Aker Solutions, which accounts for at least 1,500 jobs in Aberdeen and Stockton, said last month that has emerged successfully from the “financial turmoil” of recent years.
The preliminary results for full year 2010 record revenues of NOK 50.8billion (£5.43billion) and EBITDA of NOK4.3billion (£0.46billion).
The figures including discontinued operations such as the parts of the former P&C (Process and Construction) business, which was transferred to Jacobs just over a month ago on February 1.
Øyvind Eriksen, executive chairman of Aker Solutions, said: “The 2010 accounts show that Aker has emerged from the 2008-09 financial turmoil and on strong note. Although overall revenues declined earnings remained at the same levels as 2009.
“The market fundamentals for Aker Solutions are good, with high tender activity and orders in the fourth quarter reaching NOK 14.5 billion (£1.55billion). The order backlog at the end of 2010 was NOK 55.4 billion (£5.92billion).”
Speaking at the results news conference he added: “Looking into 2011, the market is about the rebound. The order backlog is sound and the level of tender activity is very high,”
Just a few days prior, Eriksen was in Aberdeen talking to the “troops” and consulting with management. His mission … to build a better picture of what Aker Solutions actually did in Aberdeen and what its strategic value in reality is.
He told Energy that Europe’s Energy Capital was, if anything, more important to the future of Aker Solutions than had been realised hitherto, especially in the context of internationalising the group … something that has long been something of a challenge to senior management in Oslo and Stavanger, despite various attempts to find a formula that worked.
He said too that the work being carried out by the group, supporting mature fields was also of huge value because the ageing process was much more advanced on the UK Continantal Shelf than the Norwegian sector.
“Its important to realise that, following the sale of P&C, Aberdeen has become Aker Solutions’ biggest hub outside Norway. We have close to 2,500 employees here,” he said.
“We have reconfirmed that we are definitely here for the long-term. All business activities in Aberdeen will be positioned for growth, rather than the opposite.
“Looking to the group’s future, I think we can be inspired by some of the business activities that we have here. We can be inspired in many directions, but let me briefly mention two.
“First of all, the British sector has been in a mature phase for several years already and Aker Solutions through our MMO (maintenance, modifications and operations) business is playing a significant part in field life extension work … supporting ageing installations.
“When we’re transforming our Norwegian activities in order to be better positioned for the new nature of the work in the years to come, I think there’s a huge lesson to learn from the transformation you have been through here in Aberdeen.
“The other question I will take back home is from which hub is it realistic to grow outside of Western Europe when we further develop our expansion plans globally.”
Eriksen said he had engaged in a “very interesting” discussion with the top management of subsidiary Qserv about how to further develop the Aker Solutions cluster in Aberdeen business and to what extent the city could be the well intervention hub for a global operation.
Qserv was originally set up by Tommy Dreelan and his brothers. They made its hugely successful prior to being acquired by Aker mid 2008 and remain successful under Norwegian ownership.
Eriksen: “If you benchmark the cost level and product range that we have been able to establish in Aberdeen compared with the offering we have in Norway, the difference is huge … much larger than I realised prior to this trip.
“To me its really a question about who is best positioned and I will not rule out that, going forward, Aberdeen can play a much more important role in our growth ambitions globally than we have seen.
“This is simply due to the fact that here we have the competence, the capacity and the offering that, from both a quality and a cost point of view, is better positioned than most of our similar offerings in Norway.”
Eriksen was prepared to be frank in a way that perhaps none of his predecessors ever did. Such frankness of course could be taken the wrong way in Norway. Only time will tell in that regard.”
The UK might be ahead of the NCS in terms of maturity, but it is also ahead in terms of revival, with innovative approaches used to help that process. Could Aker Solutions utilise experience gained by its Aberdeen people to help guide the approach in Norway where policy makers and the industry appear less well versed in dealing effectively with the challenge?
Eriksen: “You’re right. But the UKCS has one other important factor in its favour and that’s the customer base. It’s wide, both in terms of number, but also nature. That creates a dynamic working environment for suppliers like Aker Solutions to work in.
“While we greatly appreciate the co-operation we have with Statoil in Norway, its basically one customer. The client base in Norway is so nattow whereas in the UK is is so broad with different companies having different priorities.
“Even though we’re one of the big players in this market, I think the potential is far greater than what we have been able to show as a company. In a number of our business areas we really will have to revisit the role of Aberdeen in that context.”
The desire to internationalise goes back more than a decade to the years prior to Aker and Kvaerner merging in a bid to solve their mutual and several difficulties. Indeed, for a time, Kvaerner had its notional headquarters in London. That failed.
Years later and still Aker Solutions tends to be a Northwest Europe player and is perceived to struggle to grow globally.
But is this perception in fact rather unfair? After all, in Eriksen’s words, about 50% of group revenues are generated outwith Western Europe. Breaking this down to main segments, all product business is primarily outside Western Europe; in the UK (Aberdeen), 80% of subsea revenues derive from export.
Although from a subsea perspective, while Aker Solutions is North Sea centric in terms of the skills base, the influence on a global scale is much more than it was three to five years ago. Indeed, it is Eriksen’s opinion that, through the UK business, the group has “virtually rejuvenated” itself because, 10 years ago, it was a purely domestic enterprise.
Notwithstanding this, and the Aberdeen dimension aside, does Eriksen think the balance is right this time and that internationalising the group really will work?
” Not yet. It’s a huge task to develop Aker Solutions outside Norway and North Sea. However, I think the restructuring announced in December is a right step in that direction from a cultural perspective.
“The EPC (engineering, procurement, construction) new field development business has been a very important part of Aker Solutions. Bear in mind, on the Norwegian Continental Shelf we have been involved in roughly 90% of all field developments.
“That proud history has had a strong impact on the priorities and culture within Aker Solutions up to today.
“Even though we have extended our product and service capabilities outside Norway, from a leadership point of view, the EPC business has been vital for our wellbeing. But by spinning off EPC field development as a separate company, as we have announced and are committed to this year, and by recruiting a new management team to the company, I hope that we are taking steps in a more global direction.”
While some may view the break-up as being counter productive when consolidation appears the dominant mantra, Eriksen is satisfied the right set of decisions have been taken to bring about change that will work.
“You can approach this from different angles. My take on this is to examine the Aker Solutions portfolio. It is a very wide, ranging from EPC field development via engineering to products and well intervention. To the best of my knowledge you can hardly find any competitor in the marketplace with a similar broad portfolio.
“Even though you’re right that the industry tends to consolidate rather than demerge; speaking on behalf of Aker Solutions I think it is important that we clarify the portfolio, make the company more focused and make it easier to benchmark with our competitors.”
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