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Interview

with Morten Alstadsaether, General Manager, Module Solutions & Systems

28.05.2009 / Energyboardroom

What was the vision behind the founding of MSS, and how has the company evolved to present?

MSS began in 2001 with Morten Alstadsaether, the company’s founder and one of the shareholders, who came from 15 years in the modules side of the business representing Emtunga living quarters after realizing he could be successful by himself. MSS began by serving the market and taking care of small and medium-sized projects, matching competences depending on individual client solutions.

In 2002, another product group entered the company via partnership with Strongwell, a top-of-the-line US provider, for composite grating to the Norwegian market. Because of the challenges with weight on existing platforms – especially on new floating platforms – this product could replace a lot of steel, offering an easy-to-handle, low weight alternative with much lower life cycle cost . Despite these advantages, however, MSS tried with difficulty for three years to enter the market against steel and aluminium, but eventually persevered, and now have supplied upwards of 45,000 sqm on the NCS.

In 2003, there was a new opportunity with Albatross Services situated in Tananger, whose focus is on small, mostly mechanical EPC modifications, and at the time needed partners and to strengthens its equity. As a result, MSS bought 20%, and this relationship has become a very close partnership. MSS now uses Albatross for offshore surveys, looking at areas where our modules will be placed.

Fast forwarding to 2007, there was an opening for providing rental units and modules, with many companies just needing equipment for awhile and not wanting to buy it, so MSS responded by buying two, then four, then five, and now we’re up to nine technical units, pumping equipment that serves the rental market. Over the same time, MSS noticed that several of our clients wanted to rent, especially office modules for small operations. Therefore, the company now has three office modules in service at present, three at Njord with StatoilHydro for a two and three year agreement.

In 2008, MSS became a solution provider for a company in the UK in the Isle of Wight for passive fire and blast protection made in composites. Our solutions can take blast, fire, explosion, etc. and are used around critical platform equipment, like large shutdown valves that need to be protected. It’s an expensive product, but the quality matches the top of the range – it’s a solution in this niche we want to provide.

You mention it took three years to break into the market. Obviously your time frame is on the longer term than monthly fluctuations in commodity prices, but how has the recent volatility oil prices impacted MSS?

MSS reacts not on a daily or weekly level, but on the project level, which takes two to three years to come on track. When a client decides to build, then MSS is in, so if the oil price goes down, our clients need to finish the project anyway. The challenge is when going to the buyer: they have a budget, and tend to focus on present cost rather than lifecycle cost. However, this mindset is changing for the better, and there has been a shift from the era of 10-15 years ago. Clients know that with higher quality, maintenance costs are reduced. Nonetheless, the situation since the financial crisis is that investment decisions take somewhat longer. In the last quarter of 2008 and the first two quarters of 2009, MSS has seen a hold on projects to achieve the best price, but now the market is starting to move again.

Norway is known as being one of the highest cost environments in the world. How competitive is an MSS solution in a sea of lower costs given price pressure and the notoriety of Norway as such?

MSS is always looking for cost reductions through the entire value chain to seek new partners and easier ways of doing things to put together the total package. One of the company’s main competitive advantages is that we don’t produce everything ourselves – we have a network of partners, and pick the best depending on what kind of material is going to be used and the application. Changes lately have meant that the traditional large module builders, have opened again on a smaller scale. The last six or seven months have seen rising competition in smaller modules, with companies wanting to fill out their larger offerings.

You mention the Njord field and partnership with StatoilHydro. How important is this relationship with the controller of around 80% of the NCS’s production?

It is very important, but MSS has so far been more involved at the contractor level, working closely with Aibel and Aker Solutions, who set out their specifications on behalf of the oil companies. Just this week, however, MSS had HSE verification from StatoilHydro to supply them directly, after noticing that many of their requests are for items we are able to deliver directly, for example, composite grating, or the module units on Njord. Such offshore installation work requires a higher level of qualification, which is now in place.

