Striving for resilience
Given the current downturn, Damen is relatively well positioned to weather the storm through its diversified portfolio, strong balance sheet, ability to adapt production capacity to demand, conservative financial policies and innovative Research & Development programmes. The Executive Board explains what has been keeping the company busy in the past year and what its plans for the future are.
Q. Looking back on 2015, how did Damen perform given the challenges in the market?
René Berkvens, Chief Executive Officer: “Despite the fact that certain sectors of the market are struggling and that we are in a highly competitive arena, we are pleased to say that Damen has managed to achieve its financial targets of 2015. Though I should stress it has not been easy – everyone has worked very hard to reach these goals.”
“We have successfully delivered 180 vessels, with tugs, high speed craft and workboats our star performers. Additionally, we have completed over 1,500 repair, refit and conversion jobs, including work on jack-up platforms and large cruise vessels. Our strenuous efforts enabled us to realise a turnover of EUR 2.1 billion.”
development into production is very rewarding. Also, we saw a strong growth in Offshore Wind and the Americas.
Arnout Damen, Chief Commercial Officer: “Damen continues to prosper despite the current economic headwinds. We are very pleased to see clients returning to us for new vessels, with quality and reliability their top priorities. Our ability to offer very short delivery times also continues to be valued by customers both existing and new.”
Q. What are your expectations for 2016 as we continue to see historically low oil prices?
Arnout: “The offshore sector particularly faces many challenges, with an overriding need for lower costs. Therefore, we are moving quickly to work with owners and operators to achieve this objective, seeking to gain insights into their needs, while deepening our understanding of their key drivers and how they work with their own customers and suppliers.”
Frank Eggink, Chief Financial Officer: “As mentioned, 2015 was a satisfactory year for Damen. The 180 vessels represent an all-time high and this enabled us to meet our projected financial targets. Production value – taking into account all the operations of the Group – was also at a record high. This puts Damen in a strong position for 2016, with the company in robust financial shape thanks to its strong balance sheet and conservative policies. Given the issues facing the maritime industry, this is a good situation. The low oil and commodity prices have affected more than just the offshore sector, for example government budgets from oil producing nations, resulting in reduced demand for vessel types that are typically bought by the public sector, such as ferries and patrol boats.”
Q. Can you outline why you think Damen is able to survive when perhaps other yards are struggling to keep afloat?
Jan-Wim Dekker, Chief Products Officer: “In a traditional industry like shipbuilding it’s not the biggest, nor the smartest organisation that will survive, it’s the organisation that will be most adaptive to changing circumstances. So, to enable us to adapt to the wishes of our customers and environmental developments, we have to refocus our organisation once in a while and increase our agility. We have taken the next step this year by means of establishing four customer-focused business units, two concentrating on standardised vessels and two on customised vessels. Each of these business units will operate as seamless production chains, of which the different parts will work closely together – Design & Proposal, Engineering, Purchasing, Production and of course, the yards.”
“Because of this we can decide what vessels to develop and how to build them in the best way. Working together in these ‘chains’ saves time and decreases production errors. Additionally, standardizing and digitising all the elements in these production chains results in more time, energy and capacity to invest in customisation and innovation.”
Frank: “In 2016 Damen anticipates sustained weak market conditions which will probably result in a reduced number of deliveries. However, so far the sales of workboats, tugs, patrol vessels and yachts have held up well. In addition, with Damen serving customers in a range of different product market combinations, the portfolio approach contributes to greater resilience against market volatility.”
Arnout: “Indeed, some sectors prove to be more resilient than others. Amels, our superyacht brand, continues to prosper. The yard has a solid orderbook and its recent launch of the SeaXplorer concept – a luxury yacht able to sail in extreme conditions – has met with widespread acclaim. Also, we count ourselves lucky that second-hand Damen vessels are sought after for their quality and reliability. Hence, Damen Trading, which handles their sales, currently enjoys a steady business.”
“For Damen, the client is always number one. We continue to find ways to anticipate their needs and lighten their loads, such as our first-flight spare parts service. Our focus is on reduced Total Cost of Ownership, low maintenance, good second-hand value and fuel efficiency. Furthermore, and this is important, we try to solve a vessel’s problems when they arise – and these things will happen with a few thousand Damen designs sailing the oceans. That’s why we also have a policy of offering lifetime support services.”
