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The Finnish Offshore Industry 2014
This study describes Finnish offshore industry, its structure and business volumes as well as future outlook. This report is a continuum to the Finnish
Offshore Industry -reports conducted in 2012 and 2013. The project team is commissioned by Prizztech Oy (www.prizz.fi) and the report is also supporting the work of Ministry of Employment and the Economy (MEE) Maritime industry operational environment development programme. Financially the study is
supported by MEE.
Finnish offshore industry 2014
Page 1 (44)
Forewords
As Finland's ambassador to the Kingdom of Norway I have had the pleasure of
working closely with Finnish foreign trade and promotion of Finnish know-how in
one of the most lucrative markets in today's Europe. Norway, being one of the few
truly thriving economies in Europe at the moment, is also a close partner, and a
natural market for the Finnish expertise.
The Norwegian Continental Shelf is still going strong. The future expectations look
bright, nearly 50 years after the start of the Norwegian oil and gas adventure. The
Norwegian Petroleum Directorate's forecasts indicate that profitable production and
high level of activity will continue for many decades to come. A record number of
fields are being developed, and large new discoveries have been made. Currently many smaller discoveries
are under evaluation. The future of the offshore industry in Norway looks promising.
It is only natural that the Finnish offshore industry turns its eyes to Norway: The Norwegian continental shelf
forms currently the world's biggest offshore market. I am convinced that there is room for Finnish know-
how in this market. In many ways our two countries form a "match made in heaven": Finland has a lot to
offer when it comes to knowledge needed in the Arctic conditions, our technological competence, highly
educated work force, and our ability to perform and deliver. The statistics of our bilateral trade relations
show that there is room for improvement: Norway is (only!) Finland's 11th biggest export destination with a
2.9 % share of our entire export value. Norway is the 14th biggest import country with 2 % of the total import
to Finland.
As this report shows the Finnish expertise stands out and can make a difference in the harsh conditions of
the High North. But the reasons for Finnish-Norwegian cooperation don't stop there: we share a common
Nordic language, our business cultures are quite similar and the common cultural background makes
cooperation easy. Besides, cooperation across the borders can open up a whole new network of customers
and possible contractors – and this goes both ways.
The Finnish business life is not the only one eyeing up Norway. Official Finland delivers as well: the
establishment of a bilateral Arctic partnership with Norway aims at creating even better common ground for
cooperation and economic activity between our two countries. A "group of wise persons" consisting of
representatives named by the Finnish, Swedish and Norwegian prime ministers, is currently working on a
report that looks more closely into cooperation possibilities in the High North. All this is not just a proof of
further development potential in our relations, but it also shows the importance that the authorities in all
three countries attach to this cooperation.
An even closer cooperation and closer business ties will undoubtedly benefit both Finland and Norway.
Whether you need reliable partners, highly qualified work force, good solutions, or world-class expertise, I
am confident that Finnish expertise can offer a competitive option. We have the will and we have the know-
how, and we are ready to deliver. Hence I state with pride: "Look to Finland"!
Maimo Henriksson
Ambassador of Finland to the Kingdom of Norway
Finnish offshore industry 2014
Page 2 (44)
Key figures
Overview of the Finnish offshore industry
Value of exports
2009-2015e, M€
Number of employees
2009-2015e
Revenue by industry
segment 2014
Sources: information provided by the companies, VALOR analysis
0
500
1 000
1 500
2 000
2 500
09 10 11 12 13 14e15e
0
1 000
2 000
3 000
4 000
5 000
09 10 11 12 13 14e15e
67 %11 %
10 %
12 %
TechnologyYardsand
engineering
Sub-contract
ors
Other
Companies’ outlook for their offshore
businesses
Sources: information provided by the companies, VALOR analysis
14 %
51 %
27 %
4 %
3 %
22 %
39 %
29 %
7 %
3 %
25 %
58 %
13 %
4 %
0 %
Grows rapidly
Grows moderately
Remains constant
Decreases moderately
Decreases sharply
Finnish Offshore Industry 2014
Finnish Offshore Industry 2013
Finnish Offshore Industry 2012
Exports of the Finnish offshore
industry
Sources: information provided by the companies, VALOR analysis
32 %
10 %
1 %
11 %
7 %
36 %
1 %
North Sea
Russia
Middle East
North America
South America
Asia
Others
Finnish offshore industry 2014
Page 3 (44)
Executive Summary
In this report offshore industry is defined as including businesses conducting or supporting offshore oil & gas
exploration and production as well as other production and related activity at sea (for example, offshore
wind and wave energy and seabed mining).
