Arno Bracco Gartner, Energy Division Director, Brunel, Singapore
Arno Bracco Gartner, Energy Division Director of international recruitment agency Brunel, elaborates on APAC’s thriving oil and gas market, pinpointing attractive fiscal, political and cultural factors as the driving force behind the region’s ascent, and explains why expats are increasingly seeking opportunities in Asia.
Two years ago you were appointed Energy Division Director at Brunel. What were the main tasks you were assigned with when you assumed your new position?
I joined Brunel at the start of the rejuvenation of the region, at a time when numerous large international projects were initiated in South East Asia and Singapore.
Currently, the market is driven predominately from Houston and Australia. We had substantial projects streaming from Australia, and from Houston, we had projects such as Shell’s Mars B and Chevron’s Jack and St Malo development in the Gulf of Mexico. Working closely with McDermott, we played a prominent role in the offshore installation of Exxon Mobil’s Kipper Tuna Turrum project. The latter was a tough project but together with our partners, was a challenge we have overcome.
Two years ago everything was geared towards construction, with a considerable amount of it stemming from Korea. Moreover, the Singapore market was below full capacity—the yards were simply not operating at full capacity. Nonetheless, from that point on, our head count has grown significantly and today we are at a record high for the Singapore local market.
Ultimately, there are different ways we can look at Singapore as a market. Some clients will be drawn here because of the sophisticated, domestic engineering capabilities. This is often on a temporary basis, prior to constructing the asset elsewhere. In niche markets such as FPSO conversion, an area where Singapore has built a world-class reputation, there are clients that prefer to construct and adapt their small to mid-size vessels here. Yet, when it comes to building large structures needed for deep-water offshore fields and future floating LNG’s, Singapore’s yards cannot compete with flagship shipbuilding countries, such as South Korea.
Could you expand on the structure of your office in Singapore and given the shift in economic power from west to east, give us an insight into the strategic importance of the APAC region to the company’s global operations?
Our Singapore office is both the operational and financial hub for the entire Asia Pacific region. All the contracting, payroll, mobilization, operational support technicalities are covered by this office.
Globally, there are two trends, with slightly nuanced differences, that must be distinguished. On the one hand, we have flat lining economic markets in Europe and US; on the other hand, we have the oil and gas markets. The two are beating to a slightly different drum.
The Asia Pacific region represents a fundamental part of our business model. Although our oil and gas division is still relatively a fledgling, having been formed in 1996, it has been the strongest region for Brunel globally. Since that date, South East Asia has absorbed a large flow of the oil and gas investment revenue stream.
In 1995 and 1996 the company expanded significantly with the acquisition of six companies: two in the UK, two in Australia, one in the Middle East and one in Singapore – which was our first Asian office. The period between 1998 and 1999 represented a challenging time, with the price of oil plummeting to eight USD a barrel. As such, it was crucial that our new acquisitions became ‘Brunelised’, through consolidation. Our market transformed radically in 2003, when large oil companies started to award global framework agreements. The award of such contracts propelled the ascent of Brunel in this region.
Compared to the same period last year, H1 2013 revenue for Brunel Energy increased by 28 percent. Having recently completed key projects like Kipper Tuna and Domgas, how do you aim at replacing these projects and perpetuate you’re growth?
We have the traditional energy business that provides high level, well qualified staff to oil and gas companies. Our consultancies are contracted in the market because they assist clients in the management of their construction projects. Brunel has approximately 6,500 consultants contracted out in the market, with 5,000 of them belonging to the core energy business and the remaining number associated to our projects division.
To clarify, the 28 percent growth figure relates to the consultancy side of the business. On a global basis, the growth has actually been in single digit figures. On the project side, we have lost a substantial amount of revenue, which was counterbalanced by the Energy division.
Given your experience in the region, what were some of the most notable developments and trends impacting the recruitment and consultancy sectors?
Holistically, I do not think the region has ever been so busy. The variety of projects and clients is immense, and it is an aspect that illustrates the thriving and developing energy ecosystem of the region. Asia has a great reputation for expats. The tax regime, environment and climate are all attractive.
