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Interview

with Jaap den Ouden, Founder, Mercon

12.01.2010 / Energyboardroom

As the founder of Mercon, what do you believe to have been the main milestones and achievements of the company since its foundation in 1976?

Previous to the foundation of Mercon I was working at an important construction company called Nederhorst, which went bankrupt in the mid 1970’s. By that time I was the manager of the field-construction department. With the bankruptcy of NEDERHORST I decided to start my own business, building upon the expertise of Nederhorst .

I was approached by Mr. Rob Lubbers at that time the director of Hollandia Kloos, and by Mr. Jaap de Groot, who later sold his company named Grootint, to HEEREMA and the Dutch Government They proposed the idea of starting a much bigger company than what I had in mind at the time – which is now known as Mercon Steel Structures.

Thus, in 1976 I started Mercon with the support of three main shareholders; Grootint participating with 37%, Hollandia Kloos with 37% and the Dutch State the remaining 26% – since at the time the government was supporting start-up companies due to the large unemployment crisis the country was facing.

It was a very successful start – only three years later the Dutch government sold its participation to the other shareholders thanks to the company’s ability to grow on its own two feet. In 1985 Grootint sold their shares in Mercon and I was able to obtain those shares. In the nineties, Hollandia sold their shares to Mr Ruud Lubbers the former prime minster of the Netherlands. Today, each of the families Lubbers and Den Ouden own 50% of the shares.

Mercon continued its growth trajectory and became very successful in the offshore business. A very important milestone was the drilling-facilities contract for Shell-Esso Fulmar project in the UK sector of the North Sea, a major fabrication contract. Shell signed this contract under the condition that Mercon would build the three drilling-modules inside a large construction-bay and to a very tight schedule.

The great achievement of this project was that we managed to keep to the timeframe, so within 4 months we had the building of a large construction bay on schedule. In order to make this happen, in 1979 Mercon was granted one of the fastest building permits in the history of the Netherlands.

This project was very important to our continuation in the drilling facilities business. With Shell/Esso FULMAR we were capable of providing a complete integrated system – the power generation, the mud processing, the drill floor and so on. After this project Mercon began to build up its solid reputation and got many other contracts. Shell was very satisfied with our performance, giving Mercon an excellent reference in the market. Shortly after that we’ve got Drilling modules Contract for Shell/Esso North Cormorant, and then other clients followed such as Mobil, Elf Aquitaine Norge, Norsk Hydro, BP and Statoil with similar projects.

This recognition seems to be a constant in the history of Mercon, as exemplified by your award of excellence in 2009 by IRO. Looking at the results of three decades of evolution, how is Mercon structured nowadays and what are its main growth drivers?

The most important sector where Mercon is active is still the offshore industry; we build completely integrated drilling facilities and integrated platforms including the jacket and the deck for gas production in the North Sea and beyond.

Besides that, Mercon is very active in the design and construction and maintenance of terminals for storage of oil and gas, being responsible for the development and construction of huge tanks. Thirdly, we are active in a very different sector – infrastructure building. For instance, Mercon was responsible for construction of bridge sections and complete field-assembly of de Moerdijk-bridge that connects the TGV line from Paris to Amsterdam. Also Mercon was under subcontract from Hollandia responsible for the construction of the wheel for London Eye.

In terms of growth, the two main drivers are oil and gas storage and offshore activities. Unfortunately, in these uncertain days oil companies are investing less than what they used to in offshore projects. However, the storage of oil and gas is still booming.

Last but not least, we expect important infrastructure investments to be conducted by the Dutch government as part of the national stimulus package, and Mercon will be participating in important bids.

A company like Mercon can be a clear beneficiary of national projects such as the European Gas Roundabout – with which the Netherlands is trying to further strengthen its position as the energy hub for Western-Europe. How viable do you believe this project to be and how is Mercon taking advantage of it?

The Netherlands is already in a very strong position as a logistics hub for the continent and these projects will only serve to reinforce this existing reality. The country has a very strong position because it is exporting a huge amount of gas. Hence, the Netherlands is building networks with other countries to serve as the center of a distribution system which can be used for gas produced locally and as well as gas imported by tertiary sources.

For instance, the first import LNG terminal is under construction with a plan for a second one. These projects will reinforce the Dutch position and also ensure that when Dutch gas is reduced it will be replaced by gas which will be imported and exported again to the countries with which we are connected with.

There are an abundance of opportunities for Mercon; the first LNG peak-shaving-plant built in the Maasvlakte for Gas Unie, was built by Nederhorst / Mercon, giving us the necessary experience and the capability to win future bids. Besides, we also have a partnership with the Japanese company Toyo Kanetsu, the leader in LNG facilities in the Far East.

To start a company which began in bankruptcy and turn it into an influential player renowned for excellence for over 30 years is quite an achievement, and one which probably wouldn’t have been possible if you didn’t have the right people surrounding you. Nowadays, how does Mercon manages to attract and retain the best talent inside the company?

That was achieved in different levels. For instance, for the labor in our yard we have our own school and we educate people – with some of our workers being recognized by national and international awards of competence.

We have many people coming from technical schools and universities who come here during the studies and get our support to finish them and get their graduation while doing part time job at Mercon. We understand that our young people are the future of Mercon and this is why we are willing to invest so much on them. Hence, we are also a very interesting company for young engineers who are studying mechanical and structural engineering. Here they get the chance early on in their careers to participate in big international projects. For them it is fascinating to be a part of Mercon.

The offshore industry and the whole chain that surrounds it might be experiencing a downturn moment, but its long term development is still marching on. What’s your vision for the future of the Dutch service providers of the oil and gas industry?

In the long term, the Dutch contractors will still play an important role thanks to their know-how – and I include the future of Mercon in this. We have the capacity to develop and build projects in other countries with the expertise we developed in-house.

As an entrepreneur who started your own business and took the risks of an entire corporation, leading it to success, what would be your advice to young entrepreneurs who, just like yourself 30 years ago, want to start their our enterprises in challenging times?

You must have a dream, assess which aspects are realistic and then go for it 100%. If you really want it, you can achieve it.

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