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Interview

with Magne Orstad, General Manager, Malm Orstad

25.10.2012 / Energyboardroom

Since its inception in 1946, Malm Orstad has changed its target market from agriculture to oil and gas and even some wind energy projects recently. How are you positioning Malm Orstad today?

Malm Orstad focuses nearly all its attention on the oil business and although we have done some recent engineering projects in wind energy this plays a much smaller role for the company. Our business model is based on creating engineering solutions for some of Norway’s principal oil service companies. We are also involved in the machining and assembly of equipment for these companies.

For the most part we are a supplier to Norwegian companies but there are international companies among our clients and we are therefore exporting our products as well.

With intense upstream activity on the NCS and the growing number of construction projects how is Malm Orstad capitalizing on this market?

The business is very good right now. Malm Orstad is growing fast at the moment and we are in the nice situation of being offered more jobs than we can currently provide for at the moment.

To meet this demand, Malm Orstad is investing strongly in its capacity, installing more equipment at the site and increasing our number of engineers. We still have spare buildings on this site in which to house new machinery and technical staff. The market growth will therefore enable this workshop to reach its full capacity.

In spite of having established these engineering facilities in the middle of the global financial crisis, Malm Orstad has experienced steady growth over the last three years. Our revenues increased from NOK 170 million (USD 30 million) last year to NOK 200 million (USD 35 million) in 2012. Our projections are for continued growth in the years ahead.

Over the last 10 years there has been a 51 percent increase in labor costs and the competition for specialists is heating up. How do deal with this human resources challenge and attract specialists?

The main challenge confronting our company is to find enough qualified engineers. Unfortunately, there are not enough in the market today and the growing number of service companies in Norway has generated much more competition for this talent.

For the moment we are not looking to take on 50-60 engineers but five or six which means that we can usually source the talent from the Rogaland region. We are mostly taking experienced engineers from this region and fresh graduates from further afield.

I believe they are attracted because we offer challenging but interesting work to these engineers. Often for those engineers coming from larger companies, they gain the satisfaction of having greater control over what they produce.

I also work hard on forming a good team environment and making this a pleasant place to work. If people are happy then the rest of the work comes easier and I believe Malm Orstad is successful in establishing a friendly, family oriented environment.

The company’s motto is “challenge us”. What have been some of the most challenging projects you have been involved in recently?

I would not want to mention any specific projects but Malm Orstad has specialized in demanding projects with very short delivery times and this was seen on a recent injection platform for a major supplier in Norway.

Our facilities allow us to complete projects quickly, meeting the needs of the quite demanding Norwegian service industry. We have 6,500m2 space at these facilities and our machines are all state-of-the-art. Obviously it depends heavily on the size of the projects but we can carry out anything from 3 to 50 projects in a year.

We are currently doing a lot of work on skidding systems and we expect good growth in this segment over the coming years. We also manufacture a lot of hydraulic cylinders and do machining work. Recently Malm Orstad has also been involved in projects for down hole tools, tether management systems (TMS), and casing systems. However the full range of our work would also cover problem solving, troubleshooting, modeling, concept studies, detail design and product development.

Many service companies are now outsourcing their manufacturing outside of Norway for cheaper manufacturing and labor costs. How do you stay competitive?

We must deliver higher quality and hold down our prices. However the trend is not only showing service companies outsourcing their manufacturing abroad. Some companies are actually now taking their production back from Asia to Europe to make use of the speed of delivery, high quality output and solutions tailored to local regulations. Ultimately the human labor costs in some countries is much cheaper than in Norway but the machine costs are the same. With the inflation of machine costs the price differential is actually less apparent.

Malm Orstad is well positioned to take advantage of this trend back torwards Norway and for smaller orders we benefit greatly from our proximity to the Norwegian market – ultimately we are not three months away in terms of delivery.

What is your outlook on growing the company in the years ahead?

We want to continue to grow as we have been doing so far – not too fast and maintaining control over our standards and operations.

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