The Norwegian maritime cluster consists of the following:
– Shipowners and ship managers
– Shipbuilding and repair yards
– Ship’s gear manufacturers
– Ship finance institutions
– The Oslo Stock Exchange
– Ship classification societies
– Marine insurance companies
– Maritime research and development institutions
– Maritime education
– National authorities
– Maritime software producers
In the space that follows, we’ll be taking a closer look at the benefits of the cluster as a whole, and at a number of these specific segments. A large portion of the other segments in the cluster (such as shipbuilding, ship classification, maritime education, etc.) are covered in detail in the other articles in this issue.
One of the most successful shipowners in Norway is Farstad Shipping. The company’s CEO, Terje J.K. Andersen, is grateful for what the Norwegian maritime cluster has meant for the industry. As former president of the Norwegian Shipowners’ Association, Andersen has broad inside knowledge of the maritime sector.
“Our international competitors envy the cooperation we have between shipbuilders, ship’s gear producers and shipowners. This cooperation serves as an independent driving force in the product development of the industry. Our maritime cluster is unique,” Andersen states.
Rolls-Royce Looks to Norway
A company like Rolls-Royce Marine could easily have moved its operations outside of a high-cost country like Norway in order to produce its ship’s and maritime equipment with much lower labour costs. Still, the company finds it essential to utilize Norway’s seafarer traditions and maritime cluster.
“It is absolutely crucial for us to be a part of such a maritime environment,” says Arnfinn Ingjerd, Vice-President of Communications for Rolls-Royce Marine. The British-led company has established its Offshore division in Ulsteinvik in western Norway, in the middle of one of the most influential maritime clusters in the world.
“It is inspiring to meet customers, competitors, suppliers and other maritime partners wherever we turn. At the same time, it is challenging because we have to seek new and better solutions constantly. Thus, we are operating in a dynamic and innovative environment,” says Ingjerd.
Norway has long traditions garnered from the surrounding oceans, but a true maritime cluster also demands knowledge about the requirements of the maritime industry, about ship design and how to develop ship’s gear. “We in Rolls-Royce find this competence in Norway,” says Ingjerd, explaining that the company has activities in both high-cost and low-cost countries.
“We produce high-tech components in a high-cost country like Norway, and some of the simpler parts in low-cost countries. The combination makes us competitive,” he says.
Education a Part of the Cluster
Thruster producer Brunvoll is another good example of the unique maritime sector in western Norway. The company, which provides complete thruster packages worldwide, feels responsible for providing quality maritime education to future professionals. Brunvoll and other marine companies support education and research and development for the long-term benefit of the entire industry.
“Schools, universities and research institutions form an essential part of this cluster, resulting in synergies of theory and practice, learning and teaching,” says Brunvoll’s Marketing Director, Per Olav Løkseth.
For centuries, Norway’s maritime cluster has had an international perspective. The vast majority of the products produced in the cluster are exported, making quality essential. “The maritime enterprises in this region work in close cooperation to produce packages in which every component is designed for optimal performance in the final product,” explains Løkseth.
More Than Just Lending Money
The world’s shipping markets need reliable and secure funding, and Norwegian banks and financial institutions play a vital role in financing and advising on global shipping activities.
Norway has two heavyweights when it comes to ship financing. The Nordic bank Nordea has global shipping commitments of $12.5 billion, while Norway’s largest bank – DnB NOR –
has corresponding figures of $11 billion. These tallies place the two banks alongside Citibank as the three largest ship finance institutions in the world.
“Combined, these two banks give a tremendous boost to the market,” says Carl E. Steen, head of Nordea’s Shipping, Offshore and Oil Services Division. “We [Nordea] are a lead arranger of syndicated loans to the shipping and offshore industries, and we have about a 15 percent market share in syndicated shipping loans worldwide.”
Nordea is a Nordic bank, but its shipping headquarters are located in Oslo. “We have financial muscles from the Nordic cooperation, and we combine this with extensive shipping experience from the Norwegian maritime cluster and traditions from the old Christiania Bank & Kreditkasse,” says Steen. The Norwegian bank became a part of Nordea in 2001.
In April 2005, Nordea secured a $1.6 billion deal with Antwerp-based Euronav, the largest tank finance contract ever.
Colossal LNG Contract
Nordea’s Norwegian competitor and partner in the maritime cluster, DnB NOR, scored a coup of its own not long after.
