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Diderik Schnitler: high level of truthfulness and fairness towards the clients is a key to success
7th July 2020

The Chairman of the Supervisory Board of the SRC Group is Diderik Schnitler, who has outstanding experience in global business management. We talked with him about the present and future of the SRC Group, his views on maritime industry in these turbulent times and much more.


Initial skepticism turned around


Diderik Schnitler’s was first introduced to SRC by a friend of his. “At first, I was rather skeptical.” As a leader of a shipbuilding company, he had come across many proposals from companies that had access to labor from former Eastern Bloc. However, quality and trustworthiness always became the main concern. 

Despite his skepticism Schnitler agreed to meet with the board of SRC. He was impressed. The meeting went well, the members of the board left him with a good impression, and he found SRC to have the right tools to succeed in the ship repair and shipbuilding industry. Moreover, he found Tallinn to be quite accessible, as it was only a one-hour flight from Oslo. 


The competitive edge


Schnitler considers SRC to have quite a few competitive advantages.

Firstly, at any given time the company can mobilize labor around the world. During his work in the oil industry, Schnitler often encountered lengthy negotiations about moving labor from one part of the world to another. In SRC mobilizing comes without discussion. “Mobilizing quickly, that’s a good competitive edge.”

Experience is also of importance. SRC already has the know-how on concluding quality labour contracts. Know-how means that promises are delivered, and quality is assured. Thus, quality and trustworthiness are no longer concerns. 

Schnitler finds that knowledge of different languages is also an asset. “Many Estonians speak Russian, Finnish and English.” Additionally, Schnitler believes that Estonians understanding the Nordic business culture is an advantage.


Challenges of the marine industry

Despite SRC’s competitive edge, there are always challenges in the marine industry. According to Schnitler, in the upcoming decade, political pricing will be problematic. 

He brings examples of states like Japan, South Korea, Spain, and Vietnam heavily subsidizing its domestic ship construction industry. “That’s a challenge you have to face in the shipbuilding industry – they don’t price the product according to the market.”

Quality is also an issue in the shipbuilding industry. Nevertheless, Schnitler is not worried about quality, when it comes to SRC, as over the years they have gained the know-how of how to obtain the best resources.

Schnitler explains that it is also important to know your market. You do not only need to know your, but also your competitors’ strengths. The right contacts are also of high importance — that is why it is SRC’s strategy to establish subsidiaries in different promising regions. 

In the end it is important to deliver what you have promised. “You have to have people who have the right business ethics,” Schnitler says as he explains that only with the right business ethic can you carry out your agreements. 

However, Schnitler admits:” Most importantly, you must also acknowledge your failures,” as apologizing and promising to compensate for future projects is part of the business. 


Selecting right partners in business


When it comes to selecting right business partners, Diderik underlines the need to keep an eye especially on the heads of the companies, as well as the salespersons. He also emphasizes the importance of business partners being highly ethical. This would mean that if the job done does not meet the expectations of the customer, you must make up for it. The high level of truthfulness and fairness towards the clients is a key.

Besides personal qualities, technical understanding is important when choosing a partner, as Diderik points this out as the main problem they had with their initial partner in Norway.

Choosing business partners well is especially important for companies like SRC, which have rather slim balance sheets. This does not leave much room for failure. Maintaining a sufficiently large cash flow and equity is also a challenge when trying to survive the coronavirus crisis. Diderik has no such concerns with the Wilh. Wilhemsen Group he is also chairing. They have sufficient cash flow and equity to survive the crisis even if it takes two to three years to get back to normal business.


Impressed by SRC's work


Diderik believes in what he does. Indeed, he has multiple reasons to be proud of SRC’s work, one of the examples being when SRC delivered the Silja Europa project. A small company like SRC managed to mobilize 1000 first class people with a timespan of only 3 weeks. Diderik does not hide that he was impressed by the SRC’s execution and keeping promises.

