The vision of Pieter van Oord
A turnover of € 2.104 billion in 2014, an increase of 28 per cent compared to 2013 and the first time exceeding € 2 billion, a net profit of € 119 million in 2014 and a record-breaking order book of € 3.222 billion, an increase of 66 per cent compared to 2013. Just some key figures of Dutch family business Van Oord. Maritime Holland spoke to the company’s CEO, Pieter van Oord.
Pieter van Oord has been with the 147-year-old company since 1994, in 2008 he was appointed CEO. He is the fourth generation, with the fifth generation already working for the company. Van Oord is an international contractor specialising in dredging, marine engineering and offshore projects and the company can be divided into three main activities: dredging, for which it most known for, offshore oil and gas, started in the 1970s and offshore wind, added to the portfolio in 2002. Dredging accounts for about 60 per cent of Van Oord’s business, offshore oil, gas and wind together for the other 40 per cent. The company is headquartered in Rotterdam, the Netherlands and has approximately 30 branch offices worldwide. In total, Van Oord employs about 5,000 FTEs, operating in more than 50 countries around the world.
“I was brought up in this company”, Van Oord says, “and it has always played an important role in my life. I regularly visit our vessels and projects. To be able to do this job, you need to have affinity with water and vessels. It is a great industry.”
When asked why Van Oord chose economics instead of a maritime study, he answers: “I thought about that, but in the end I chose economics, just like my father. I don’t think being an economist in a technical company is an obstacle, as at a university you only learn a small part of what you learn in the business world. Learning is a continuous process, in that respect you should be curious, no matter what kind of study you did. When you have an open mind and dare to ask, you can come a long way. We are a true engineering company, we employ a lot of engineers and are therefore one of the best customers of the Dutch technical universities. I want to stress the importance of technical and nautical education. We need sufficient university and higher vocational education graduates for our company. Choose a technical study, then you know for sure that you will find a job.”
Van Oord is headquartered in the Netherlands. Did Van Oord ever consider moving the company’s headquarters abroad? “We employ about 5,000 people, of which half is Dutch. We are a Dutch company regarding the culture despite our international field of activity, most management positions are filled by Dutchmen. This is important as this ensures a good understanding between employees, a communication in nods and winks and common sets of values, which makes working together pleasant. The Dutch culture is the basis and characterised by being direct, entrepreneurial and internationally oriented. Most of our employees want to work or have worked abroad. I am proud to say that most of our vessels sail the Dutch flag, surely the big units, and most of our vessels are operated by a Dutch crew. We are the biggest ship owning company in the Netherlands with regard to Dutch crew, we employ about 800 Dutch seafarers and are a frequent customer of the maritime academies.”
Investing in vessels
Van Oord’s more than 100 different vessels are the heart of the company, according to Van Oord. Recently, the company’s flexible fallpipe vessel Stornes was modified at Damen Shiprepair Rotterdam to allow the vessel to operate at greater water depths in the future. The 175 metre long, 26.24 metre wide DP2 vessel is used for subsea rock installation to protect pipelines and since her delivery in 2011, she has mostly been installing rocks to water depths up to 800 metres.
Van Oord: “We regularly have modifications, but this one was a very special one, required by the market. After the refit, the vessel is now suitable for rock-dumping at up to 1,500 metres water depth with an accuracy of ten centimetres, the only vessel in the world that can do that. We developed a system in-house with a halfway hang-off, which means that the fall pipe is hung up in two independent parts, which makes that the forces on the fallpipe are divided on two parts. This innovation is unique and gives us a competitive advantage.“ Stornes will continue to work on contracts on the Norwegian continental plat.
According to Van Oord’s strategic plan the company will invest more than one billion Euros to build new vessels and to modernise and replace its fleet between 2013-2018. Currently Van Oord has fallpipe vessel Bravenes under construction at Sinopacific Shipbuilding Group Shanghai, scheduled for delivery in 2016. Bravenes will feature Ulstein’s advanced X-bow design and be equipped with a completely automated fall pipe that Van Oord developed in-house. Next to that, two trailing suction hopper dredgers are on order at LaNaval Shipyard in Spain to be delivered in 2017. All three vessels are replacement investments.
Why not building them in the Netherlands?
Van Oord: “We tendered internationally for the trailing suction hopper dredgers, that we designed ourselves in cooperation with Dutch C-Job, and the Spanish yard turned out to be the party with the best price-quality offer. Although the dredgers are being built in Spain, they have a clear Dutch touch as Royal IHC provided the dredging installation, and dozens of other Dutch suppliers are involved.”
“Being a family business nowadays is something distinctive”, says Van Oord. “A general advantage of a family business is the long-term vision and focus. Van Oord is being managed for the next generation, not for the next quarterly figures. However, being a family company has also its disadvantages: we can’t collect money at the stock exchange, sometimes that can be useful. Also the succession between family members can be vulnerable. Van Oord is a limited liability company, a governance structure, the members of the board of directors are appointed by the supervisory board and only one of the four is a Van Oord family member. How do you keep a family business a family business after 150 years? There are a lot of things you can do right, employ competent family members and train them to become potential successors, which is time consuming though. We have almost 100 shareholders, some of them are always willing to work in the company. Another advantage of a family business is that CEOs of family businesses are staying longer in their function than CEOs of listed companies.”
