It’s been an interesting twelve months in the shipbuilding industry. Sustained low oil prices continue to provide a challenge in some markets, whilst offering stimulation to others.
Against this dynamic backdrop, Damen’s Executive Board plans for the future, looking to innovation and structural optimisation to maintain the group’s leading position. Here, Chief Executive Officer René Berkvens, Chief Commercial Officer Arnout Damen, Chief Financial Officer Frank Eggink and Chief Products Officer Jan-Wim Dekker give us their thoughts on the past, present and future of Damen.
Q. The last time Damen’s Executive Board reviewed the year for the Damen Magazine it was clear that the industry was facing some challenges. We also discussed that Damen’s multi-market penetration would help it weather the storm. How has this played out between then and now?
JAN-WIM: It’s been challenging. Both 2017 and 2018 are transitional years – both from a market perspective and an operational perspective. The markets have largely remained the same – or are maybe even a little more difficult, certainly on the shiprepair and conversion side of things.
ARNOUT: That’s correct, though in newbuild we do see a slight increase in demand for small crew boats, based on a slight upturn in exploration activity. There is not yet an increase in production, though I’d say operations in oil and gas are beyond the lowest point now. However, it will still be some time before this translates into significantly renewed activity for the shipbuilding industry.
RENÉ: Despite difficulties in some areas, a number of markets have proven to be very stable over this period. Defence & security and yachting have been very supportive to the whole group and this certainly looks set to continue for the coming years.
FRANK: There is a relationship with the low oil price and the renewal of activity in other sectors. Whilst things have been difficult in offshore, we have meanwhile been exploring new avenues and encouraging existing product market combinations.
Q. Can you give some examples of the avenues – both new and existing – that you refer to?
ARNOUT: The renewables industry looks promising – the amount of wind farms to be installed will be growing. The growth to at least 10MW turbines will definitely lead to some heavy lift ships and some larger jackups than are on the market now. You can also expect to see movement towards offshore renewables in Asia and North America.
FRANK: This year we have announced our move into the cruise market. There are currently 26 million people taking cruises each year and the cruise sector is growing fast in established and emerging markets. Plus, we have seen the arrival of a new branch – the expedition cruise, taking passengers to more adventurous destinations. Production capacity is more or less fully booked and cruise operators are looking for builders – especially those that have a strong balance sheet – who can deliver on time. We have built up a team and are now ready to take orders.
JAN-WIM: The cruise market is something we have been looking at for a number of years already – we already had the ideal yard for it. The idea has been given fresh impetus, not only by the current economic situation, but also by the development of the Damen Shipyards Group. For example, Denmarkbased naval architect KNUD E. HANSEN is now a part of the group. KNUD E. HANSEN is internationally renowned for ground-breaking passenger vessel designs.
Q. If the above covers the transition from the market perspective, what can we expect to see from the operational transition?
JAN-WIM: The aim of this is to create an organisation that is ready for the next step; building the future to support the next wave when the opportunity arises.
RENÉ: We will see a definite improvement in ship repair activity, based on the reorganisational steps we have taken already. For example, bringing the largest repair yard in the region (Damen Verolme) into the group and then carrying out a further consolidation of our repair activities. We expect that to lead to positive results starting this year.
ARNOUT: You will also see synergies optimised between the different companies in the Damen Shipyards Group. This, combined with investment in new hardware and software, will lead to shorter lead times and an increase of services to support our clients through the entire lifecycle of their ships.
FRANK: We want to move closer to our customers, in part through the development of a global network of Service Hubs. Following our successful start-up, for example in Australia, Nigeria, Russia, Sharjah and South Africa, we want to go wherever there is a concentration of Damen ships to be optimally positioned to provide lifecycle support to our clients.
Q. The magazine this year focuses on maritime innovation. We’ve already seen some exciting examples over the past few months, including Damen’s involvement in the first 3D printed ship’s propeller and the increasing use of hardware in the loop. How important is innovation and technological development for Damen and can you offer any examples of projects in the pipeline?
JAN-WIM: Digital development will offer us the chance to enhance our production capability and to further increase our cost efficiency. It will give us new tools and opportunities to further enhance our customer value offering. This provides our organisation with a renewed sense of energy as we pursue the chance to develop our offering to the customer with a vengeance.
RENÉ: For example, we are working on a project called the Gateway. It is a black box that collects data from the ship. Critical data can be sent by satellite for speed and less critical information by Wi-Fi. It’s a form of remote monitoring. It’s very simple, but it gives the customer a lot of helpful data, which we can help in analysing in order to ensure optimal performance and maximum uptime.
FRANK: We are investing heavily in innovation at Damen. The work we are doing is truly ground-breaking and it’s making Damen an even more exciting place to work than previously. There’s an atmosphere of potential and expectation and our plans for the future include investing in the development of specialist skills. It’s not only new products and solutions that will arise from our work on innovation, but an entirely new type of career path and I expect this will attract some very talented people to Damen.
ARNOUT: Innovation in our industry enhances our capability to work together more strategically with our valued partners in the chain, to align our products and services better with our customer needs, As an example, this includes increased lease and financing options.
Q. What will be your personal focus for the coming year?
FRANK: I will be looking at the further enhancement of our suite of financing options for customers, including for those based in areas we haven’t previously covered, such as
China. I will also be experimenting with data analytics.
RENÉ: I will be pushing for all improvement initiatives to contribute to the success of Damen and, in particular, help us to restore healthy margins that will allow us to invest in the group’s future.
ARNOUT: I will be intensifying the dialogue with customers in order to develop our understanding of what they need to stay relevant. A big part of this will be looking at ways we can work together with clients as well as with suppliers to encourage more sustainability in the industry.
JAN-WIM: Shipbuilding will always be a competitive market. In order to maintain competitiveness I will continue to improve quality and reduce cost by means of lean shipbuilding and employment of robots in production. I will also continue our long-term cooperations with suppliers and partners as well as focus on digital innovation in products and production.