Heerema Marine Contractors – Jan Pieter Klaver, CEO – Netherlands
The CEO of Heerema Marine Contractors explains the logic behind the company’s global footprint, and why as an offshore contractor it will continue to push the extremes of innovation and technology.
You’ve overseen some of the more challenging moments for the global oil and gas industry since becoming CEO of Heerema Marine Contractors in 2009. To what extent has the Heerema’s mission to be the world’s best offshore construction contractor helped the company sail through these troubled times, and how have the niches and regions you have been working in affected this?
The last six years have actually not been all that stormy for Heerema: in fact, in the last couple of years, we have experienced excellent growth, driven mainly by market demand for our services. This has led to the fortunate position of being able to make choices about where we want to operate: which countries, which markets and which services we should provide. Keeping niche services as the guideline for our growth has helped me a lot; it’s also what I believe in. While Heerema is large for a family-owned company, it’s also small in the grand scheme of the oil and gas sector, and we need to be very conscious of which projects we take on and how they reflect on us. As a result, there is a major focus on excellent execution at Heerema today.
This fortunate position has also allowed us to look towards the future and put together a fleet that represents our ambitions. In the last six years we built Aegir, an extremely versatile vessel for (ultra) deepwater markets, currently active on the Ichthys LNG project in Australia, and performing better every day. We have also replaced some of our old tugs that are assisting us in the heavy lift market, and have run extensive life extension programs for our vessels Thialf and Balder. We have also invested in new barges recently, including those on the larger side. Added together, this brings us where we want to be: we have good, well experienced and knowledgeable people and the right assets to continue in this chosen niche market.
How does your current fleet match current demands in the offshore construction sector, and how well do you believe you have predicted the future trends of the industry as a company?
We see in the market that there is a continuing need for a player that provides our particular brand of niche services: to be the biggest in the market for heavy lift, for example, or having the capability to install the most complex pipelines in the world. So we continue to look at extremes, and our portfolio of services that have built up from heavy lift now include the biggest floatover projects in the world and decommissioning services, where we are a natural fit: having installed so many of these platforms over the last 20 years we are now ideally placed to decommission them. We have also worked on the installation of deepwater FLNG projects, and have signed a contract for the Prelude’s installation. We are also the market leader in the installation of tension leg platforms (TLPs) and semi-submersible rigs, and playing an increasingly more important role in the installation deepwater field developments products, like mooring systems, export pipelines, flowlines, risers, inline structures and subsea tie-backs.
When taking decisions about assets, we move from our predominant market segments to discussions with clients about what we can expect from them in the future: from bigger lifts to deeper pipelines. This drives a lot of our investment in this area, as well as the need to replace older assets. Today, we are looking into investing in a new crane vessel that will have more lifting capacity than the Thialf, because we think that with such an asset, we will have the ability to continue to provide the market with proven installation services for even bigger platforms. We have seen since the late 1970s, with the introduction of Balder and Thialf into the North sea, that the market has also followed along with us to a certain extent, and this is still true today. There are only specific companies that have the ability to do this: companies like Heerema that are family owned, take a long-term perspective rather than short-term, and are not listed, which has a major impact on the way we think.
How do you work to make sure that you are addressing the future demands of the industry when you look to innovate?
Innovation at Heerema is implemented in two ways – first, through the lessons learned from previous projects, which makes us better at what we do, and second, looking into the future to see which services we could extend to our clients. In this area, which is separately organized from the rest of the company, we allow creative thinkers to come up with new ideas; from these, we develop some, and finally, we take an even smaller number to our clients. From these, we start to develop new technologies and processes.
Crucial to the innovation process is the incredible knowledge base that we have built up at Heerema over the last 50 years, from our understanding of harsh environments like the North Sea to ultra-deepwater environments around the globe. Without this cultural knowledge, we could not make those steps towards innovation.
With so many challenging and interesting projects in oil and gas markets around the world, does Heerema’s focus and commitment to the North Sea still remain?
