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Interview

with Leo Huisman, Managing Director, SMIT

05.07.2010 / Energyboardroom

What were the main drivers you have seen here in the market that really drove SMIT to establish itself here in Singapore?

With nearly 170 years of service in the maritime sector, SMIT is a well established name in the industry. The main reason SMIT expanded into Singapore was to turn this location into the company’s hub for its salvage activities for the entire Asia Pacific region. In a second instance, the market also offered potential for anchor handlers for the offshore industry. From these core activities, SMIT started to develop an additional service range of harbour towage, heavy lift sheerlegs and subsea services.

While Singapore serves as a salvage hub for SMIT, competition is very tough with around nine other local salvage companies present in Singapore. What is SMIT’s strategy to retain its market share for the salvage business in Singapore in particular?

Salvage is unpredictable and you cannot know where a ship will be in need of emergency services or where a wreck will need to be cleared. In order to get a decent return on investment, it is necessary to cover larger geographical areas and this requires a global marketing network. For Asia Pacific, Singapore is the perfect place to mobilize people and equipment to the work sites. In particular the air travel infrastructure makes any place in Asia easily accessible within a very short time span

With such competition, what is SMIT’s competitive advantage here in the region?

SMIT has always experienced fierce competition throughout its existence and presence in Singapore. Nevertheless, SMIT is a global renowned name that is usually called upon whenever there is a difficult wreck removal or emergency response. SMIT has a large international network that creates a sense of comfort among customers when they need emergency response. SMIT is able to leverage on its network of local partners to enable immediate mobilization of its experts, equipment and agents in emergency situations.

The importance of local connections reflects SMIT’s strategy to participate in joint-ventures and partner up with local companies such as Keppel in Singapore for example. As SMIT grows and expands internationally, are these joint-ventures an essential part of the future growth strategy of the company?

SMIT has a number of joint-ventures and in Singapore the link with Keppel is in particular close. This cooperation allowed both companies to combine their strengths whilst we also share the same culture based on professionalism and fairness. SMIT has a number of opportunities within Asia that require Joint ventures with local partners. Several of these cooperations are simply necessary in order to meet the local regulations

Looking into SMIT’s activities beyond salvage, are there any particular niches which you expect to become more important in the near future?

A particular niche comprises marine services for LNG terminals, frequently located in remote areas. Our clients in this demanding segment prefer to subcontract to a specialized company that has the right global experience, equipment, people and safety culture that ensures a smooth operation.

You have been appointed very recently in August 2009. What personal ambitions do you have and where do you want to take SMIT Singapore in the next few years?

My ambition is to have a larger presence across Asia particularly in harbour towage services in the first place. The focus will be to establish a strong network of harbour towage operations in a number of countries, in particular in Vietnam, China, Taiwan and India. This will not be an overnight process since it is important to get the right partners. SMIT sees the value of having Asian harbour towage operations because once this is in place, it becomes easier to leverage and expand further into additional services.

These ambitions to expand further will obviously require additional financing. When we spoke with David Chin from the Singapore Maritime foundation, he pointed out that there is a gradual shift from debt financing to equity financing. How do you see this affecting SMIT and to what extent does the recent Boskalis merger offer new funding to realize your growth ambitions?

Boskalis is a very strong group with a healthy balance sheet and equally healthy ambition to allow SMIT to further grow their business. Every growth opportunity naturally needs to be backed up by good investment proposals and up till now, Boskalis has been very positive and receptive for these plans.

We also saw that the industry is becoming more focused on deep water. How do you see opportunities here for SMIT?

The latest challenges in the Gulf of Mexico once again illustrate that when the industry decides to move into deeper waters, it needs to consider carefully how to respond to calamities. SMIT has a number of projects within their Research & Development group to develop new solutions for removal of pollutants from vessels in deeper waters and as such providing solutions that can assist the industry in responding to a calamity.

SMIT also received the KVNR shipping award in 2009, how do you see the drive towards more sustainable solutions reflected in SMIT’s activities in Asia?

This is determined by SMIT’s clients who drive such development. They need to be willing to pay for the more advanced technologies on offer. An example is the usage of hybrid tugs that are technically feasible but do carry a different price tag. Fortunately there are an increasing number of oil companies interested in environmentally friendly solutions as part of their Green credentials. We foresee that in the next 10 to 15 years customer demand for hybrid tugs will gradually increase.

In Singapore, there have been talks of making transportation greener using LNG. So, indirectly, how can SMIT take advantage of the new LNG terminal in Singapore?

Keppel SMIT Towage is one of the leading harbour towage companies in Singapore and is already operating its fleet to cope with the more stringent requirements for the berthing and unberthing of LNG ships. A fleet renewal program has been put in place to provide a new range of tugs that can cope with these requirements.

You mentioned the importance of having local talent working in the company, especially when working in Asia. Would you say that SMIT in Singapore is more of an international company than a local company? How are you perceived and how would you like to be perceived?

SMIT is an international company that employs many different nationalities representing a mix of employees from Singapore, China, India, Europe and a range of other countries. The office reflects this diversity, also in the Management Team.

Is SMIT also actively looking for joint-ventures to go beyond salvage in this market? What makes SMIT an attractive partner for local players?

SMIT looks into potential joint-ventures on a regular basis and can profile itself as an attractive partner because of having a track record based on providing high quality and safe operations. Additionally SMIT has an extensive network with international clients in various market segments. A combination with companies that share the same operational philosophy creates powerful joint-ventures. As important for our partners, SMIT is not afraid of sharing the benefits of said ventures with its local partners.

When we look at the group in general, how would you say do the Singaporean operations represent SMIT as a whole?

This has been an important growth area for SMIT. The company has focused significantly on growth in Africa and Latin America in the last years, while it is now time for Asia.

If you had to give an advice to global investors looking into doing business in Singapore, what kind of advice would it be?

It is important to spend time on establishing relationships with local partners rather than being impatient and moving too quickly. Singapore is also an excellent hub with all the required infrastructure to conduct business across Asia.

Do you have any final message you would like to send out to the readers of Oil and Gas Financial Journal?

The industry should have a higher regard for quality and safety in operations and be prepared to look at the total package, rather than price alone. The quality and safety standards in Asia need to be brought to a higher level. Fortunately the Oil & Gas majors do spend time on raising the bar and it is their task to lead the way, having good reasons to do so.

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