In this report offshore industry is defined as including businesses conducting or supporting offshore oil & gas
exploration and production as well as other production and related activity at sea (for example, offshore
wind and wave energy and seabed mining).
Today in 2014, the Finnish offshore industry comprises of approximately 150 active companies and to whom
offshore business is of increasing importance. The Finnish offshore industry experienced substantial growth
in exports in years between 2010 and 2012 but decreasing slightly in 2014 compared to previous year. The
total exports of the industry are expected to be around 1.7 billion euros in 2014. Technology is the most
important offshore industry segment in Finland accounting to approximately 1.3 billion euros, or around 70 %
of the industry’s revenues. Particularly strong Finnish players in this area include companies such as Wärtsilä,
Rolls-Royce, ABB, and Steerprop, specializing in propulsion, power and engine technologies. The industry
employs approximately 5 000 persons in Finland and the companies participated in this study are planning to
recruit more than 150 employees for offshore business in next two years.
Finnish companies are known for their high technological expertise and uncompromising quality in offshore.
Companies emphasize that quality is viewed holistically covering not only traditional aspect of product quality,
like technical properties and durability, but also reliability of delivery, and communication and cooperation
through entire supply chain. Other important competitive strengths of the Finnish offshore industry include
e.g. Arctic know-how, geographical location near Norway and Russia, engineering work, project management
and supporting political environment.
Norway is regarded as one of the leading offshore markets and Finnish companies often quote Norway as
their home country in offshore business. Norwegian offshore companies are one of the most technologically
demanding and savviest customers and their decision criteria is based more on managing risk rather than low
purchase price. Russia is also considered important for the Finnish offshore industry due to their share in
Arctic offshore and proximity to Finland. Other important markets include Brazil, Asia, Gulf of Mexico
(GOM) and West-Africa.
Finnish offshore companies emphasize that they invest robustly in technological innovativeness and quality,
aspects on which they will ground competitiveness also in the future. Specifically, companies regard advanced
service concepts, such as preventive maintenance, HSEQ, subsea and project management – even by assuming
EPCM (engineering, procurement and construction management) projects – as important product and service
key success factors for them in the future.
Finnish companies have a multiple of partners and other stakeholders with whom they cooperate in offshore.
Particularly technology companies are active in investing in their network of supply chain in order to ensure
the most stringent quality requirements are complied also in the future. Important partners outside offshore
industry include e.g. universities and other research institutions, and Finnish government and government
owned companies and facilities. Finally, Finnish companies also recon that intellectual property rights (IPR)
management is becoming more and more important in offshore business.
Finnish offshore industry 2014
Page 4 (44)
Table of contents
Forewords ............................................................................................................................................................... 1
Key figures ............................................................................................................................................................... 2
Executive Summary ............................................................................................................................................... 3
Table of contents ................................................................................................................................................... 4
1. Introduction .................................................................................................................................................... 5
2. The Finnish offshore industry overview ................................................................................................... 7
2.1. Key Finnish offshore industry business areas ................................................................................. 7
2.2. Competitiveness and strengths of the Finnish offshore industry ............................................... 8
2.3. The Finnish offshore industry in global perspective .................................................................... 11
2.4. Arctic offshore markets for the Finnish cluster ........................................................................... 15
3. Offshore industry in Finland ..................................................................................................................... 18
3.1. Yards and engineering ........................................................................................................................ 20
3.2. Technology companies ...................................................................................................................... 22
3.3. Subcontractors .................................................................................................................................... 24
3.4. Material companies ............................................................................................................................. 26
3.5. Other identified offshore businesses .............................................................................................. 28
3.6. Finnish offshore company size & employment ............................................................................. 29
4. Finnish offshore cluster composition ...................................................................................................... 30
4.1. Finnish offshore as a part of marine industry ............................................................................... 30
4.2. Finnish offshore cluster geographically .......................................................................................... 31
5. The Finnish offshore industry outlook ................................................................................................... 33
5.1. Exports .................................................................................................................................................. 33
5.2. Products and services ........................................................................................................................ 34
5.3. Resources ............................................................................................................................................. 36
6. Conclusion .................................................................................................................................................... 38
7. Methodology and reliability of the study................................................................................................ 41
7.1. Background and objectives ............................................................................................................... 41
7.2. Methodology ........................................................................................................................................ 41
7.3. Reliability of the study........................................................................................................................ 42
APPENDIX ............................................................................................................................................................ 44
Companies participated in the study .......................................................................................................... 44
Finnish offshore industry 2014
Page 5 (44)
1. Introduction
Finnish offshore industry 2014 –study describes Finnish offshore industry, its structure and business
volumes as well as future outlook. This report is a continuum to the Finnish Offshore Industry -
reports conducted in 2012 and 2013. The project team is commissioned by Prizztech Oy
(www.prizz.fi) and the report is also supporting the work of Ministry of Employment and the
Economy (MEE) Maritime industry operational environment development programme1. Financially
the study is supported by MEE.
