Page 8: of Maritime Reporter Magazine (June 1999)

Investment in Design by David Tinsley, technical editor

The cost of building for the future

A concurrence of major elements of expenditure took its toll on last year's financial results at Lloyd's Register. In the face of intensifying competition and difficult economic conditions, the very fact that the classification society con- tinued to make heavy investments for the long-term future had a pronounced impact on the bottom line.

Research and development (R&D) endeavors were sustained, while an astonishing total of $19 million commit- ted to staff training during 1998 reflect- ed the earnestness of LR's Customer

First training initiative, seen as essential to cultivating improved contact and faster, more efficient response to clients.

Headquarters reorganization and a policy aimed at creating greater regional focus, all part of the business-building strategy of getting closer to the cus- tomers, have imposed non-recurring costs. Interwoven with the R&D pro- gram, the process of mechanization has seen the society invest $32.4 million per "As well as now incorpo- rating a number of our specialist software tools, including ClassDirect and

Rulefinder, SSRS has been enhanced to allow reporting from Interna- tional Safety Manage- ment (ISM) Code sur- veys." — Willem de Jong annum over the past three years in infor- mation technology (IT) hardware and software.

While total income was little more than one percent down at some $501 million, the big investment in outgoings coupled with the influence of price com- petition on newbuildings and the strength of sterling resulted in the pre- ceding year's operating surplus of $11.2 million being turned into a deficit of $8.7 million for 1998. Net investment income ensured that LR stayed in the black overall.

The effectiveness of the Change Man- agement Program, which draws together the various strands of the reorganiza- tional and more customer-attuned strate- gy, will be pivotal to the restoration of operating results, as will the various investments in working systems.

A society wishing to retain market clout cannot afford to relax its R&D efforts, so as to meet the client indus- tries' unerring expectations as to techno- logical standing and capabilities. The scale of input required in this respect certainly brings into question the ability (Continued on page 13) •or filtration, protection, and endurance, nothing holds up better in rough water than Luber-finer. Every filter is factory-tested to ensure the highest performance under Luher^finer

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