1. The Norwegian Maritime Industry in Global Competition – Future Prospects Fagtreff Norske maritime leverandører PhD Erik W. Jakobsen Managing Partner Menon Business Economics www.menon.no

2. MENON Business Economics www.menon.no MENON Business Economics Background and Experience  MENON Business Economics (www.menon.no) is a small Oslo- based research and consulting firm with six partners and analysts. Both partners have the highest academic levels (Ph.d) in both Business and Economics.www.menon.no  MENON possesses a unique and strong analytical competence on combining business strategy and economics. Our research and business consulting activities are directed towards  Economic analysis of international trade and business trends  Strategic management and business development  Industrial Clusters  Maritime and offshore industries  All our publications are ready for downloading at http://menon.no/en/Publications/ http://menon.no/en/Publications/

3. MENON Business Economics www.menon.no The Norwegian maritime cluster Shipping Financial services Ship brokage Legal services Education and R&D Insurance Ship design and engineering Equipment, Systems and modules Classifi- cation

4. MENON Business Economics www.menon.no The maritime value chains Shipping Cargo owners Oil/gas producers Oil service MOU building Shipbuilding Design Manufacturing Construction, Assembling Class Seismic Field development Drilling & petroleum production Supply/offshore service Tank/bulk Container Ro-ro Logistics MARITIME MANUFACTURING MARITIME SERVICES

5. MENON Business Economics www.menon.no The maritime value chains Shipping Cargo owners Oil/gas producers Oil service MOU building Shipbuilding Markets & transactions Market analysis Brokerage Financial services Insurance and legal services

6. MENON Business Economics www.menon.no Value creation doubled in 5 years 100%

7. MENON Business Economics www.menon.no Strongest growth in equipment and maritime services

8. MENON Business Economics www.menon.no The second largest industry in Norway

9. MENON Business Economics www.menon.no Growth in employment in recent years

10. MENON Business Economics www.menon.no And the productivity is impressingly high A tax revenue difference of 10 Billion NOK per year

11. MENON Business Economics www.menon.no

12. MENON Business Economics www.menon.no Countries and regions increasingly compete on being attractive locations for highly productive and innovative companies  The race for attractiveness exists on all geographical levels Local areas and cities Nation states Supra-national regions (e.g. EU vs. South East Asia)  The more internationally mobile firms are, the stronger the competition  The less mobile resources are, the more important they become  Countries compete to attract activities – not companies. The winners in the future are the ones that are able to attract Owners and Headquarters Financial, legal and other sophisticated services R&D – product and technology development Science and education

13. MENON Business Economics www.menon.no What explains long term industry competitiveness? Public Policy Tax & subsidies Fiscal Policy Regulations Labour market Education R&D Cluster dynamics Innovation pressure Knowledge externalities Critical mass Transaction costs Long term relative industry performance Company sophistication Strategic resources, i.e. rare, valuable, in-imitable, mobilized and appropriated Country Attractiveness Price, quality, mobility & relevance of resources Satisfaction with domestic location & foreign attractiveness

14. MENON Business Economics www.menon.no It was not until 2006 the Norwegian fleet started to grow … Source: ISL / Norwegian Shipowner Association

15. MENON Business Economics www.menon.no … while the world fleet has grown every year Source: ISL Shipping Statistics and Market Review

16. MENON Business Economics www.menon.no Norway has lost market shares in shipping in recent years Source: ISL / Norwegian Shipowner Association

17. MENON Business Economics The Danes gain while the Norwegians lose market shares Source: ISL / Norwegian Shipowner Association

18. MENON Business Economics Number of ships in the Norwegian fleet tell the same story Source: ISL / Norwegian Shipowner Association

19. MENON Business Economics … particularly if you use the right scale Source: ISL / Norwegian Shipowner Association

20. MENON Business Economics and number of rigs don’t seem to grow Source: ISL / Norwegian Shipowner Association

21. MENON Business Economics www.menon.no OECD Non-OECD Source: EIA, The world’s growing need for energy Fossil fuels will still meet 80% of demand in 2030 Source: EIA

22. MENON Business Economics www.menon.no But oil is drying up Existing global oil production Capacity expansion needed Industry’s capacity strained Mill barrels per day Source: IEA’s world outlook 2006

23. MENON Business Economics www.menon.no … something that creates the strongest offshore boom ever  The offshore market turned 1.000 mrd NOK last year and is expected to reach 1.500 mrd NOK in 2011 Source: ISL/Intsok

24. Transport Seismic / survey Exploration and Production drilling Floating Production (FPSO) From drawing boards to installation of pipelines and other subsea constructions Shuttle tankers Crude oil tankers Gas Carriers Ship-to-ship Heavy Lift Exploration Exploration drilling ProductionDemolition Offshore Service Vessels Field construction (subsea) Norwegian maritime companies are present in all parts of the oil/gas value chain

25. MENON Business Economics And look at the companies in Oslo  Shipping: BW Gas and BW Offshore  located headquarters in Oslo  Finance: DnB Nor and Nordea  The two leading shipping banks of the world  Brokers: Platou and Fearnley  Among the largest and fastest growing in newbuildings and freight  Class: DNV  still winning market shares  Services: Wilhelmsen Maritime Services  A global Maritime Superstore with 4.500 employed in 340 offices in 80 countries  Legal: Wikborg Rein  Serving leading shipping and offshore firms all over the world  Technology: Kongsberg Maritime  Dynamic Positioning and other innovative solutions for ships and floaters all over the world

26. MENON Business Economics www.menon.no Future competitiveness  There will be tough years in shipping, but offshore still looks good  The Norwegian cluster will remain competitive, but change in structure and focus  More HQ activities – transnational governance  More execution of ownership  More advanced maritime services Corporate finance Legal services and insurance R&D and education  Less manufacturing but more technology development – a lab for maritime innovations  Choosing the right strategy, Norway can be a global knowledge hub for offshore technology and advanced maritime services