This study is conducted by VALOR Partners Oy (www.valor.fi) and it was implemented between
June and August in 2014. The focus of the study is on Finland, and Finnish products and services for
the offshore industry. Additionally Norwegian and Russian market opportunities for the Finnish
companies, especially in the arctic region, have been studied in more depth and a summary of these
markets has been prepared in cooperation with Storvik & Co AS (www.storvik.com).
Finnish offshore industry has been recorded systematically by company interviews and a survey. The
Finnish offshore companies have been identified especially from yard and technology sectors,
including also their identified networks of supply chain, and by utilizing previous data from offshore
cluster in Finland including previous Offshore Industry studies. Despite the systematic approach of
the study, a small number of relevant companies that are not members of the Finnish Marine
Industries association, do not own internet visibility in offshore business or have not being
mentioned in numerous discussions with Finnish offshore companies are outside of the scope of this
study, however. Further discussion concerning the methodology is provided in Section 7.
Offshore as a term refers regularly to the production and exploration of oil & gas at sea. A key
characteristics describing offshore industry commonly is the high quality requirements being
implemented throughout the supply chain from procurement and service functions, and to other
companies and stakeholders being part of offshore business. This is why, in this report, offshore
industry is regarded comprehensively also taking into account functions satisfying the conditions of
the stringent quality requirements. Figure below illustrates examples of the offshore end-customer
industries. Also the structure of the offshore cluster in Finland is illustrated.
1 In Finnish ”Meriteollisuuden toimintaympäristön kehittämisohjelma”
Offshore end-customer industries
Source: VALOR analysis
Oil & gas Offshore wind Seabed miningWave energy
Current operations Future opportunities
Solar energy
Finnish offshore industry 2014
Page 6 (44)
Based on the discussion above, in this report offshore industry is defined as including businesses
conducting or supporting offshore oil & gas exploration and production as well as other production
and related activity at sea (for example, offshore wind and wave energy and seabed mining). Instead,
offshore industry does not include oil & gas logistics related tanker or harbour activities since quality
requirements are not strictly shared with offshore industry.
Specifically, this report consists of 7 chapters, this chapter being the first. The second section briefly
introduces the Finnish offshore industry and its business areas and main competitive strengths both
globally, and in specific in Norway and Russia and arctic region. Norway and Russia represent natural
markets for Finnish companies due to geographical proximity. Third chapter instead provides key
statistics and discusses the Finnish offshore industry by sector and Section 4 introduces offshore
cluster in Finland in broad context and discusses its role as part of the Finnish industry. Fourth
section also maps the Finnish offshore cluster geographically in Finland. The following part, chapter
5, provides insight concerning Finnish offshore industry’s outlook and Section 6 draws a conclusion
of the study. Finally, chapter 7 discusses the background and objectives, and the methodology of the
study. Appendix provides the list of companies contributed to the study either through interview
discussion or questionnaire.
The structure of offshore cluster
Source: VALOR analysis
End customers
Oil & gas industry
Leasing and shipowners
Operators
Other energy
Key companies in the industry
Subcontractors
• Materials• Components• Services• Staffing
Supporting activities
• Harbour• Logistics
• Organisation• Association
• Education• R&D
• Finance• Insurance
Engineering and construction• EPC• Shipyards &
offshore engineering works
• Engineering
Technolgy
• Special solution providers
• System providers
• Classification• Procurement
Finnish offshore industry 2014
Page 7 (44)
2. The Finnish offshore industry overview
Today in 2014, the Finnish offshore industry is significant business in Finland and over 150 companies
operate actively in the industry, according to the results of the Finnish Offshore Industry study.
