At SMM 2016 in Hamburg Maritime Reporter & Engineering News had the opportunity to sit with Remi Eriksen, the CEO of DNV GL. After his first year on the job in the top spot, Eriksen shares with MR his blunt assessment of the maritime and offshore O&G markets in the near-term, and discusses DNV GL’s role in these key markets as they re-emerge in the coming years.
It has now been just more than one year since you took the top spot at DNV GL. What were your expectations and goals coming in, and how have they changed?
Before this I had been with the company for almost 24 years, so I knew what I was getting into. I wanted to complete the merger and start growing the company, but then the market did not cooperate. We completed the merger by the end of 2015, but the market did not come back. The biggest surprise and adjustment: I didn’t believe that this downturn would have lasted this long, particularly on the oil and gas side of the business. (In context) 70% of what we do in DNV GL has to do with maritime and oil and gas. Our projections today are a recovery in the deep sea segment at the end of 2018 beginning of 2019; with oil and gas, rigs in particular, it will take a bit longer. We might not see any rig building activity until 2020/21.
Can you quantify how you have had to adjust within DNV GL to counter this market?
It basically means that we have to adjust our manning capacity, part of which was in step with reductions taken with the merger taken in 2014 and 2015. But this year we had to make some more adjustments. Last year we had reductions of about 1,000 staff, from 15,000 to 14,000, and this year we’ll probably have another reduction in the range of 1,200 to 1,400 people.
Is there any good news?
There is. The good news is that we are growing certain parts of our operation. While we see 70% of our business declining, we see 30% growing – renewable, power transmission and distribution, healthcare and food. Most of our people are engineers, they are highly educated, and they can do other things. We’re trying to leverage this flexibility in our workforce to build where we are growing, to avoid laying off highly competent people.
We see this a lot when we interview CEOs; people are the biggest challenge, particularly when there is a downturn and a shipyard, for example, if forced to shed valuable workforce.
But for us it is even more dramatic, more so than shipping companies and oil companies. What we do is deliver our services to people. The only asset we have are our people. They are the revenue generators and the cost. It is really a fine balance.
What do you count as DNV GL’s biggest success (during your tenure)?
Completing the merger. Another goal was to ensure that we are becoming a customer-centric organization, more attentive and responsive to customers, and to be more agile. We are on the way. A great example of this is our DATE Centers (Direct Access to Technical Experts). This is not a call center, rather a physical facility (five facilities total covering all world time zones) where technical experts are sitting, shifting the question to the next time zone when necessary, responding now within six hours. We are looking to lower that response time to four hours on challenging technical questions.
Also, we were quite early to emphasize the importance of digitalization and its impact on the industry as a whole. We have made investments in modernizing to offer digital solutions. Not to sound arrogant, but I think we are now far ahead of the competition when it comes to this digitalization journey.
What do you consider (personally) your greatest ‘lesson learned?’
There is something new to learn every day, you can never underestimate this. Of course, I didn’t anticipate the oil and gas market to be down for so long, so that too is a lesson learned.
Take me back to when you first entered the work force following university. How are you most the same?
I’ve always had the drive to push myself and improve. I still have that. I also have always been curious, and I’ve always enjoyed working with people. I had that when I graduated, and I think that I still have that today.
And how are you most different?
I think I’ve become more humble. Back then the world was more black and white, and today it is more shades of gray. I take a more balanced view on things. I also am less impatient today. I also think that today I have a much deeper appreciation for the purpose and values of our organization … the basic DNA for how we do things. That is something I learned, that when I was younger didn’t perhaps identify or appreciate at that time. I think it has to do with maturing in life.
How is that purpose, that value, important to the company as a whole?
It’s inspiring for people to work for a company that has a purpose. It’s not only about making money. Many companies were started because they had a grand idea, they had a purpose, and as a consequence perhaps they earned a lot of money. Sometimes you may have the tendency to forget why it was started in the first place.
When did you realize that you were on a trajectory for the top spot at DNV GL?
I have always been ambitious in my whole life. That was instilled in me by my parents: ‘be as good as you can be.’ I always wanted to work for a big corporation; I always wanted to do big things. But of course I did not visualize early on I would have this job. About 10 years back I realized I was building some really valuable experience that could help this company and bring me to a senior position.
