaries and installed a large, floating Seabin to collect rubbish from the harbour, for example.

 

Q. With the commencement of projects of increased complexity, for example at Damen Shipyards Mangalia, Damen has spoken of more ‘engineered-to-order’ projects. Does this represent a break with tradition and a move away from the standardised shipbuilding philosophy?

Rene_Berkvens_Chief_Executive_Officer_DSGr RENÉ: I think we need to make a distinction between customise to order and engineer to order. It’s a similar process to what we’ve done already with our tugs portfolio, where multiple vessel types all draw on the same systems and benefit from interchangeability, stock spare parts, reduced warranty costs and higher uptime as a result.
Arnout_Damen_Chief_Commercial_Officer_DSGr ARNOUT: We still believe in series building and are still committed to standardisation. Building in series results in a more reliable product. It’s true that, with Mangalia, we are ready to build engineered to order ships, but we will build them using standard components and equipment.
Jan_Wim_Dekker_Chief_Operations_Officer JAN-WIM: We will use modularisation to deliver engineered to order vessels, wherever possible using standard equipment. This will facilitate a significant reduction in lead times. With increasing complexity and custom vessels comes a need for increased focus on processes. The difference with these projects is that project management and risk management become much more important than they are in the more predictable environment of a production line. Ultimately, we are talking about custom vessels of standardized platforms. Our role is not only that of shipbuilder, but of integrator. To fulfill this role we will continue to cultivate close relationships with our clients and their clients, our suppliers and their suppliers and with universities and research institutes. We are keen to collaborate to optimise the results of standardisation.
Tom_Touber_CFO_ad-interim TOM: It’s in Damen’s DNA to build in series. It’s a philosophy that’s proven remarkably versatile in many markets. What we need to do going forwards, to maximise the efficiency of the model, is to further increase the collaboration between the various business units and the commercial part of the operation within the group. By paying close attention to the markets, we can make sure that our stock levels align with market needs.

 

Dear reader, please note that position titles and job functions of Damen employees contributing to these articles is subject to change and description in this archive may, therefore become dated.

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