Moreover, the results of the survey reveal offshore companies expect the importance of the
offshore business to grow for them in the future. In this study, the Finnish offshore industry cluster
is divided in five different segments: Yards, engineering companies, subcontractors, technology
companies, material companies and other identified offshore business, including e.g. offshore wind
and shipping services.
2.1. Key Finnish offshore industry business areas
There are several key areas of expertise and products within the five segments of the offshore
industry cluster in Finland where companies possess world-class competence and knowledge
developed during past decades. The roots of most of these companies date back to the strong
shipbuilding industry as well as to competitive high technology cluster in Finland. These have created
a strong background for innovation and high quality in the Finnish offshore industry, its products and
services. Examples of areas where Finnish companies are specifically well recognized globally in
offshore are illustrated below.
Propulsion systems
Copyright © Rolls-Royce
Cranes & lifting
Copyright © Konecranes
Yards and construction
Copyright © Technip
Automation
Copyright © Metso
Metso / Wärtsilä
Finnish offshore industry 2014
Page 8 (44)
2.2. Competitiveness and strengths of the Finnish offshore industry
One of the most prominent strengths of the Finnish offshore cluster is technological expertise and
innovativeness. Numerous companies in the Finnish offshore cluster are in a strong position globally
in providing technology solutions within selected areas, but the single largest product area in which
technological know-how has accumulated and expanded broadly during the past decades is
propulsion systems. In this product area Wärtsilä, Rolls-Royce, ABB and Steerprop are major global
players in their specific applications in their Finnish operations. Particularly Rolls-Royce Finland and
Wärtsilä have been able to deliver a large share of propulsion systems for advanced solutions in
offshore platforms and vessels used e.g. in drilling, production and supporting activities in offshore
worldwide. Steerprop and ABB are instead renowned for their solutions in powerful propulsion
systems. Moreover, it is important to note an internationally unique cluster of expertise has evolved
within supply chain to support the development of this unique cluster of propulsion systems in
Finland.
Manufacturing solutions
Copyright © Pemamek
Living & wellbeing
Copyright © Almaco
Materials
Copyright © Ovako Imatra
Other marine & arctic technology
Copyright © Arctech Helsinki
Finnish offshore industry 2014
Page 9 (44)
Rest of the technology sector include companies that are
specialised in selected application where they assume a
leadership role internationally. Typically these companies
have a background in maritime industry as well as in other
industries. For example Kemira is well-acknowledged
chemicals supplier, GS-Hydro is a globally established
company supplying non-welded piping systems, Marioff
provides fire protection systems customers world-wide and
Vaisala that is one of the most renowned high-end
environmental measurement systems and solutions
providers. Vacon and ABB instead provide customers
drives and other frequency convertors. These companies
possess strong references in providing offshore oil & gas
exploration and production solutions as well.
Finnish yards instead are players which have earned a strong
reference base in specific product areas where they are
particularly competitive. For example, majority of spar
platforms ever build has been constructed in Mäntyluoto yard in Pori - a yard that is nowadays
owned by Technip that is one of the largest global offshore corporations. Mäntyluoto yard has also
been awarded with many other offshore projects and has the capability to construct e.g. subsea
structures, and semi-submersible and FPSO platforms as well, however. Arctech Helsinki Shipyard
Oy, a company owned jointly by STX Finland Oy and United Shipbuilding Corporation with equal
shares, is specialised in Arctic shipbuilding technology and has constructed approximately 60 percent
of currently operational icebreakers in the world in Helsinki. These icebreakers and other special
vessels are also operating in offshore and have become a firm part of the global offshore cluster.
Equally important is to notice that icebreaker and Arctic project deliveries have been backed by the
expertise of numerous Finnish engineering and subcontractor companies. This has created the
grounds for the development of one the global Arctic maritime technology centres of excellence
and knowledge spillover in Finland. As an illustration, the government owned icebreaking and special
purpose vessel service provider, Arctia Shipping Oy, has taken the advantage of its ice management
know-how and is providing customers related services in Arctic offshore projects. Aker Arctic
Technology, on the other hand, is a company specialising in engineering services for the ice going
vessels, icebreakers and offshore. Based on company comments of this study, Finnish knowledge in
Arctic solutions is viewed highly important area of competence for offshore cluster in Finland
particularly in the future when offshore investments actuate in Arctic region.
