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IHC

Asia Pacific – Francis Tang, Managing Director – Singapore

26.08.2014 / Energyboardroom

Francis Tang, managing director of IHC Asia Pacific speaks about his company’s place in Singapore. Surrounded by potential clients, the business here focuses on offering its traditional dredging services as well as offshore support – a newer development for the company- including providing such assets as diving support vessels to clients. The company has also recently initiated the acquisition of a number of new pipelaying assets.

 

What were the objectives you were assigned when you arrived in your current position for Royal IHC?

I arrived in February 2014, and was tasked with bolstering the company’s focus on the offshore business and to deliver growth in this sector. At the same time, I had responsibilities as director of product development- developing a new series of products (vessels) for IHC Offshore. These responsibilities involved working towards the goals of my PMC, or Product Market Combination group.

Some of these products under development have included your Packhorse and Packhorse Maxi vessels. Are vessels the key area of development for Royal IHC, and where else is the business seeking for extend its tangible capabilities?

Royal IHC (IHC) is particularly proud of the pipelaying vessels it has recently contracted- 10 which will be working for Petrobras in Brazil. Each pipelay vessel is a high value asset and we are particularly pleased in which the whole vessel’s systems work seamlessly together- from the dynamic positioning system to the pipe handling and laying process. The first two have already been delivered ahead of schedule.

What the company considers will become a key differentiator is that the group owns a number of subsidiary companies. These subsidiary business units design and fabricate critical mission equipment related to offshore vessels. For example, a diving support vessel is simply a platform (if without the diving system onboard). The diving equipment is in this case, the critical mission equipment  which delivers the ultimate goal; the vessel is just a floating platform without the key equipment working properly. We have our own company – IHC Hytech which produces diving equipment. The ‘hy’ in the name comes from hyperbaric- alluding to this pressure speciality. They produce a range of high quality diving equipment and the integration of companies such as this into our wider operations is one of our key strengths.

The synergies between the companies allow complete parts to be fabricated which work cohesively with the equipment produced across our entire business- standardization between sister companies makes life simpler for ourselves, and for our clients. Overall, our objective is to construct key mission critical equipment and the vessels to house and support those equipment. Having full control over both allows us to integrate the complex mission equipment into the platforms seamlessly and improve the overall performance of the vessels.

In 2010, the business had been looking at acquiring a shipyard in the region, principally to reduce costs. This did not happen- why not, and how is the business managing its cost base now?

The focus changed for the time being, amongst others also due to the fact that so many yards were in distress at that time, to not owning a yard in Asia but towards working with various yards all over the world in Joint Venture type of constructions and collaborations. We are currently building and have been building our products in China, India, Bulgaria, Croatia, Brazil, the USA and many other countries.

Today in Singapore, exists a sales support and product development team. This is a commercial office, which allows us to knock on the doors of the ship owners in the region engaging them early on with our support and services for their operations.

What was the importance of situating the business here in Singapore?

Generally, Singapore represents a city with a high concentration of ship owners- hundreds indeed. In the Tanjong Pagar area, for example, there is a particularly dense collection of these ship owners. The good thing is that although ships are not always built in Singapore, the owners are still here, even if they are placing orders in China for instance. It is very important to talk to the shipowners directly, from the beginning of the procurement process. Receiving second hand information from the shipyards is not good enough, as by then one would already be late in entering the sales process.

Secondly, Singapore has excellent commercial, infrastructure and transportation links. Even if costs can be high, these are significant advantages. IHC has reacted to this by retaining a small, commercial team here in Singapore, managing our costs base but at the same time, increasing our outreach and presence towards our clients so that we can better serve them in this region.

The sales office in Singapore is not IHC’s sole presence here. In Tuas, there is also a servicing workshop (for the dredging industry) which has been here for more than ten years already.

Across the wider region, what are key trends and locations for the business?

The business does have offices –including an engineering office in Malaysia. We have a fabrication workshop capable of engineering huge products in China and a sales office with a similar set up to the one here in Singapore in Beijing, China. This covers dredging (our other speciality) and offshore support vessels. In China, we also have a servicing workshop in Tianjin.

In Singapore, what are the key growth drivers for IHC?

Around ten years back, the workshop here in Singapore was formed, as mentioned above. It is focused on parts provision work and servicing of dredgers. This business was fueled by a large infrastructure boom in Singapore– land reclamation, and dredging being a significant part of this. All the significant dredging players were operating here and when their vessels required servicing, IHC was well placed to provide this service. The workshop remains focused on this market segment, which is a particular strength of Royal IHC- around 70 percent of the world’s (larger and complex) dredgers are built by us. A few years after, we started our specialized offshore tools business providing our equipment to the various offshore engineering companies operating in this region.

More recently however, the decision was taken to diversify the business into the offshore support sector. Diving support vessels were the original route into this area, and when the Singapore office was opened, it was felt that this was a useful concentration for IHC in the region.

Today, our business in Singapore covers offshore and dredging both through selling equipment and vessels, and maintaining existing ones. Specialised offshore equipment and vessels is a particular forte of the business here. One example is our Hydrohammer business which supplies specialized offshore construction tools- such as offshore piling hammers which are sold or rented to the key EPIC contractors in this region.

We are always on the look out for good companies to expand areas where we might be able to leverage further integration of mission critical equipment into our portfolio.

Between 2012 and 2013, global revenue for IHC grew by 90 million euros. What are your own personal ambitions for the company over the next five years?

The competition is and will continue to be there- at the same time IHC has confidence in its strategy and will stick to it. Internationalisation is very important. The company started in Holland, and retains four shipyards there. The business has around 3,000 employees, and the majority of these remain in Holland. We are proud of our strong engineering heritage from Holland but at the same time, we need to grow our outreach and presence to better service our clients around the world. This is one of the reasons I joined IHC- I have worked for a number of multinational companies and I consider that experience highly beneficial which will allow IHC to further its strategy to this end.

 

To read more articles and interviews from Singapore, and to download the latest free report on the country, click here.

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