Offshore – Mark Beretta, Chief Operating Officer – Singapore
Mark Beretta, COO, explains KTL Offshore’s high quality, reliable and innovative product offering in the rigging field and the company’s strong global growth trajectory. KTL Offshore’s R&D and technological advances, including synthetic rigging solutions, are well suited to respond to growing deepwater operations in the region, and the company customizes and adapts its equipment to each project to act as a true solutions provider.
Having joined KTL Global in 1999 with growing responsibilities across a variety of roles, how would you summarize the company’s evolution?
When I joined the company in 1999, KTL Offshore was essentially a trading organization. Although it did shift large volumes of stock, it was competing in a very tough segment of the market and one of the reason why they took me on board was to help penetrate the offshore market, where the profit margins are much better.
In 2000, we made some scattered investments and kicked off marketing efforts to offshore players including the large contractors like McDermott and Saipem. It was two years later that we made our first breakthrough when we successfully began producing our first heavy lift slings. We had acquired the technology from abroad and were presented with the opportunity to supply these to a large player. At that time, we were still a small player in the industry, but having done a good job on that project, our business was catapulted from there.
Through the early 2000s, we grew our business supplying our slings primarily to American contractors. There are generally two types of slings available, the ones we provide that are generally used by the US contractors and represent about half the market. European contractors on the other hand use the other type which is known as a cable laid wire rope slings which we did not yet know how produce at that stage. Eventually in about 2007, we began exploring different sling designs by watching and learning. As we developed our portfolio, we were able to successfully break into the European market as well.
In short, KTL has evolved from a trading-based company into a solutions-based publically listed organization capable of manufacturing heavy lift slings for the international market.
KTL Group’s listed on the Singapore Exchange in 2007 just prior to the global crisis. How was that experience for you?
Like for many others, that was a difficult time for KTL that put our organization to the test. The global markets were still booming in 2007 which is why we had compiled a significant amount of inventory and had just relocated to a new facility. Needless to say, KTL was dealt a strong blow. Because certain manufacturers of steel wire ropes simply could not afford to halt production for a number of reasons, the market quickly became flooded and market prices tumbled by some 50 percent, leaving us with a lot of expensive stock on hand. It took us quite some time to recover from that.
Over the past five years, we have been able to return to a more stable footing and have progressively improved our performance. In fact, 2014 promises to deliver an even better results compared to the preceding years.
Can you tell us more about the solutions KTL provides today?
One clear trend in the lift industry is the transition into ever heavier lifting and rigging with increasingly larger vessels and cranes, as well as deeper and more challenging oil fields. Gone are the days where a standard one-size-fits-all solution will do. Each project requires a thorough technical analysis and input from our side before we can begin to supply our customers. This is where we really excel. Although we do still sell a fair quantity of off-the-shelf products, they are all integrated into a total solutions approach towards our customers. KTL boasts a workforce of almost 200 people with a strong technical background who work together to generate real value for our clients. We also invest in in their abilities to ensure they are equipped with the skills and knowledge to ensure we consistently deliver the highest quality products and services.
We also have a significant degree of flexibility built into our manufacturing capabilities and there are perhaps only two companies in the world able to supply our portfolio of products. In terms of heavy lift slings, there are slightly more with about a handful of companies globally sharing our abilities. We have therefore clearly been able to make significant inroads into the exclusive club of players that make up our industry. Due to the nature of the assets handled, the heavy lift industry is particularly demanding one and requires our customers to have a significant degree of confidence in our product.
What are the most exciting trends in your industry and where are the most challenging and most promising market segments?
We have made significant inroads in to the new build vessel business. This region, especially Indonesia, has invested significantly into new anchor handling tug supply vessels (AHTSs) and offshore supply vessels (OSVs), among others. However as those programs taper off, the challenge will be to substitute that business since operators are increasingly moving into platform supply vessels (PSVs) which use almost no rigging.
On the other hand, the global industry’s transition into deepwater exploration and production will present a wealth of opportunities. Leveraging these, however, will require us to push our technical boundaries to support our clients in their latest efforts. We are very excited about deepwater prospects and are confident that will drive KTLs future growth.
Where does KTL stand in terms of deepwater capabilities?
Traditionally, KTL has always focused on steel wire ropes. That was until some four years ago when we had a visit from one of our Dutch customers whose comment had a lasting impact on me; that despite our great portfolio, we did not have any synthetic slings. This inspired us to invest in synthetics, or High Modulus Polyethylene (HMPE) as it is formally known, and liaised with a leading manufacturer.
Despite advantages of being equally as strong as steel while still floating in water, HMPE is several times more expensive than steel. Nevertheless, synthetics are the future of our industry, particularly in deepwaters. Its weight advantage over steel allows synthetics to perform in deeper depths well beyond those of steel. It is one of the few option available for deepwaters. HMPE is also being deployed in shallow waters too. In the Middle East, for instance, we successfully replaced the steel mooring one of customer’s barges with synthetics. This mitigated the risk of damaging the network of subsea pipelines the crisscrossed the area due to the synthetics floating properties. This also saved the customer a great deal of time and money because if steel was used, they would have to install buoyancy to the ropes which involves AHTSs, among others.
Synthetics are still in the early adoption phase. However, they are steadily gaining more and more recognition and we are glad to have moved in early into the market.
How would you describe the company’s core competencies and winning characteristics which contribute to your competitive advantage?
Technology and quality are the cornerstones of our organization. We realize our place in the world and recognize that we cannot compete on the lower end of the market. Anyone can trade in ropes. Instead, we are committed to adding value to the advanced materials which we offer. From splicing the ropes to making the heavy lift slings, this is a demanding task as failure can be disastrous. We therefore conduct a good deal of our own R&D and testing before bringing it to the market. That philosophy has endowed KTL with an excellent reputation in the market, particularly in Asia. Some of the world largest heavy lift contractors based in the Netherlands has for instance been a frequent clients of ours and that goes a long way in demonstrating the reputation and trustability we’ve earned in the market.
What are the next steps for KTL in terms of capabilities?
Because our value added lies at a stage after the manufacturing of the rope itself, we want to take that step further and eliminate our reliance on the rope makers. Not only will this give us greater control over our products, but will significantly contribute to our margins.
To that end, we are currently acquiring the individual strands to manufacture a specific type of HMPE sling that is unique to the market. In this way, we are going one step further by getting involved in the process at an earlier in the product supply chain, offer clients different solutions of slings that can carry weights of up to 5,000 tons. We aim to launch this product by the end of 2014.
How are you looking to expand your geographical reach?
As part of our international expansion, we established a presence in the Middle East. This initiative has paid dividends thus far, going from strength to strength. We are also keen to leverage our Middle Easter presence to capitalize in the East African developments in place like Tanzania and Mozambique.
With the exciting development sweeping through Latin America, we are looking to explore a number of markets there including Brazil and Mexico in particular. We already somewhat of a presence there having forged a partnership with two domestic players in the respective markets.
Closer to home, we are opening a new facility in the bordering regions of Malaysia that is nearly as large as our current one here. Despite its obvious and fantastic advantages, Singapore is becoming an increasingly expensive place to operate in. By gradually shifting some 60 percent of our production capacity, we are keen to reducing our cost base but also exploring the opportunities present in Malaysia. Nevertheless, our headquarters will always remain in Singapore.
We also see a lot of developments taking place in Indonesia and our service facility there has increased significantly over the past couple of years. To support that growth, we recently set up a new sales office in Jakarta, Indonesia in partnership with a local player.
In China, we are in the process of establishing a joint venture with a local partner which we expect to be operational by the end of 2014. The aim there is to capture the growth and potential of the domestic market.