In addition to the technological know-how and innovativeness, Finnish companies are also known
for their uncompromising quality in products and services, which stems from the fact that Finnish
offshore cluster is particularly advanced in project management. According to the company
comments, quality is viewed as a holistic concept covering traditional aspect of product quality, like
technical properties and product durability as well as reliability of delivery, and communication and
cooperation vertically both within customer as well as supply chain. This is a very important
consideration in offshore industry, especially in advanced solutions where high and rigid standards
Copyright © Vaisala
Copyright © Vacon
Finnish offshore industry 2014
Page 10 (44)
and quality requirements as well as full traceability are
expected and complied throughout the entire value chain
on daily basis. Companies also emphasize Finnish
companies do not ground their competitiveness on price,
e.g. if comparing to Asia and other low cost countries,
but rather on the highest level of quality – an area
whereof a premium is also paid in the offshore industry.
Many companies also note that Finnish engineering work
is very competent, which originates both from providing
tailored and advanced engineering solutions and modest
cost structure. Price competitiveness is particularly well-grounded if compared to other developed
countries. For example, according to the Union of Professional Engineers in Finland (IL), Finnish
engineering work cost on average slightly over 4 000 €/month (median 2 692 €/month) in 2013.
This is a level far below corresponding figure in e.g. Norway where according to NITO’s, The
Norwegian Society of Engineers and Technologists, who estimate a corresponding figure of
approximately 6 200 €/month for local engineering work2. Finnish engineers are also highly qualified
in education. According to study results, Finnish engineers in offshore are with a few exceptions
graduated with a diploma from university or applied university.
Another advantage for the Finnish offshore industry stems
from geographical location near two large offshore markets,
Norway and Russia. Geographical proximity is to reduce
costs associated with logistics and delivery time but the
advantage is also derived from enhanced customer
communication between Finnish company and customers.
Reduced response time is particularly important in offshore
business and operations where problems and issues may
escalate rapidly on massive scale. Besides, time zone and
cultural differences are all adding complexity in
communication, which is based on the discussed above
regarded as an important aspect of product and service
quality, creating a solid advantage for Finnish companies in
Norway and Russia.
Finnish political atmosphere and intent has also become increasingly supportive for the development
of the offshore industry. The objective of the new MEE development programme for the maritime
industry's operational environment is to increase the competitiveness of and renew the Finnish
maritime industry so that the top level expertise remains in Finland. The programme recons Finland
has opportunities especially in offshore industry and arctic business. The programme supports
activities of Finnish companies and other market participants developing new and leveraging existing
know-how, products and services that create new opportunities in the offshore industry and arctic
2 According to the salary calculator at http://www.nito.no/Lonn/Hva-tjener-en-ingenior/Lonnskalkulator, a Norwegian engineer earns 588 427 NOK per year on average.
Copyright © Aker Arctic Technology
Copyright © National Energy Board of Canada
Finnish offshore industry 2014
Page 11 (44)
business for Finnish companies. Besides, the Finnish government has also shown its intention to
support maritime and offshore industry through ownership arrangements in e.g. engineering and
yard sectors.
2.3. The Finnish offshore industry in global perspective
Global offshore markets have been growing rapidly during the past years and the market is expected
to grow 10 per cent per annum in the near future, as illustrated in the figure below. The largest
offshore production areas are the so called the Golden Triangle (including the area of Gulf of Mexico
(GOM), Brazil and West Africa), and Norwegian Sea and North Sea. Of these areas, particularly
West Africa region and Brazil are expected to grow robustly in the future.
