Realism sets international strategy at Croon Elektrotechniek

Electrical engineering and installation company Croon aims at becoming one of the world’s leading system integrators. Strategy is to diversify in regions of activity and benefit the export value of Dutch know-how.

‘‘The Dutch maritime industry will always maintain a position in the world of shipping”, is Brian Faerber’s belief. The sales manager marine & offshore at Croon Elektrotechniek recognises that the home market in the Netherlands remains important, as the yards here build advanced vessels that incorporate a lot of cleverly linked systems. Being part of this local branch in the forefront of technological development is important for a knowledge-driven organisation like Croon. ”The industry is very efficient here”, Faerber adds. ”We have a robust supply chain. Companies throughout the chain show great dedication to getting the job done, also if this means participating and sharing knowledge with potential competitors. Still, even if we only concentrate on Dutch-built vessels – which we do not – we need to be active internationally. The ships go round the world’s oceans. They are not brought to the Netherlands for repairs. Our job is to install the electrical installation and infrastructure aboard, as well as to link the ship’s systems to provide an efficiently controlled and operated vessel. We take responsibility for the functioning of the system and provide service. That is why we are present in ports all around the world.”

Reputation

Faerber expresses his company’s ambition to perform at the top of the international maritime industry as a system integrator, collaborating with clients around the world. ‘‘We are not quite at the position we aim for. Our purpose is to build long-term relations with ship owners for whom we act as coordinator of the ship’s installations. The way we prefer to work is to bring together all the components, design the infrastructure and link all the onboard systems. Then we conduct the sea trials and take responsibility for performance and maintenance of the

We want to operate at full potential

integrated systems. We seek to establish more client relations in which we can deploy this full potential. Nowadays, we also often act as one of the suppliers in the installation process. This is a job we like to do and will continue to be doing. At the same time, long-term international strategy is to establish a reputation as leading system integrator. This means opening offices and service points in other countries. Being actively present and actually operating as local company in countries around the world is A becoming an evermore important part of our business plan.”

Market overview

Plans to start activities in the main shipbuilding m areas of the world impose an orientation of 2 the market worldwide. In South Korea, the shipbuilding industry is rapidly developing towards levels of complexity in the kind of ships they are able to build, that are comparable to the Netherlands. Like other Dutch suppliers, Croon would like to play their part in that. Also in Japan, shipbuilding remains strong and operates at the forefront. Faerber reveals some of the considerations before Croon would decide to target a local or regional market: ”We need to ask ourselves: how is the supply chain organised in the countries we aim to be present in? What companies are active in electrical installation and system integration over there? Can we add
some new knowledge and functionality into that industry and be competitive – or will we have to compete local businesses in their own area of expertise? We are confident Croon can always contribute to further efficiency of the system and its installation, but it is hard to compete in a foreign country against companies that already have lasting relations with yards and ship owners.” In countries where the Dutch expertise offers a giant leap forward, the need for Croon’s know-how is the biggest and the company’s contribution to maritime industry development will manifest most positive. ”I think our chances are best in the BRIC countries”, Faerber concludes.

Competition

The paths of this international strategy are to some extent directed by Croon’s clients. Faerber indicates the cooperation with a major Dutch ship owner and logistics company, for which Croon has done installation work during refits and new builds. Through their relationship with this shipping company, Croon was able to collaborate with local firms from China. When another relation of the Dutch ship owner was looking for an electrical installation specialist, Croon was introduced. Nowadays, the company is working to acquire jobs more regularly and more frequently in China, supported by the references from their first direct Chinese client. In other cases, clients operate so internationally that Croon will need to follow them to maintain the relationship. ”Will Subsea 7 start building in Brazil?” Faerber exemplifies. ”We will be involved in the construction of a flexible pipe layer in Brazil. Some of our people from the Netherlands will go there for a couple of years. Of course, we will do a large part of the job with Brazilian workforce. Still, Dutch know-how is needed. The local shipbuilding industry is not equipped to build such complex vessels, yet. Therefore, we hope to get a spin-off from this project. We can be part of organising the supply-chain for advanced shipbuilding in Brazil.”

”The trick to be accepted is to employ Dutch knowledge while operating as a Brazilian company”, Faerber reflects on the conditions governments set for international companies to operate. ”To some extent, the Brazilian government needs to overcome protectionism. On the one hand, protectionist regulations may help develop an industry. But in the long run, it will set back the competitiveness of an industry. Shielded by the regulations demanding local content, an industry will maintain a local position. But as they do not need to compete in the open international market, the companies will not be able to operate at the forefront of technological development. This principle manifests clearly in the United States: shielded by the Jones Act, American yards maintain a flow of orders. Internationally, they are no longer able to compete as they are no longer triggered to constantly optimise their skills and services in an open competition. With the 60% up to 70% demand of local content in every project, the question remains if the Brazilian shipbuilding industry will still exist after 20 years. Once the Petrobras orders are finished, what will remain?”

Front runner

Accepting the given circumstances in international business, however, Croon will continue to pursue its goal of becoming a worldwide acknowledged system integrator. “It is too risky on the long term to have only the Dutch maritime industry as a basis for a business. Even in the niche of highly complex vessels, the Netherlands is loosing market share. To uphold a critical mass in order to survive as a company, our strategy has been to diversify: in regions over the world where we want to be active, as well as in industries we offer our expertise in. Dutch know-how is a strong export quality. I hope the industry and the government will keep investing in that.”

Hans Buitelaar