The North Sea has been extremely important for Heerema, both throughout its history and in recent times, having gone through something of a revival over the last five years. We expect the North Sea to continue to be an important basin for our activites, not just in green field projects but also in decommissioning. The knowledge and experience that Heerema has built up in the North Sea are crucial to our global activities: as one of the most difficult environments on the planet, we can transfer the knowledge gained here to other markets.
As well as the North Sea, another key area for Heerema has been the Gulf of Mexico, where the company has been operating for over 40 years. Here, we have very much followed our clients as they have moved to new areas. 20 years ago, Heerema was primarily a heavy lift contractor, but then exploration went into deeper and deeper waters, and we have adapted ourselves to grow with our clients into those environments.
How do you pass learning experiences on from project to project?
This is a challenge for the whole industry, compounded by the fact that many experienced people in the sector are now reaching retirement age. We have built our execution organization in order to ensure that experience is captured and anchored around the world, by splitting up our global business into a number of regions and structuring them so that young members of staff can learn from those with more experience, and that they are challenged, educated and coached by them. Next to that, we have knowledge database where people have access to material such as ‘lessons learned’ on previous projects.
To what extent do unplanned events like the low oil price and the weak euro affect Heerema?
Events such as these have an enormous impact on the market, making companies strive for better cost effectiveness, and we share in this situation too. However, we do have a healthy backlog of projects, which will keep us busy for the moment, but it is true that some projects are being shifted and put on the back burner, which will have an impact on us, particularly in the deepwater pipeline market.
However, the industry has learned very well that during dips in the market, you need to be very careful in laying off staff, because they constitute the core of your business and its knowledge base. We have taken a lot of new people in recently, and we will use this dip to train them and make sure they are ready for the next upturn. It also gives us an opportunity to look at our organization and improve it. Because we have a long-term focus, we can spend this down cycles improving our business, and turn a negative into a positive for Heerema. This downturn had to happen at a certain moment in order for the industry to become healthy again, and we have seen many newcomers in the industry in the last few years as well as substantial growth in costs: this downturn will ensure that only the strong contractors survive.
What does Heerema owe to the Netherlands in terms of the culture and reputation it has?
While we would love people to think of Heerema as an international company, the simple truth is that it isn’t. When our senior management forum is held, and the top 50 people from the company come together, the vast majority are middle-aged Dutch men, typically having attended Delft University and grown up in the Netherlands. This obviously has an impact on our culture, which reflects that of our homeland: straight talking, focused on delivering success, and not political. As a contractor, this formula works incredibly well. We owe a lot to Dutch culture. Next to that, we have also embraced the culture of being a family owned company, which means we can keep our course straight. I am part of a generation of people working at Heerema that have been here for decades, who stay because they were given the freedom to do their own thing in the company, build up their careers and take responsibility. People are proud to be a part of this company, that works on projects that make people say ‘Heerema can do things other companies can’t.’
How did your personal trajectory in the company help you prepare for your position today?
I started in the yards as a project engineer. I didn’t know anything about fabrication when I left university, but I was equipped with sufficient brains to pick it up pretty fast, and since then have never hesitated to do anything I thought was needed to bring that company forward. I had the luxury of starting at Heerema in a relatively small environment, in our yard in Vlissingen, and although I started with projects, I quickly became involved in helping to submit tenders and win business.
Later, I was sent to Norway, and over time the projects that I was responsible for grew and grew in size. It was around this time that I learned that I couldn’t do everything myself, and learned it the hard way. As I grew, I got more satisfaction that I was able to work well with others and motivate them to support my ideas. After becoming a member of the management team in Norway, I went back to do my MBA in Rotterdam, which helped me shift from thinking primarily about projects to about the organization as a whole. Going back to Vlissingen after this, I helped the yard move past some bad years of too much work and low margins. I watched people start to see the light at the end of the tunnel there, which makes people happier and creates a positive spiral, which certainly was a valuable lesson for management.
The offshore industry may be in stormy weather today but it is a fantastic industry for a lot of people, and for a lot of younger people just starting their careers today. There is such enormous room for creativity and growth in this sector, and we should always bear that in mind, and try to further the goals of the industry as a whole, through working together.