Offshore operators and oil companies are required to bear enormous liabilities with investments
and commitment of billions of dollars for years to come in undertakings. To add to this, risks in
offshore are massive not only because the magnitude of investments but also due to the fact that
offshore projects include major uncontrollable risk factors like natural hazards and the bad outcomes
Finnish offshore industry strengths and competitiveness
Source: VALOR analysis
Technology know-how and innovativeness
Engineering work & cost-competitiveness
Project management & quality of products and
services
Political environmentLocation near Norway and
Russia
Arctic know-how
Offshore E&P spend 2013-2017, USDbn
Sources: Rystad Energy Dcube, Aker Solutions, Barclays Capital, Bank of Finland, Valor analysis
0
200
400
600
800
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
OPEX CAPEX, shallow water CAPEX, deepwater
CAGR 10 %
Finnish offshore industry 2014
Page 12 (44)
tend to escalate rapidly. This is why, typically operators and oil companies are large global
corporations, who are willing to acquire only the best possible technology and solution available in
order to ensure finest outcome for a given venture. This is why offshore industry extends its arms
on every corner of the world and includes globally integrated network of supply chain. Accordingly,
based on the results of this study, Finnish companies are also international by nature and their export
amounts to 85 - 90% of the total Finnish offshore industry revenue in 2014 with project deliveries
and exports to practically every continent of the world.
Norway is often regarded as one of the
leading offshore markets in the world and
Finnish companies often quote Norway
as one of their home countries in
offshore business. According to the
interview discussions, Norwegian
customers are one of the most
demanding and savviest customers
technologically in the world since the
decision criteria in the market is based on
quality and managing the risk rather than low purchase price. They emphasize that Norwegian
customers require most advanced technological solution, and require the stringent standards of the
market to be complied throughout the entire supply chain – every company operating in Norway
must meet the local standards and quality requirements which are considered as one of the most
rigorous in the world. Finnish companies also recon this is one of their most critical competitive
advantages in Norwegian markets.
Norwegian customers also highly appreciate suppliers’ locally established operations and having
robust networks in offshore cluster is essential based on the interview comments. Finnish companies
have also been active in gaining a foothold in the market. For example, Wärtsilä has a long tradition
in Norway and the company has created a deep understanding of the local customers and markets.
Today Wärtsilä has four subsidiaries in Norway with over 1 200 employees and R&D, project
management, engineering, manufacturing and sales operations. Besides, many Finnish companies
mention that acquisitions are a central consideration if willing to create a local network in Norway.
For instance, Citec, a Finnish engineering company, acquired recently a local offshore specialist, a
company named M7 offshore, in Norway in order to gain a position in the local offshore cluster.
Also Wärtsilä has successfully acquired many local companies in Norway.
Finnish companies regard Russian markets with large potential not only due to its geographical
presence close to Finland and massive offshore oil & gas reserves but also due to the fact that Russia
is one of the largest markets to Arctic offshore. Arctic offshore markets are further illustrated in
Section 2.4., however, and the importance of the Arctic for the Finnish offshore cluster is discussed.
On the other hand, Russian markets and project are currently discounted due to the underlying
uncertainties in the operating environment. Russian offshore investments tend to be volatile and the
current political dispute between Western countries and Russia, originating from Russian
intervention in Ukraine, are all adding up to the uncertainty in Russian offshore projects.
Copyright © Wärtsilä
Finnish offshore industry 2014
Page 13 (44)
Finnish companies and other stakeholders have also a long tradition of cooperating with Russian
partners and Finnish do have a competitive advantage in communicating with Russian customers and
other stakeholders. For example, Arctech Helsinki Shipyard is a company half owned by a Russian
company, United Shipbuilding Corporation (USC), and the yard has awarded with numerous ice
breaker deliveries to Russia. On the other hand Finnish companies Wellquip and Elomatic
Engineering have established together a joint venture with local partners in Russia in order to gain
a stake in the market. Interestingly, recently Elomatic and Wellquip decided to merge their
operations aiming in particular to achieve growth in the arctic marine business in the Russian and
Caspian Sea markets.
Other important market areas globally for Finnish
companies include Brazil, Asia and GOM. Brazil is a market
with vast offshore projects and reserves, and it is regarded
as one of the largest markets for offshore investments
globally. On top of that, majority of Brazilian offshore
undertakings are deepwater projects in harsh operational
environment providing increased demand for advanced
technological solutions. This is why many Finnish
companies have been lately active in the market, despite
the rigorous local content requirement that is adding
complexity for foreign companies in penetrating the
market. For example, Almaco, a Finnish accommodation
solution provider, has been able to establish itself in the
market through providing its flexible and innovative global
construction capabilities and solutions for Brazilian
customers. On the other hand, Wärtsilä have established
itself in the market by setting up a local manufacturing facility to meet the increasing market demand
particularly in the offshore market.