The role of Big Data in shipping can no longer be denied, but “Big Data” means 100 things to 100 people. When the discussion turns to the use of data in the maritime sector, where do you see it having the biggest immediate impact in the coming year? Why?
A lot of people talk about big data, but the key question is: what can it really do for you? For us it means it will help to improve safety at sea, it will help to improve efficiency and it will help to reduce costs. You need to ask yourself … can this technology help you to do one of these things, and ideally all three. So what are some of the real, tangible benefits? It will help to improve condition monitoring, so that you are doing maintenance based on the condition, not the calendar; you can have situational awareness systems like you are starting to see on the new cars, helping to take away some of the human errors; and hopefully you can reduce manning. At some point you will see unmanned ships. We are starting some pilot trials over the next year or so testing some of the systems, with people onboard. But I think in three of four years I think you will have point-to-point traffic without any people onboard.
We often talk about ‘taking the down times to invest and plan for the future.’ But many ship owners, as you know, are simply struggling to survive. What is the reality on the street?
Some companies are literally turning over every stone to save money and to survive, then you have some of the companies that are more robust who can take the opportunity to invest for the future. But I think the reality is: there is not another China. China drove a lot of international trade and shipbuilding. This is a cycle, but the super cycle that we saw from 2004 to 2008 will not come again: there is not another China, and the money is so cheap right now that you will see many new players coming into this market, speculating and bringing in new capacity. I think it will recover, but I don’t think it will be as strong as we have seen in the past.
While it is obvious to see the impact of modern computational power and software solutions on the efficiency of vessel conception and design, it is perhaps not so easy to gauge effectiveness in real terms. Can you put in perspective of how modern computational power and software solutions have made ship conception and design more efficient and effective?
I think they are better ships. We have the ability to optimize ships for certain routes, meaning you can measure fuel savings for example. And there is the ability to perform more advanced calculations, meaning that we can more accurately put steel at the best locations, meaning we will get a more robust ship.
As you know, emerging rules and regulations which impact the way that a ship is designed, built, equipped and maintained over its life-cycle are putting a tremendous stress on ship owners – particularly small and medium-sized owners – to “keep up.” How do you see the role of “class” in assisting vessel owners and operators comply with the new rules?
There are two lines of thought. One is that we can help to identify the changes and determine the impact, as well as determine the options available under changing regulations. The second is that we have the purpose to safeguard life, property and the environment, and that we can help to ensure that regulators really know the impact of their regulations so they are not introducing regulation with unintended consequences. It is a dual role: to ensure that the regulations are good and not causing unintended effects; and to help ship owners understand so they can make better decisions.
The Future of Class: From your perspective, what are the two or three technologies or capabilities that will have the most dramatic impact on the way in which class conducts its business in the coming decade?
- Condition based monitoring and maintenance.
- Remote surveying with drones, for example.
- Connectivity: Gives us a better understanding of how trends change over time.
- Autonomous Ships (beyond 2025)
Obviously there are only a handful of ‘premier’ maritime classification societies. What makes DNV GL standout?
- R&D: We have a strong commitment to research and innovation. That is so important, to not only have innovation in technologies but also in regards to business process. Year after year we invest 5% of our revenue in research and innovation, either in house or in conjunction with our customers.
- People: 85% of our staff have a university degree, with many masters and PhD level as well. This helps because as I said before, the world is not black and white, there are many shades of grey, and you need to be able to make good decisions.
- Accessibility: Our global structure makes us highly available to our customers, an accessibility enabled by 350 offices in 100 countries.
- Future Rules: By virtue of the merger, we had the opportunity to really review all of the rules, to take a fresh look and develop something that is fit for the future.
- Diversity: We are diverse for a class society, and that’s a big plus for us. Two of the biggest themes across all of our business are digitalization and de-carbonization. Alternative fuels, automation, machine learning, connectivity is equally relevant to power plants to offshore platforms to ships at sea. We are in a unique position to take ‘lessons learned’ from one area and accelerate progress across other areas.