with Neil Bruce, COO, AMEC Natural Resources
AMEC has three divisions in Power and Process, Earth and Environmental, and Natural Resources, the latter of which you are the COO. Would you please introduce the division and the role it plays in the overall AMEC portfolio?
Natural Resources is the biggest of AMEC’s three divisions, effectively generating two thirds of the company’s profits. Natural Resources employs approximately 11,000 people operating in three global regions: the Americas, Europe/West Africa, and frontier regions. Of these 11,000, 3,700 are within Europe/West Africa specifically in the UK, with headquarters based in Aberdeen, although the Group HQ is in London.
Can you speak to the importance of Natural Resources being headquartered in Aberdeen?
All worldwide operations are dealt with on a local basis, because effectively project services need to be delivered to customers locally. Therefore, AMEC has people in all locations in which the company operates running within a defined structure. However, in terms of our Natural Resources, corporate centre and support services decisions around issues like employee and business development are effectively run out of the Aberdeen office. From a Natural Resources perspective, about 40% of the division’s business is UK and 60% falls under the rest of the world.
What have been some of the main milestones and achievements of the division in recent years?
In recent years activities have certainly been around different ways of adding value to our customers’ assets within the North Sea. Whilst there’s another 30 years left in some shape or form, it is predominantly a plateaued region, with a lot of focus on how to increase production levels and efficiency in either older or ageing assets. Many services provided for customers are very focused towards this end, such as taking over as duty holder for Fairfield on the Dunlin platform, a significant contract for AMEC concerning older assets, duty holder, and operations and maintenance issues. Also, being selected as one of BP‘s three global contractors for the development of future upstream projects was a major milestone.
In terms of life in the North Sea, the West of Shetland and the next phases of Clair are equally important in trying to make existing facilities as efficient as possible. AMEC has been selected in the front end of Clair, which is a major milestone for us. AMEC is the only British contractor chosen to provide these services for BP.
What was it about AMEC that made it the partner of choice for BP?
Basically, engineering excellence. BP was clear in what they wanted: process and safety systems, excellence, consistency, and how they can achieve that throughout the world.
What is it about the AMEC approach that makes it stand in terms of that engineering excellence?
The long track record and continued reinvestment back into the company’s engineering systems, both in terms of systems and people, make AMEC stand out amongst its peers in the provision of complex engineering solutions our customers can rely upon.
You mention investment in people. Given the industry-wide shortage of skilled labour, how has the recent run-up in oil prices and their subsequent decline affected AMEC’s HR attraction and retention?
Not at all. The people who have suffered from resource shortages are the ones who haven’t had a long term investment program in people. If you are out in the market trying to hire people, and your only differentiator is paying them an extra dollar or pound an hour, you’re going to struggle. AMEC increased professional staff in 2007 by 15-16%, compared to the same figure the year before, and 12% in 2005. Additionally, the company maintains a structured program in place to bring graduates through, with 200 technicians in our system at any point in time. Effectively, AMEC has an entire development program around human resources, and in constantly recruiting and developing its people, has found an increase in numbers by 15-16% annually very achievable.
How do you deal with the double-edged sword of good internal training programs, and a strong AMEC brand on the CV, leading employees to go elsewhere?
For the people who want to go for the extra pound, we aren’t particularly bothered about them leaving. AMEC has people leaving, but has excellent retention rates, with employee turnover less than 5% across Natural Resources. If you provide people with training, development, and good interesting work, then you will keep the vast majority of your people motivated to stay with you. And the small amount interested in an extra dollar per hour can go get it elsewhere.
What are your biggest challenges as COO?
They are separated into a few areas. On a general ongoing basis, the challenges are always about trying to keep people safe and secure in the work we do, either offshore in the North Sea or in some of the other frontier regions in the world. Safety and security are at the top of the list on a continuous basis. You can never reach a point to say, ‘We’re happy here,’ – you’ve got to keep going.
Reputation, and fiercely protecting it, is another big issue. AMEC achieves this by being good at what we do and continuing to deliver.
AMEC’s business is very much around having the best systems, people, customer relationships, and delivery, and if you can do that combination, you’re probably on a pretty good track.
On the side of credit crunch and dollar price of oil, this has added a further challenge. The vast majority of AMEC’s customers are majors, whether in oil and gas or mining, and therefore the issue of cash hasn’t figured in too much if at all. In terms of commodity prices and lowering oil, that presents changes we expect customers in our industry to focus on the ongoing cost base over the next year to two years’ time.
You mention three elements of systems, processes, and people. How would you describe your management stile and culture within the organization?
The culture is all about regional organization, people having responsibility to deliver against challenging targets, and pushing that down through the organization, with very customer-focused objectives, which is at the end of the day how we do earn our profit. AMEC has to be providing solutions for the customer, and the more people engaged in that process the better. Ultimately, everything goes in a circle: if you can provide really engaging work for your employees, and value to the customer, we can earn a good margin, and it continues to build. If you treat employees like a bulk of people doing a bunch of man-hours and deliverables, the company becomes ordinary and average.
What is the most significant piece of feedback on how you are achieving that goal?
It comes through in a number of things. Feedback recently through FPAL (First Point Assessment) at various levels showed that in all categories, except for one ranked number two, AMEC was number one. This represents third party feedback gleaned in the North Sea that proved without a shadow of a doubt that customers and suppliers saw us as nearly number one across the board. In terms of building the business and market share within the UKCS, AMEC is certainly in the top three if not the top two of our peer group in terms of the work we do. We go through and do customer feedback sessions on a regular basis, and get a highly positive set of feedback from which we learn and continuously improve. Feedback is fantastic as long as you do something with it. AMEC aims to do something with it and try to improve the business as a result.
In being number one across a number of areas, how does AMEC keep from getting complacent? Where’s the fire coming from?
About a year ago, even though the company may have been in a good position in terms of feedback from the marketplace, we decided we needed to do more, so we introduced a program called Operational Excellence. This program looks at a dozen different areas of the business, including engineering, project management, safety sustainability, cash management, and employee development, representing some $35 million invested back into the business. AMEC is not taking anything for granted, and is investing a lot of time, effort, and money back into the business to become even better through this program, running from the present time through to 2010.
In getting continuous feedback from your clients, what do you hope they say about AMEC?
I’d hope they’d say that, above all else, they actually got genuine commitment and integrity in what we do. When working with customers, the biggest piece is being open to working collaboratively, sitting and listening to what customers are saying, and having a dialogue and relationship to stretch boundaries, improve, and be seen as having real integrity.
In the next three to five year time horizon, where do you want to bring the company?
We want to continue to serve our customers globally on a slightly wider basis. We’ve 11,000 people operating in 32 countries at the moment, and want to serve customers better in more areas. Involved in this will be Increasing the work done with NOCs, selected companies within the mining industry, some technical expansions – but nothing dramatic, as AMEC is reasonably happy with its operating areas, while recognizing there are always items to add to the portfolio. For instance, like the work we do in oil sands with Syncrude, Shell, and Imperial, where we are looking for an in situ acquisition, to add to 2008’s acquisition of BDR (May 2008). AMEC is always looking to fill in the capability gaps, whether in technology or geography, and ultimately grow the company to better serve customers on a wider scale.
What is your final message to OGFJ readers?
AMEC is very much a customer-led business, and everything the company does is a direct result of actually having a conversation with the customer, who has indicated there is something we could help them with. AMEC will continue to do that, and refuse to blindly offering services, instead engaging with either existing or new customers to fully understand what it is they need, and whether we can help them or not. AMEC will carry on approaching the dialogue with its customer base, and hope that it continues to be welcomed.