Asia instead is the main hub for offshore vessel and
platform construction activity in the world. Main Asian
offshore markets for Finnish companies include South
Korea, Singapore and China. Traditionally South Korea and
Singapore have been key markets for advanced offshore
platforms but China has also been active in the market
recently. Finnish companies are particularly strong in
delivering technological and engineering solutions in
selected product areas to the Asian markets. For example,
Finnish companies assume large market share in propulsion
systems in Asian offshore hub.
Conditions in GOM for offshore operations are aggressive and corrosive as the climate is warm,
humid and salty. This is why a special attention must be put on to the quality of the products and
services. Also, regulators are forcing companies in GOM to take a more systemic approach to drilling
safety - similar to those of applied in the North Sea that is the one of main market for Finnish
Copyright © Almaco
Copyright © Wärtsilä
Finnish offshore industry 2014
Page 14 (44)
offshore companies. This is why Finnish companies have a particularly well-established references
and perquisites in delivering solutions for projects in GOM. For example, Finnish yard sector has
earned strong references in the market in advanced solutions and most of the offshore platforms
constructed in Mäntyluoto operate in GOM.
Finally, it is also important to notice that many Finnish units have a unique position in networks of
numerous global large offshore corporations. The role of the Finnish division or unit is often in
research and development, production and advisory activities in the global network. Instead, sales,
after-sales and other cross-functional operations are usually assumed then by the international
network, having established presence globally and direct customer relationship. This kind of
structure helps in leveraging Finnish knowledge rapidly worldwide. For example, ABB has its global
knowledge centre for e.g. propulsion, motor technology, generators and drive products in Finland.
Rolls-Royce Finland instead is a subsidiary assuming main responsibility in R&D and advisory services
in propulsion systems globally.
Finnish offshore industry 2014
Page 15 (44)
2.4. Arctic offshore markets for the Finnish cluster
One of the most compelling competitive advantages and future opportunities for the Finnish offshore
cluster is Northern hemisphere and Arctic offshore markets. Based on estimates the Arctic area
accounts up to 30 per cent of the world’s undiscovered and recoverable oil and gas resources.
Notable is that of the total reserves, approximately 84% is expected to be found offshore.3 Global
oil and gas companies have fairly long traditions in Arctic as well: Arctic activity is dated back to in
1962 when large Arctic hydrocarbon discoveries originated in Russia with the discovery of the
Tazovskoye Field.
Currently, Arctic offshore oil & gas operations are considered to be only at a development phase,
and the production volume corresponds to about 1 million barrel of oil equivalent per day.
Geographically, by far the single largest Arctic offshore production field is Okhotsk in Russia. Other
important fields include Newfoundland and Labrador province in Canada and Alaska (USA).
Arctic offshore is expected to remain at the development phase for the near future. Large reserves
have already been discovered, however, and substantial investments are already being made for
exploration and development activities in the area, particularly at Russian continental shelf which
contributes to 60 per cent of the Arctic continental shelf. This is why Arctic offshore is regarded
as a Russian driven activity. More specifically, the most important offshore exploration and
development fields are located at Kara Sea and Barents Sea, both in Russian and Norwegian
continental shelf.
Major Russian companies, including Rosneft, Gazprom and Lukoil, are operating with global giants
in order to increase their Arctic capability and competence. For example Exxon Mobil, Shell as well
as Statoil have been actively partnering with Russian major oil & gas companies in Russian Arctic
3 U.S. Department of the Interior, U.S. Geological Survey, 2008. Circum-Arctic Resource Appraisal: Estimates of Undiscovered Oil and Gas North of the Arctic Circle.
Arctic offshore geographically Arctic reserves by development phase
As of 2013, billion boe
Source: Dcube Rystad; VALOR analysis
Alaska
(USA)
CanadaRussia
FinlandSweden
Norway
Iceland
Greenland
Valdez
Chukotka
Sakha
Krasnoyarsk
Urengoi
Komi
Nenets
Nunavut
Yukon
Gas production
Oil production
Reserve
Development area
0 25 50 75 100
Kara Sea
Barents Sea (RU)
Alaska
East Greenland
Barents Sea (NO)
Okhotsk
East Siberian Sea
Northwest Canada
Ob Bay
Newfoundland-Labrador
Laptev Sea
Chukchi Sea (RU)
West Greenland
North Greenland
Production
Development phase
Proven reserve
Unproven reserve
Finnish offshore industry 2014
Page 16 (44)
offshore operations. This
cooperation is expected to
continue despite recent
sanctions against Russia,
although sanctions may
postpone the Arctic oil &
gas projects in Russian
waters.
