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Gunnar Haug, Managing Director, Ulstein Asia, Singapore

26.12.2013 / Energyboardroom

Gunnar Haug, Managing Director in Singapore of Norway’s international marine and offshore services company Ulstein, discusses the strategic value of having an exclusively sales and services-focused office in the financial center of Southeast Asia: Singapore

Over the past few years, what has Ulstein Asia’s history in Singapore looked like and what have the organizations key activities centered around?

The present Ulstein has been in Singapore for the past four years, whereas I have been heading the affiliate for the past two years. Prior to my appointment, the company had the ambition of offering technical ship management services to both Ulstein and non-Ulstein clients. However, after observing the market, we came to realize that this was outside our core competence field and decided to restructure the global firm in addition to our international offices. As a result, the Singapore office is now 100 percent dedicated to sales and service activities, relocated from the Bukit Batok industrial estate to a more suitable space in the Science Park II.

Founded in 1917 Ulstein enjoys a long history, initially being involved in the repair of fishing vessels. Gradually, Ulstein subsequently developed into what was probably the largest market player in terms of building and supplying the design and equipment for offshore support vessels worldwide. However, in 1999, Vickers acquired Ulstein Group except the shipbuilding division. A few months later in the same year, Rolls-Royce then acquired Vickers, thereby obtaining the rights to the range of equipment and UT designs. Nevertheless, the acquisition had left the company with some capital, part of which was used to upgrade our shipyard in Norway and invest in the development of new ship designs, most notably the unique X-BOW® hull line, as well as the development of new equipment lines in power and electronics. In this respect, you could say that Ulstein has managed to redevelop itself from the ground up.

Of course, when Ulstein was acquired we were bound by a non-competition clause, which prohibited us from selling our designs to other yards for five years’ time. Since we could only construct our designs in our own yards, we were somewhat restricted in terms of business during that time. In any case, we used our time effectively by developing new designs, which allowed us to hit the ground running once the non-competition clause expired. Since 2006, Ulstein has been rather successful in selling our new designs, both the X-BOW® and other conventional types, to yards and owners across the world, which is what I am here to do.

With two locations in China, how would you rate the strategic importance of your Singaporean presence in relation to its growth and development strategy?

Singapore is of course a highly important market for us, in part, because it is where a majority of the ship owners are. It is also an extremely important hub when it boils down to base activities. In addition to this, Singapore offers an environment that allows business to establish a presence in the country with great ease. Furthermore, it is an easy place to live. If you were not in Singapore, then where else would you be? In my view, if you are not in Singapore, then you should not be in the business at all.

Our presence in Singapore, coupled with our locations in China, composed of a commercial office in Shanghai and a marine equipment manufacturing facility in Ningbo, offers an ideal situation. Essentially, Shanghai focuses on the shipyards in China which is largely viewed as the place to build for obvious cost reasons. That is, unless the ships are of an extremely complex nature, many of the vessels are constructed in China. Nevertheless, through close collaboration with our partner yards in China, we are working towards developing competencies and an overall strategy that embodies Ulstein’s best practices so that we can achieve Norwegian quality vessels, built in China.

In addition to this, the combination of our understanding of what it takes to do ship building projects in China and our inherent competencies, we are also able to lower the overall risk of the project for the client and ensure timely deliveries.

Aside from the innovative designs produced by Ulstein, what would you say is the company’s key differentiating factor?

One thing that certainly sets Ulstein apart is that, unlike many, we have the combination of a shipyard in Norway, which builds turnkey vessels, and offer ship and equipment designs to other yards. From a technology transfer point of view, this provides us with the best possible environment to excel at that. Not many other ship designers can offer the same package of understanding the ship building practice from both a conceptual and practical perspective. Indeed, there are quite a few ship designers that employ naval architects that have hardly laid their eyes on a ship. This limits an architect’s ability to truly understand the challenges that ship builders might encounter when piecing the whole design together.

By contrast, Ulstein is able to overcome this issue by actually engaging in the total shipbuilding project. From the first day that we talk with the client, we discuss not only what their technical requirements are, but also what their actual business case is. Arguably, it is perhaps more important to understand the anticipations of the client, such as the day rates they expect to receive, the type od clients, etc. This allows us to take a holistic view of the business case and work backwards from there to deliver a suitable design than can fit the bill while leveraging the library of technical knowledge and skills Ulstein has amassed.

Given the importance of costs, what is the competitiveness of Ulstein when it comes down to price?

When I first came to Singapore, I must say that in some cases, I was greeted with a large degree of skepticism primarily because we were perceived to be quite expensive. Also, when potential clients look at one of our X-BOW® designs, they instantly assume that it is an expensive vessel, which is not entirely true. It can indeed be expensive, but it can also be the same price as a conventional design. After all, regardless of the shape of the vessel, the costs of the inputs are the same; the costs of the equipment put into different vessels are the same. Comparing vessels like for like, the only cost differences you really have is the marginal design fee, which is of course relatively insignificant. Hence, when people assume that we are expensive, it is because they are not comparing apples to apples.

From your office here in Singapore, where have you identified the greatest potential?

Indonesia represents one area with great growth potential for Ulstein. More specifically, the Indonesian authorities are requiring that for new contracts, the vessel should be Indonesian flagged and run by a local company. This in turn will translate into a strong demand for new tonnage.

In addition to this, we also see good potential in Australia, an important market for our existing local clients and new promising domestic ones, particularly, the Australian market is ideal for us since they have rather demanding and high standards for ships’ specifications and its accommodations and this fits perfectly with our ship designs. For instance, the X-BOW® vessel design virtually eliminates slamming, giving low vibration and noise levels, which in turn help to maximize crew safety, comfort and effectiveness, and protects the integrity of the hull, equipment and cargo.

If we were to come back in three years’ time to look at the evolution of Ulstein’s regional operations, where will you have taken the company?

As a relatively new player in the regional market, our primary goal is to considerably grow our market share. Over the past couple of years, we have sold design and equipment packages for half a dozen Platform Supply Vessels (PSV’s) to a number of Singaporean owners and also have been attracting a lot of interest from others in the region. In this respect, my personal goal would be to grow our references to ten times the existing numbers.

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