Diderik knows what it takes for a company to do that. He brings an example of his past when he was a chairman of one of the largest cruise vessel builders in the world, Kværner ASA (now only in Finland Mayer Turku, Rauma Marine Construction & Arctech Helsinki). The Finnish firm built a vessel called Crystal Symphony for a Japanese company Crystal Cruises, making a net 100 million dollars with the project. Later, the Japanese company lost a 100 million dollars when trying to build a sister vessel to Crystal Symphony themselves, as it had an engine failure during a voyage.

Japanese have not successfully managed to enter the cruise building business just yet, as cruise-ship building keeps being dominated by Europeans. Others that have tried to build cruise ships have thought of it as of building ships, which according to Diderik is wrong. One must think of building a cruise ship as of building a hotel. According to Diderik, when building a hotel, the right infrastructure of subcontractors remains crucial. He underlines his experience as his key strength, and he has all the right to do so. Building a cruise vessel requires a good network and plenty of experience.


Bio


Diderik Schnitler has extensive experience from Norwegian business and politics and has among other things been president and CEO of Saga Petroleum ASA, president of the Confederation of Norwegian Enterprise (NHO), president for Kværner Shipbuilding and Deputy Minister of Industry. Furthermore, he has been chair of more than ten listed and non-listed companies.
 
He also served as president of the Confederation of Norwegian Enterprise and is currently a fellow of the Norwegian Academy of Technological Sciences.
 
Since 2002 Schnitler is chairing the board of a global shipping company Wilh. Wilhelmsen Holding. He is also Chairman of the Supervisory Board in SRC Group AS.
 
Schnitler holds a Master of Science from Norwegian Technical University, Trondheim, Norway from 1970.
Megatrends shaping the maritime industry
22nd June 2020

The negative economic impact caused by coronavirus will probably only become apparent in autumn when the effects of the crisis will surface in the balance sheets of businesses and thereby also reach the ordinary people. The maritime industry will certainly not be left untouched by the crisis. However, in the long run there is a solid foundation for growth in the sector. Hannes Lilp, the owner of a ship construction and repair company SRC Group AS, writes about megatrends in the maritime industry.
 
It probably comes as no surprise to someone working in the maritime sector that more than 80% of the world's goods move by sea. Shipping is the force behind the world economy  — it is one of the most important and environmentally friendly methods of transportation that humankind has come up with. 

 

The same volumes in the oil industry 

 
The modern developed society cannot function without energy. In my opinion, despite looking at the different scenarios on how to produce energy, today's demand for oil and gas products will not decrease in terms of volume in the next few decades. There might only be changes in the shares of total electricity production — for example the percentage of green energy is increasing and the percentage of oil products is decreasing accordingly.
 
This is largely due to the fact that it is already apparent now that by 2050 there will not be enough funding for green energy projects to ensure energy security in states. Therefore, oil and gas will most probably remain in use until reserves are depleted. However, the sector will definitely become more efficient and environmentally friendly than it is today. This in turn will provide work for maritime companies.

 

Offshore wind farms create growth opportunities

 
In the future, the Offshore sector will not only rely on oil and gas. Until recently, states had to heavily subsidize offshore wind farms and wind technology so that it would make sense to produce electricity by these means at all. Now however, offshore wind farms have become reasonable cost investments that can operate under market conditions.
 
Floating wind farms, which have already been tested in some places, offer very interesting opportunities for the Offshore sector. Since, the 2017 construction of the first floating wind in Scotland developers have shown increasing interest in floating wind farms. The advantage of floating wind farms is that they can be built farther from the coastline, are better for the environment and less disturbing to people.

 

Ships will be designed to be more environmentally friendly 

 
The most notable changes in the shipbuilding and ship repair sector (both in which our own company is active) are connected to environmental standards. These requirements often concern ship exhaust emissions and ballast water systems.
Hybrid solutions, whereby ships are made more environmentally friendly and less polluting through battery solutions, have also come into the picture. These types of systems make it possible to visit city harbours without polluting its air. 
 
