Left Mr. Arnaldo Calbucci, Wilson Sons, Right Mr. Sander van Oord, Damen Shipyards Gorinchem

How did you become involved in the maritime market?

van Oord: After finalizing a master’s education in Marine Engineering at Delft University of Technology in the Netherlands in 1998, I became a Sales Trainee at Damen Shipyards. A year later, I started with the Sales Department for North-, Central & South America mainly in charge of Colombia, Panama & the Caribbean. By 2004 I became the Sales Director for that region running “shop” with my team of three sales managers and two office assistants, in charge of all commercial activities of Damen in the region. Since then most of the countries in the territory have been part of my day-to-day activities at some point in time.

Who is Damen?

van Oord: The Damen Shipyards Group is an international group of 35 operating companies, originating from a single shipyard founded in Holland in 1927. The Damen group is involved in a wide variety of ship new building, ship repair and related maritime activities, whereas the shipyards in the group are each specialized in specific ship types and/or markets. The highly standardized designs and the ongoing product development (based on customer feedback and practical experience) offer Damen-clients important advantages such as proven performance, unmatched reliability, short delivery times and low operational costs. Damen has earned a reputation for the superior quality of their products and for efficient after-sales services.

Summarize the strength of your company in one sentence.

The strength of the Damen Shipyards Group lies in the series production of standardized vessels in various product niches with a geographically wide spread base of customers and life time support of our highest quality vessels to assure customer satisfaction and  operational success.

Damen has a global reach: what are the advantages?

The main advantage of having a geographical spreading base is that we are less vulnerable to market fluctuations. In combination with the various series of products (i.e. Tugs & Workboats, Fisheries, Offshore, Defense, Dredging, Repair, luxury yachts) that we operate in provides that the geographical or industrial fluctuations level out the worst years and assure that we do not depend on for example one dominant customer or one type of product. The local construction of vessels through our material packages (CKD – Complete Knock Down package) allows flexible construction in competitive wage countries and makes us less dependant on our own existing facilities.

In example at this moment, although the world economy is slow, we continue to receive orders from countries like Brazil (Offshore), USA & Canada (Government - Defense) which are to some extent less sensitive to the momentary crisis.

How has the current economic situation affected your business in 2009, and, looking ahead, 2010?

In 2009 Damen’s the overall order intake dropped significantly in comparison to the “boom” years. In combination with some minor cancellations this has resulted in a reduction of the total order book. Overall one could say that we are back to more normal levels of sales, production and order book.

Luckily, we still have a good order book from the previous years resulting in our yards still being full for the next coming years, although production capacity reduction is on the agenda at some locations.

Looking into 2010 we expect that sales should pick-up back to a more normalized pre-boom level in order to continue normal production values. With the ability to expand production capacity rapidly through sub-contracting focus is now on managing stock production levels to market demand

What two or three “Emerging Markets” hold the best hope for business prospects in the coming 12 months?

Brazil: Through our strong relation with Wilson Sons, we have been active in the Brazilian market since 1992. Construction of large series of tugs for Wilson Sons’ port activities was the main business until approximately 2005 after which our customer also stepped into the offshore business. Since 2005 we have built more than five PSV’s currently chartered to Petrobras and still have another seven under contract. Furthermore some construction for third (government) parties has taken place. Taking into account the recent discoveries of larger deep-water/pre-salt oil fields, we expect a continuation of Brazil’s expansion of the offshore and related business. Although Petrobras will remain in a leading role as prime driver of the shipbuilding business, related industry like the

Marinha do Brazil (Brazilian Navy) and Transpetro will also follow to assure long term continuation of government policy, economical and infrastructural growth.

In all our view on Brazil as an emerging market is very positive. The shipbuilding industry is rapidly developing to a mature business resulting in an attractive & dominant offshore market.

Vietnam / China: In the Asian emerging markets Damen is mostly focusing on Vietnam and China. In both countries we have long lasting relationships that have started some 15 years ago. To do business in Asian markets, relationships are essential. There is no such thing as a quick deal. In both countries Damen is active as a shipbuilder building ships for exports as well as for the domestic market. Where we used to send complete shipbuilding kits with components sourced in Europe, we nowadays source more and more components locally, either from a local supplier or from a European supplier with production in Asia. In both countries Damen has invested and will invest more. There will be Joint Ventures as well as wholly owned companies. Gradually Damen is shifting the majority of its production capacity to Asia. This does not mean that the European yards will be closed, but these yards will be focussing on different, specific markets and products. The bulk production of standard vessels will mainly take place in Asia. A group of Shipyards like Damen can only secure its future when it secures the most economic production locations.

How is Damen investing today to secure its future?

Damen is and has always been investing in long term infrastructure to optimize production efficiency and thus facilitate lowest possible production costs. Currently those investments are being made mostly in the Far East at our facilities in Changde, Vietnam and in Romania at our yard in Galati.

Damen Shipyards Changde: We are currently expanding the production location through organic growth. In the past couple of years we installed new (covered) workshops to finish the vessels and for the short term future such expansion will continue.

Damen Shipyards Galati: At this facility we also just installed new covered workshop facility for the Tug & Workboat division so they have an all-weather work environment.

What do you count as the biggest challenge(s) today to run a successful, profitable boatbuilding operation?

The biggest challenge today is to down scale the production capacity while maintaining know-how, best motivated personnel and keeping facilities running at a cost efficient level. Furthermore, we deem that many shipyards will face liquidity problems, so maintaining positive financial figures is very important.

(As published in the January 2010 edition of Maritime Reporter & Engineering News, www.marinelink.com)