You mention increased competition from the larger modules end of the business moving down in the small and medium territory. What is the MSS advantage against these much bigger and experienced competitors?

One of them is that we bought 34% of the HVAC supplier RK Offshore this week, which will move into the same office as MSS to facilitate closer working arrangements, bring down costs, and bring responsibilities in-house. Another success factor is buying the steel box for modules in Poland, with direct lines to be brought to Norway at a low cost and doing the installation ourselves. Overall, a big part of the competitive advantage at MSS stems from being a small organization and maintaining a small overhead.

One of your ambitions is to be among the leaders in your niche in Norway, having recently opened an office in Kristiansund. How does this expansion go towards fulfilling these ambitions?

It’s an important step as activities move further and further North, and this office will cover mid and north Norway. As a small organization, our representative there can knock on doors to create a very strong network, as a senior personnel and member of the industry for 30 years, having previously worked at Aibel, Subsea 7, and Aker Solutions. In terms of expansion further afield, MSS is looking at a contract in the Gulf of Mexico for a FPSO for BW Offshore for a special type of pumping unit, with only a few companies worldwide who rent such equipment. For composites and modules, the main focus will remain in the North Sea, because the market to be covered is still quite big. One challenge internationally is when we offer our quality modules to markets like India and Australia; they don’t want to pay so much, preferring the simplest standard that will for example allow four people to sleep in one room, which is not allowed on the NCS. . However, MSS has focused on the higher quality and North Sea standard. Of potential international markets, the most prospective for MSS include Russia and the Shtokman field, Gulf of Mexico, Brazil, and Baku thanks to Aker Solutions’ presence.

It seems like you have many legs to stand on – what’s at the top of the MSS priority list?

The top priority is getting our four divisions in the Norwegian market. MSS has been increasing its ownership in Albatross, and we like to present specific expertise in the design and fabrication of mostly tailor-built modules, rental management, EPC projects that can be taken together with our partners, and fire and blast protection. Depending on the client, we look for partners, and pick based on management, engineering, special competencies, etc.

In putting forth the MSS brand to these partners and potential clients, we saw a year ago there was a rebranding campaign emphasizing “solutions” – why is MSS the partner of choice?

MSS gets the right solution as a small competence company. The larger builders can’t match our focus in having good relations with all the contractors, and we work very closely in the study phase to find the best solution early on. Larger companies don’t give the same attention as MSS, and we’re there serving the clients daily. And they can turn around to MSS and know what they should do and the consequences of their decisions. Others just build and leave, while MSS has the discipline to discuss things at the beginning in principle, be more thorough and efficient, because we live for smaller projects.

What are your ambitions for the five to 10 year time horizon?

MSS and Albatross Services will soon be in the same building, fostering better communication and a better team within the MSS group. In terms of business strategy, maybe more companies will be brought into the umbrella, to benefit the business and its clients. As of last year, MSS has a turnover of 100m NOK, but in 2010 we’re looking toward 200-250m NOK in the group. MSS wants to be in the entire value chain, and bring in good partners so the group is more effective. The important thing is that it should always be easy to talk to us.

What is your final message to OGFJ readers about MSS, not only here in Norway but in the international community?

MSS has a specialized competence, and the company’s structure and strong partners makes us more efficient for our clients in the end. If they choose us over our bigger competitors, they get the attention, the good response, and a high quality tailor made solution. Because of MSS’s technical approach and how the company presents its scope, we not only get to a smart solution, but take care of safety regarding how the module should be installed and arranged. Then it becomes not just a matter of making the module and leaving it, but looking at the module from the beginning to make, join, and install it to ensure the end-users have a project they’re happy with; otherwise it’s waste. MSS comes in early and tells what the real cost is and wants to be taken seriously for finding the top quality solution that’s fit for purpose. With MSS, you have a partner to talk with on a weekly basis that knows the client and how they use the product.

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