In the fall of 2005, DnB NOR secured a $1.6 billion loan to five Japanese shipowners for investment in LNG (liquefied natural gas) vessels. The vessels will be chartered on a long-term contract to a major LNG project in Qatar.
The Norwegian bank was able to secure the transaction because of its comprehensive knowledge about shipping in general, and the continued growth of the LNG market, according to Kjerstin R. Braathen, in charge of the LNG section of DnB NOR. While cooperating with the Bank of Tokyo-Mitsubishi, Societe Generale and Sumitomo Mitsui Banking Corporation, DnB NOR has the lead role in the project.
“LNG is a market with a substantial growth, and we expect this market to grow stronger over the next three to four years. To be a good advisor, you have to understand the industry and the competition. We have that competence,” Braathen says.
“We aim to be the preferred provider of a comprehensive range of commercial and investment banking services to high-credit quality Norwegian and international shipping and offshore clients, either as principal or intermediary,” says Kristin H. Holth, who is in charge of the shipping and offshore activities with basis and relations at DnB NOR headquarters in Oslo.
In addition to Oslo and Bergen, DnB NOR has major shipping offices and corporate banking centres in New York, London and Singapore. The last office is of particular importance at present, as the bank expects the Asian market to be the most interesting with regards to LNG in the foreseeable future.
“We concentrate on international markets, and approximately 50% of our portfolio consists of exposure to non-Norwegian clients – and this is increasing,” states Holth, whose bank employs approximately 100 professionals focused on the shipping and offshore branches.
Braathen is confident that DnB NOR will strengthen its position in the LNG market. “We are a lead arranger and lender to selected clients and projects dedicated to upstream liquefaction and regasification of natural gas, and we want to be a leading advisor and arranger within LNG ship finance by 2008,” she says.
Global Insurance Players
In addition to shipping finance, Norway is also one of the driving forces within marine insurance, represented by flagships Skuld and Gard. Combined, Norwegian insurance companies have about 15 percent of the global shipping insurance market. Headquartered in Oslo, Skuld is an international player with offices in Copenhagen, Bergen, Hong Kong, and Piraeus, Greece.
“Our dedicated staff and an extensive network of correspondents make Skuld a competitive service provider that will always go the extra mile for its members,” says President & CEO Douglas Jacobsohn
A few years back, the marine insurance industry faced a challenge with regards to insufficient premium levels. According to Jacobsohn, Skuld responded to the challenge with a clear strategy. It involved a major restructuring, with strong emphasis on costs, member selection, and pricing and reserve building – all while still meeting the needs of its members. “A dedicated staff and a lot of hard work have made these efforts successful,” he says.
Gard is another international shipping insurance giant, headquartered in the small southern Norwegian town of Arendal. The company employs more than 340 people of 27 different nationalities in nine locations around the world.
“Our workforce possesses a unique mix of expertise in marine insurance, energy insurance and claims handling, as well as a broad range of professional qualifications and practical experience,” says Gard CEO Claes Christian Isacson. “A high proportion of our staff are former seafarers with hands-on knowledge of the problems that can occur and the support that is required. They are assisted by an extensive network of correspondents in all major ports,” he says.
Influential Shipping Stock Exchange
The Oslo Stock Exchange is also an important part of the financial element of the Norwegian maritime cluster.
“Norwegian shipping has high competence, and the industry is well acknowledged internationally,” says Oslo Stock Exchange Senior Vice-President Per Eikrem. 2Moreover, Norwegian shipping analysts are highly skilled, and they provide quality analysis of the individual companies and the different segments in the industry. This is some of the background for shipowners Bergesen choosing the Oslo Stock Exchange for its stock relisting.”
Even Greater Possibilities
According to Morten Ulstein, CEO of maritime investment company Borgstein, the synergies in the Norwegian maritime cluster could reach an even higher level if the Norwegian industrial locomotives cooperated better to develop solutions based on Norwegian competence and resources.
“I’m thinking first of all about oil companies, cargo owners and exporters, but I’m also thinking about the shipyards, ship’s gear suppliers and ship consultants,” he says, adding that he is optimistic about the development of the Norwegian maritime cluster.
“If you want growth, you have to accept risks, and this requires insight and competence from the employees and, of course, the owners. It is difficult to find other industries with better competence than the maritime sector,” he ends.