Despite the fact that certain markets are struggling, many of our activities remain relatively stable
Q. Standardisation has always been at the core of the Damen philosophy and it is just as important now isn’t it?
Jan-Wim: “Absolutely and we are planning to extend this standardisation strategy even more. Within the near future we will templatise all our standardised serial ships, meaning that we have digitised every step of our shipbuilding process using our ERP system as the backbone.”
“Not only will we be creating a more strategic stock of ships that have already proven their value and effectiveness, but at the same time, we’ll also produce new designs in which we believe and of which we expect stock to become useful in the near future. It is a risk, of course, but one we’re willing to take.”
Q. Does innovation continue to be at the heart of Damen?
Jan-Wim: “The spirit to innovate permeates the entire Damen organisation. From the Sea Axe hull shape to building on site via Damen Technical Cooperation, we are always looking for ways to give our customers the products that deliver the performance they need.”
Arnout: “Yes, innovation remains at the core of the Damen ethos.
We continue to invest in Research & Development that aims to anticipate and meet the needs of our customers. Extremely shallow draught workboats drawing just 120 to 150 cm is one area on which we are working. Another is composite waterbuses. We are also extending our range of composite high-speed vessels, looking to add new models of pilot boats, fast crew suppliers and interceptors.
In addition, we now have licensed nine yards in the USA to locally build Damen designed ships.”
Frank: “Perhaps I can add to this that we demonstrate our commitment to a cleaner and more sustainable environment not just by how we manage our business, but also through the products that we design and build. Recent innovative environmental projects and development programmes include low emissions hybrid propulsion systems using both conventional and alternative fuels. Also both Ballast Water Treatment systems and the design and build of a Razor Shell Dredger, help, in very different ways, to reduce or prevent the spread of invasive species outside their natural environments.”
Q.Are there any other new markets or products that you can tell readers about?
Arnout: “Harbour and Voyage Repair is one area in which we are stepping up. We are also targeting larger vessels for repair and maintenance. With our network of European ship repair yards, we have the facilities to take on the largest vessels.“
“Aquaculture and fisheries is another sector where we are developing new designs and we have set up a Workboats department to sharpen our focus in this area. Despite the current downturn we are also putting more resources into cargo vessels in anticipation of the market recovering. The list is long, for example, we are also extending our range of RHIBs for commercial and naval applications, working on a new Utility Vessel, new Reverse Stern Drive tugs designs and a 35 m Shoalbuster.”
Q. It seems that Damen continues to improve its transparency in its role as ‘corporate citizen’. How can we actually notice this?
Frank: “For a number of years now, the Dutch government, induced by new and expanding European policies on transparency and good governance, schedules the annual Transparency Benchmark for Dutch companies. In 2015 Damen participated for the first time in this benchmark in response to societal expectations. This year Damen will again take part in the benchmark. This yea r we will aim for a higher position in the overall ranking, partly due to the strengthening of our compliance systems and procedures.
For Damen, the client is always number one. We continue to find ways to anticipate their needs
Q. As always Damen is looking ahead, thinking longer term. What are your thoughts on the future?
Jan-Wim: “Digitising our standardised serial ships and linking all parts of the production chain will make our organisation more customer oriented. Frankly speaking, we can only do this because of the intimate feedback loop we have created all these years with our customers. Together with our customers, engineers and sales departments we will make revised, updated concepts that incorporate the market’s wishes, resulting in efficient shipbuilding. Secondly, specific yards will specialise in building a specific range of vessels, enabling them to excel in, for example, building an ASD 2810.”
The portfolio approach contributes to greater resilience against market volatility.
René: “As we know, the shipbuilding world is facing a severe oversupply of yard capacity, especially in the Far East where many large shipbuilders are hit. European shipbuilders too are feeling the impact. For example, the market for cargo vessels – both inland and seagoing – has not yet recovered.”
“However, having said that, we will continue to broaden our range of activities, explore new markets and dig deeper into existing niches. To stay close to our customers, we will further expand our commercial and service support presence. Damen now has dedicated Service Hubs in Nigeria, Australia, Curaçao, the United Arab Emirates, Canada and South Africa. Other hubs are due to be established.”
Frank: “As said before, we are confident that through a combination of conservative financial policies and a strategy based on diversification, standardisation, innovation and accountability, Damen is well positioned to continue to thrive through the current period of economic turbulence.”
René: “And while, in the shorter term, we are not too optimistic when considering the oil & gas and cargo vessel industries, our many other activities remain relatively stable. We are confident and we will continue to innovate and develop our products so we can serve our customers as efficiently as possible.”