Battery solutions also suit smaller ferries that travel shorter distances. In principle, with the current technology and with agreeable ships, it is possible to carry goods for shorter distances, such as the crossing of the Gulf of Finland (Tallinn-Helsinki-Tallinn), with the help of battery systems.

 

The volume of ship constructions will not stop

 
There are too many ships in the world's merchant fleet. That is why ship chartering prices are low, while causing difficulties for ship owners such as creating the need for ship owners to consolidate. 
 
In principle, the construction of ships could be stopped for several years, they could be modernized a bit and be left to wait until the situation has returned to normal. Nevertheless, we are still seeing quite a big increase in construction volumes. 
 
Why are these new cargo ships being ordered? Mainly because engineering solutions have evolved a lot over time. If a new ship can be operated 20-30% cheaper, it is already a good argument to construct the ship. 
 
New ships also comply with more standards or are just more environmentally friendly. That is an important argument to construct such ships. For example, large oil companies with strong market forces often force shipowners to invest in green technologies so that they can tell their customers and governments that they care about the environment and they also demand the same of their partners. Inter-governmental agreements also impact this process.  
 

Autonomous ships are the future of merchant shipping


One of the major and important trends is the growth of ship automation and the development of autonomous ships. Prototype ships have been built for some time already, especially in the military. In Norway, the world's first emission-free autonomous commercial vessel, Yara Pirkeland, will soon be completed.

Unmanned vessels are safer and more efficient than manned. It is a well-known fact that 80% of all insured events with ships are caused by human error. If we eliminate the human error, we also significantly reduce the number of shipping accidents. Costs will also be reduced, as there will be no need to keep a crew on ships.

At the same time, it must be acknowledged that the crews of larger cargo ships have already been made so efficient and minimal today. Thus, crews are not as significant of a price component for cargo ships as they are for passenger or cruise ships. A cruise ship's crew can often be 1,000 or more people.

In Finland, attempts have been made to make ferries between islands move without people. Nevertheless, whenever there is a passenger, it has to be thought what can be done when a conflict between passengers or a health issue emerges. When it comes to passengers, we will probably not get away without having the ship manned just yet.

Autonomous ships are certainly the future of the industry, but common standards must be agreed before their deployment, in order to ensure safety at sea. This legal framework has not been agreed upon yet, and we will have to wait a few more years.



Information technology is finding its way into the maritime industry


The advent of information technology to sea has certainly already begun, and this is a major trend that we must take into account.

A very important issue with autonomous fleets in the near future will be cyber security, because we will see more and more cyber pirates and terrorists trying to take control of ships.

When it comes to the sharing economy, which has changed the market for taxi or courier services, there will be some changes in maritime transport and the organization of maritime transport ahead of us as well.


Ferries are becoming more and more floating department stores


Tallink, the leader of Baltic shipping, has performed particularly good and has been pioneering in the ferry industry, as they have changed the nature of doing business all over the world.

The Estonian company has made the transport of people as efficient and comfortable as possible for passengers, but more importantly, taking a ship has become a way of spending leisure time for people.

Basically, Tallink's ferries are mobile shopping centers, where people can spend their time shopping, enjoying a delicious meal or having fun. This trend is certainly spreading to other parts of the world, as it makes the provision of ferry services more profitable.


The cruise industry continues to grow


Cruise shipping is a very fast-growing form of entertainment. This sector has suffered a major setback in the context of the coronavirus, but they will certainly come out of it.


Had it been any other crisis, the cruise industry would have continued very successfully. The reason is that their client is a pensioner who has already accumulated their wealth and is receiving a stable pension. Crises do not have as much of an impact on these people as they do on working people.

Despite everything that has happened in the market today, cruise companies have been able to raise money in the crisis conditions - Virgin Cruises finished new ships, the Ritz-Carlton hotel chain also came out with its cruise ships.