Brunel relies heavily on the flexibility and mobility of our contractors. From the annual statistics we can derive that, at present, about 49 percent of our total workforce is performing work outside their domicile. Furthermore, Asia Pacific has a great reputation for expats: the tax regime, environment and climate are all highly enticing, with Singapore signifying the pinnacle of favorable destinations.
Yet, many countries are imposing stringent labor laws, with the intention of fostering local employment, at the expense of foreign hires. How is that impacting the company?
You have to differentiate between the type of country and project. For instance, as long as Chinese, Malaysian and Singaporean yards are being used for international projects, then the governments are usually a lot more flexible, because the benefits are mutual. In some countries, the behavior changes when the projects are of a domestic nature, the local content aspect becomes more pronounced, particularly in China and Indonesia. Despite change, the environment is better in Singapore. Indeed, the labor laws have not affected most of Brunel’s workforce, as they are on an employment pass.
The industry is constantly changing and oil companies are changing the way they operate by seeking increasingly flexible projects. What can be done better in Singapore to improve the overall business environment?
A decade ago there was a push by the government to develop the ICT, pharmaceutical and financial services. This coincided with a lot of graduates being steered in that direction. As a result of this restructuring, Singapore has lost its edge in the engineering space and many companies have been affected by the expanding talent gap. In this sector, Singapore is rapidly losing ground to Kuala Lumpur.
With over half of the experienced engineers eligible to retire in the next five to ten years, talent shortages in the oil and gas industry is no longer a company challenge, but a business issue. How do you intend to tackle these issues? What strategies are you taking to support your clients in addressing labor shortages?
This is a topic I have given many lectures on, particularly in 2004-2006 when it was a very hot project. Contrary to my predictions, the market did not suffer as expected. Nevertheless, this is still a topical subject. Many oil companies who want to realize projects have been thwarted by a lack of resources, which ultimately has a knock-on impact on us, as we are reliant on project activity.
Currently, I am not as nervous on this topic as I was eight years ago, and this is partly because of profound technology changes. We have adapted internally by investing in new IT systems and building a global recruitment facility out of Manchester. When clients ask for our help, we can still deliver effectively. Yet, it is a subject that will increasingly shape and impact our long-term strategy.
In terms of recruitment we have seen the rise and fall of India, though it is still a market where the level of English spoken is relatively higher than other potential areas. Russia is another country we have looked at, but since the Russian domestic market is booming, there is less opportunity. Naturally China is a market of vast potential but there are language and cultural hurdles to overcome.
What differentiates Brunel from its competitors?
In 2010, Brunel was awarded the Customer Service Excellence award by the British Chamber of Commerce. This was not a goal or achievement that we purposely set out to attain; rather, two independent clients suggested Brunel to register for the competition. This was a symbolic award, which stamped Brunel as a company of quality. To get the award was the ultimate testament of recognition from our clients.
Brunel does not build or construct anything. We are a company that is all about people—it is this facet that underlines the true value of our company. Moreover, clients want to collaborate and work with Brunel because they know we treat compliance and safety extremely importantly. Maintaining high standards in these areas forms a central part of our business model, particularly because they are aspects of the industry that are taken very seriously.
Furthermore, to maintain our competitive advantage, we are continuously investing in innovative systems. We know it is not easy to become the biggest company in a specific area in the world. Yet, we all know the real challenge is staying ahead of the pack. To maintain our position, we have to keep evolving. Fortunately, the company is driven by a CEO who is driven by perfection, which that can only help the company’s upward trajectory.
If we were to return to you in five years’ time, what would you have liked to have achieved?
For four out of eight countries in Asia, Brunel is the company of choice. We aim to be the agency of choice for all our clients. There are numerous clients who have recognized our value and made long-term commitments to Brunel. Moreover, we have clients on a project-by-project basis, aiming for the lowest price. We try to convince those clients that there is a relationship between price and quality. The more we differentiate ourselves through quality, from our peers, the easier it is to explain the price premium.
The industry in this region has perhaps reached a glass ceiling, as it is approaching the peak of activity and volume. Although, there are untapped markets, in particular: Cambodia, Indonesia, Myanmar, Vietnam and China. Yet, I do not know whether in five years’ time we would have experienced a higher head count in Singapore because it is a glass ceiling market. Ultimately, over the next five years, you will see Brunel building a footprint in new frontiers and doubling in size. Asia Pacific remains at the heart of our growth.