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Interview

P. Chacko John – Vice President AMEI Region, Palfinger Marine, UAE

21.03.2017 / Energyboardroom

Chacko John, Regional Vice President of Palfinger Marine, discusses the recent acquisition by Palfinger of Harding and how the integration has benefitted their operations. He also discusses the company’s extensive and growing footprint in the region as well as how Palfinger is optimistic about the coming years for the industry despite current challenges.

To begin, could you provide our readers with a brief overview of Palfinger in the UAE and your current operations in the country?

“The timing was right for both Palfinger and Harding, and really it was a perfect marriage.”

Palfinger, as a company, started in 1932, specializing in truck- and land-based cranes. In 2000, they entered into the marine industry, which was complementary to their business, and later bought Dragon, a Norwegian company, that was an offshore crane manufacturer, broadening their portfolio to offshore cranes, rig cranes and marine cranes. Offshore cranes are specialized in offshore explorations, a very specialized industry. This all represents one segment of our business, the second being lifesaving equipment.

Lifesaving equipment consists of life boats, davits and rescue boats, all activities that normally accompany all of the oil and gas operations, from the merchant or the vessel to the rigs, and is mandatory. This is the core area that we were operating in here, and that is a very specialized area. This was the primary activity of Harding prior to the acquisition by Palfinger, and is still our core activities in the region, including inspection, maintenance and refurbishment of these products. However, after the integration with Palfinger, we have the crane portfolio as well, and we are now expanding our services into that segment as well.

How has the acquisition process proceeded?

Any integration is a process, and we have a full-fledged marketing team supporting us from HQ, taking care of the rebranding completely. For us, I believe that this is an opportunity, as it gives us a reason to meet all of our customers again and re-introduce the company.

There has been a slew of mergers and acquisitions in recent years. For Palfinger and Harding, was this acquisition based on opportunity, or the need to consolidate assets?

Both. Consolidation of course does give you a competitive advantage, but when it comes to timing, if you look at the history, when there is a slightly economic downturn, that is where you see consolidations happen. The timing was right for both Palfinger and Harding, and really it was a perfect marriage. Palfinger had strong crane and deck equipment and Harding was equally as strong and had a strong footprint worldwide with their lifesaving equipment. The merger was complementary, and now Palfinger Marine is working to be a market leader in all of the segments that they operate in. We are ambitions and focused, there is always room for this type of activity.

What has been the impact of the merger on your regional operations?

When the merger occurred, here in this region only Harding was operating, Palfinger Marine did not have any service or sales office in this region, so the transition was relatively seamless. We actually needed to hire more manpower after the merger. We are hiring sales managers and we are hiring the technical team, which is testament to our belief that the economy is improving.

What was the strategy behind developing your regional headquarters here in the UAE?

The reason that we opened our operations in Dubai is due to many factors. This country is the gateway to the Middle East, we have proximity to our customers in other countries, and there is a business-friendly environment to start an operation. All of these factors helped make our decision to be based in Dubai.

From these offices you oversee a vast geographic area, including Africa, The Middle East and GCC, Iran, Bangladesh and Pakistan. How do you manage such a broad geographic portfolio from Dubai?

We have sales teams that are assigned to the different territories, where they take on most of the responsibility. Additionally, in some of these markets we are working with partners, for example in India, several countries in Africa as well, including Egypt. Even when utilizing 3rd parties, the clients will still deal directly with us, we coordinate with them and support them., and in many cases, our engineers fly down from here to support as well. If the client feels more comfortable with us there, and we can provide better service, we will go.

In some areas, we start our own operations and some other areas we are depending on the agents to provide us an entry to the market. One example being Saudi Arabia, and soon in Qatar as well. There are key areas where opportunities where presented, and if the same happens in other countries we will expand our presence there as well.

What factors lead you to develop an actual physical presence in a country as opposed to working through partnerships?

We must be able to justify the investment. If we see that opening up our own services will be justifiable and create efficiencies, then we are of course open to investments.

Here within the GCC and wider Middle East, which countries are currently keeping you the busiest?

In Iran we do not currently have any operations, but that is an area of interest for us, as there are off-shore operations. In Abu Dhabi we have our own branch license for operations there, as well as in Fujairah, a huge area of interest for us as the 2nd largest terminal in the world. In Kuwait, we do not currently have an office, as there are currently no off-shore operations, but I understand that soon there will be, so that will be interesting to watch, and Oman is much the same situation, as they have only one major port which is Duqm. Qatar is a different ballgame all together, as they are all off-shore, and they have a large shipyard right now as well, and we have developed quite a presence as a company there. We have installed many of the platforms with our equipment, meaning we have to continue to provide services for this equipment as well.

Much of your work is with NOCs, which are sometimes difficult to penetrate and showcase your products. How have you been able to attract the NOCs to Palfinger’s products?

We are a company focused on innovation, and all of the NOCs appreciate that fact. In Qatar, a few years back, we received a contract for installing our lifeboats and davits on their platforms, and with our products they did not have to endure any down-time to happen for the installation to take place. Our equipment was designed in such a way as to not create downtime, it is a matter of easy installation. What we learned was that if you have a product which is cost-effective and a long-term very maintenance friendly, obviously they will consider it.

Just nearby our office here, EIMA, Emirates International Marine Academy, purchased a whole order of training equipment which includes lifeboats, davits, rescue boat and davits from us. This purchase was driven by the fact that we had basically developed a new design for the davit which is actually fully enclosed. Normally, davit systems have the wires, cylinders and other equipment exposed, however, our design fully encloses everything, meaning everything is protected. This is valuable in harsh environments, and it is what led our products to being selected.

Over the past 2-3 years we have seen a drop in oil prices, leading many to go back to fundamentals, including returning and reinvesting in the Middle East. Has this increased competition for Palfinger?

We do not believe in competition that there is a price war. We believe in our products, and companies have been using our products since 1928. If you look at the oil and gas segment, they are price conscious to a certain extent, but our products are lifesaving, so they will not go for cheap solutions, and we are the only manufacturer of state-of-the-art lifesaving equipment in the Middle East.

We see that globally, 2016 was a good year for Palfinger. Was that true in your region as well, and which geographic areas were driving the most growth?

In this region, yes there was growth, especially in our service sector. With new equipment, due to the market, there was not that much growth, leading us to focus more on brownfield projects. In 2016, you see that globally the market was down for the new equipment, yet our service team is fantastic and they managed to still have a good year for us, and in 2017 we are expecting to perform even better!

Focusing specifically on one country, currently in Saudi Arabia we are experiencing growth, and our activity is primarily focused on services. Our objective in starting our operations in Saudi was to be able to provide services for our customers, and I believe that we are achieving that. The awareness in the market is there, that we have our own offices, that we have our own engineers and training. Soon, the rig owners and ship owners will be able to come to us to provide better services, to help reduce their costs. We are optimistic about or operations in the country.

In 2018 there will be bidding for offshore concessions here in the UAE, the first in 18 years. Is this something that Palfinger is focused on?

Yes, these concessions are part of our focus and our planning. These are the reasons that we are investing further, because we do believe there is bright future ahead in the region. The problems are there in the Middle East and other areas, but that is not dampening our spirit. We are focused, and we are very optimistic, and we are moving ahead with a clear plan.

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