Given the rapid growth of the tourism sector, there is certainly space for the cruise industry to grow.

SPS Technology: A Go-To Solution in Maritime and Offshore
22nd May 2020

SRC Group AS is accomplished SPS Technology installation partner with numerous successful projects across two decades. The technology delivers cost and time savings, enhanced protection and safety, as well as improved environmental sustainability. In this article, we explain how to use this technology in maritime and offshore sector.

What is SPS technology?

SPS is a structural composite material comprising two metal plates bonded with a solid polyurethane elastomer core.
Approved by major regulatory authorities, it’s used in a wide variety of civil, offshore, maritime and special applications including repair of offshore structures and maritime vessels.
The technology is much simpler than stiffened steel plate and much lighter, slimmer and faster to erect than reinforced concrete. It is patent protected and has a low carbon footprint and is 100% reusable/recyclable.

How It Is Used in Maritime and Offshore Sectors?

In Marine & Offshore, SPST eliminates the need to crop out existing steel. Existing structure is retained and reinforced with a new steel plate and polyurethane core resulting in a stronger, flatter surface. This makes reduced repair times possible; often without taking vessels out of service,” said Vadim Ladkin, Chief Commercial Officer & Member of Board, SRC Group AS“In shipbuilding, SPS allows simplified, more robust structures with less welding, labour and material required. The reduction in fatigue and corrosion prone details increase service life and reduces maintenance costs,” he added.
Marine applications include hatch covers, tank tops, vehicle decks and citadel access protection doors. Offshore applications include pontoon reinstatement on semi-submersibles; side impact protection on FPSOs; strengthening helidecks, pipe decks and landing areas; deck reinstatement on all platforms; blast walls; OSV decks reinstatement; dropped object protection solutions; and jack-up spudcan reinforcement.

Experienced Installation Partner

SRC Group AS are an accomplished multi-skilled global business unit that remain flexible to their clients’ needs,” said Ian Nash, Business Manager of SPS Technology. “Versatile, conscientious and highly motivated to deliver only the highest standards, make them the perfect partner for SPST.”“The team are exceptional communicators and experienced in liaison with national and international organisations, displaying tact and diplomacy by being sensitive to the clients’ needs. A great company ethos mixed with hard work is the perfect combination," he added.

Selection of SPS Technology applications we have done!

SRC Group AS are the most experienced SPST installation partner, building a large portfolio of successful SPS projects spanning across two decades. We selected three, we are some we are very proud of.
Queen Mary 2
Owner: Carnival Cruises
Class: Lloyd’s Register
Area: 88m²
Date: October 2017 & September 2018
With SPS licensee, SRC Group, an SPS project for Carnival Cruises on board the Queen Mary 2 was completed in September 2018. It follows on from a similar project October 2017. Both projects were undertaken during a scheduled cruise between New York and Southampton. Two areas, 48m² and 88m² were reinstated tween deck 8 and deck A. The repairs were inspected and approved by Lloyd’s Register on both sides of the Atlantic!
The team was able to complete the repair under challenging circumstances whilst the vessel was in-service. In order not to impact on our guests’ cruise experience, restrictions were placed on when works could be undertaken which the team worked around, delivering the project on time with minimal disruption,” said Andrew Manzies, Deck & Safety, Carnival UK.
Sun Princess
Owner: Princess Cruise Line Ltd
Yard: Sembawang Shipyard, Singapore
Date: June 2018
62sqm on deck 14 (ventilation room) was reinstated using SPS. Pipework etc made access challenging. Project completed on time according to Schedule.
Pride of York & Pride of Bruges
Owner: P&O North Sea
Class: Lloyd’s Register
Date: January and February 2019
Pride of York project was carried out at Damen Shipyard. 58m² reinstated across Decks E&F, plus 17m² on bulkhead of water ballast tank. In Pride of Bruges, 55m² deck was reinstated whilst still in service between Hull and Rottterdam.

Interested to know more? Contact us now!