Room for innovations
Van Oord: “A dilemma of big companies often is the fact that innovating is difficult. You need to create a culture that shows there is enough room to innovate, employees should not feel restrained to work on innovations. In a big enterprise, that is not easy, because it comprises of structure and arrangements. We want to offer our people the freedom to be able to work out good ideas. Our company culture allows for a lot of entrepreneurial blood on all levels. Employees don’t feel inhibited to work out an idea into something concrete. This company culture has contributed to a lot of innovations.”
He continues: “To give an example: the cable laying system on board of Nexus was invented in-house. This system is unique and very innovative, we currently achieve new records regarding cable laying. You need to give your employees space to invent something. Own initiative is being stimulated, we use our network and the maritime cluster, which is very active in the Netherlands, we cooperate with engineering companies that create equipment that define the success. Our offshore transport and installation vessel Aeolus recently completed the installation of 43 wind foundations and turbines on the Dutch Eneco Luchterduinen offshore wind farm. The innovative monopole gripper system which installed the foundation has shown a record regarding production and installation. She is an excellent example of our innovative strength.”
When asked about the trends in the offshore industry in the future, Van Oord comments: “In offshore oil and gas, I see a short-term dip, but on the long term, I am cautiously optimistic about the market. The energy demand is still growing and existing oil fields are quickly running out. This means new fields will have to be developed. The Dutch oil and gas cluster is very successful worldwide, think of companies like Heerema or Allseas, and there are lots of opportunities for Dutch companies. I very much enjoy it to go out as chairman of IRO and promote cooperation. When looking at offshore wind, it still is a growth market. The past ten years showed a spectacular growth, but there is a problem: the cost price per kilowatt is still too high and is in need of subsidy to be able to compete with gas and coal. This makes offshore wind a product relying on government support, it is up to them how big the market will become.”
Last but not least dredging: “Dredging depends on the economical growth worldwide. After the crisis of 2009 we notice that the rates of growth do not catch up with the figures of the past decennium. In the 1990s and the first decennium of 2000 dredging grew explosively. That kind of growth did not return after 2008, the past five years the dredging market steadily grew. If there will be an extensive growth in the future is looking into a crystal ball.”
Late June Van Oord secured a e 100 million contract to deliver the new waterfront of Deira Islands in Dubai, that were constructed by Van Oord between 2005 and 2008.
Van Oord’s strategy is strengthening its position in the current sectors. Van Oord: “Started in 2008, 2009 was the biggest crisis year. Van Oord did suffer from it, because a major client in Dubai suspended the Palm Deira contract, our largest project ever, with immediate effect. On the other side, we have always shown a healthy profit, no losses. Nowadays, we do feel the low oil price, contractors from small to big feel it as oil companies invest on average 25 per cent less in 2015. Luckily we have three activities, which makes the company a bit more stable in situations where one of the activities is a little bit less successful. We used to be a dredging contractor and managed to become a company with a broader scope without acquisitions. We started new activities, like pipelaying in shallow waters and constructing offshore wind farms. This diversification makes that we do not depend on only one market segment, but have a broader pallet of activities on offer, we have become a maritime contractor instead of only being a dredging company and this is also my vision for the future. The theme of our company is being at sea and staying at sea, I do not see us acquire a Dutch building company, that does not fit into our company culture.”
According to Van Oord, the company is in the middle of sustainability: “Nothing is more sustainable than being a company for 147 years. What I see as a challenge is preventing the sea level from rising, we need to drastically reduce the emission of CO2 by contributing to renewable energy. We have grown into the largest offshore wind contractor in the Netherlands and offshore wind is sustainable, the Dutch Energy Transition Agreement states in 2020, 14 per cent of all energy should be renewable, in 2023 even 16 per cent. We contribute to that goal. Next to that we have a fleet of more than 100 vessels and we try to be as energy efficient as possible, using as less fuel as possible to achieve the same production as in the past.” Making sustainability a priority paid off: Van Oord’s CO2 footprint in 2014 was reduced by ten per cent compared to 2010, and two-thirds of the self-propelled vessels have been awarded International Energy Efficiency Certificates.
Van Oord’s focus is not only limited to sustainable energy, however. The company also deals with its effects on the environment and therefore various Guards were developed. One of them is the ReefGuard, a mobile coral breeding facility where new coral is cultivated to be planted to help rehabilitate degraded natural coral reefs. Another initiative is the FaunaGuard, a system for using safe levels of underwater noise to temporarily drive away marine mammals and fish from active construction zones. Sounds are emitted from underwater speakers as soon as work commences to keep the fauna in the area out of the active zone. The system was tested in the Rotterdam Zoo Blijdorp and is now used in reality during the construction of the Dutch Gemini offshore wind farm.
Gail van den Hanenberg