Second opinion on the strategic plan of the management of an offshore shipyard.
Our client builds large, offshore installations for the oil and gas industry. The exploration and exploitation of oil and gas fields is the most important driver for our client’s business model. The position of the big oil companies in the North Sea is under pressure; as a result, there is serious competition from suppliers from the low-wage countries. Ultimately, the design of an installation and its construction in good times determine the end customer’s profit. Our client specialises in producing relatively large, complex installations, whereas the trend in the North Sea is tending towards smaller and more flexible installations.
Should it remain active in the North Sea gas and oil industry and, if so, how. Also, how could it market its large installations competitively in the rest of the world, and would this necessitate relocating its production? The management were unsure about the developments and did not have a well substantiated answer to the above dilemma. JBR was asked to evaluate the management’s existing plan and to put forward alternative strategies, if necessary.
The management’s existing plan was assessed, thereby making the relative risks and certainties clear to the Executive Board. Based on the decision of the Executive Board, JBR worked on a new plan resulting in a partnership with an American engineering consultancy; this has the aim of sharpening discriminative ability in the design phase of large installations. JBR also recommended that shipyards should be opened abroad in cases where the local content can be supplied by the acquisition of projects. A different strategy of standardised and modular construction is recommended for the North Sea, leading to smaller, cheaper and more flexible units.
A strategic plan that distinguishes between big projects, thereby enabling the company to stand out from the competition, improve risk management and produce smaller, standardised and more flexible units. We have offered concrete suggestions with regard to the implementation.