Arctic conditions are harsh
and the projects pursue
offshore companies to face
unique risks, requirements,
and challenges. The arctic
environment is
concurrently sensitive to
disruption and oil spills but
harsh and unforgiving due
to remoteness and extreme
weather conditions, particularly in areas with thick ice cap, permafrost or extreme wave conditions.
Environmental impacts take longer to heal and cost more to remediate. Accordingly, Rystad Energy
estimates the Arctic to be one of the most expensive resources, with an average breakeven price
of 75-80 USD/boe for production activity for the fields that have first oil target before 2025. Adding
risk factor to the equation will increase breakeven price for Arctic offshore projects substantially
and 100-150 USD/boe oil price level is required for many projects to start. This is why, Arctic
offshore investments are expected to actuate on large scale if (or when) oil and gas price increase.
Increased risk and harsh operational conditions will of course also change the operating model of
companies toward increased risk management. This is why Arctic conditions are providing the
Finnish offshore cluster
increased opportunities.
Finnish companies have also
been very actively developing
solutions for offshore oil & gas
companies and operators for
Arctic offshore projects. For
example, interviews reveal
that the importance of service
is increased in Arctic.
Especially decreased response
time is essential when
operational failures occur. On
the other hand
communication between
Arctic offshore E&P spend
2010-2025, billion nominal USD
Source: Dcube Rystad; VALOR analysis
Opex
Capex
Exploration
Capex
0
20
40
60
80
100
2010 2015 2020 2025
Projected Arctic offshore production
2005-2030, million boe/d
Source: Dcube Rystad; VALOR analysis
Alaska
Newfoundland-
Labrador
Northwestern
Canada
Barents Sea
(NO)
Okhotsk
Barents Sea
(RU)
Ob Bay
Other
Development phase Production phase
0.0
1.0
2.0
3.0
2005 2010 2015 2020 2025 2030
Finnish offshore industry 2014
Page 17 (44)
offshore field operator and company knowledge centre is enhanced. This is why Finnish location
near Arctic offshore fields, particularly Kara Sea and Barents Sea, is an important competitive
advantage.
Finnish companies have also substantial experience in working in Arctic conditions, partly due to
the country’s location in the Northern hemisphere. For example, Arctia Shipping has decades of
experience in ice-breaking and –management, and the company has also established itself as an Arctic
expert in offshore. Arctech Helsinki Shipyard has constructed over 60 per cent of the operational
ice-breakers in the world, as discussed above. Aker Arctic instead is targeting Arctic markets with
engineering solutions. Equally important is to note the experience of Arctic is extended throughout
the entire supply chain. Companies emphasize experience is vital asset in turning opportunities to
success in Arctic oil and gas projects.
For detailed discussion concerning Russian and Norwegian offshore market, please look into a more
detailed study of these regions also published by Prizztech in www-address [LINK:
www.prizz.fi/storvik_country_reports_addressess].
Finnish offshore industry 2014
Page 18 (44)
3. Offshore industry in Finland
Offshore business is today a significant business in Finland. In 2014, total revenues of the Finnish
offshore cluster are expected to amount to approximately 1.9 billion euros, of which exports
accounts to 1.7 billion euros. Offshore industry employs directly approximately 4 650 employees
and, according to the results of the study, Finnish companies are seeking to recruit additional 250
employees within the next two years.
The results of this study reveal that also Finnish
companies regard offshore as an attractive
industry with many future growth and business
opportunities. The industry has experienced a
rapid growth in Finland with a compound annual
growth rate being approximately 10 percent
between years 2009 and 2014. Companies also
believe that the industry will grow moderately in
Finland within the next few years.
More specifically, 14 percent of the companies
involved in the study expect their offshore
business to grow rapidly and 51 percent
moderately within the next few years. Only 7
percent of the respondents expect their offshore
business to shrink. Challenges for the Finnish
companies impose cooling investments in specific
offshore markets and increased competition
internationally. Despite these challenges Finnish
companies are confident on future growth
Overview of the Finnish offshore industry
Value of exports
2009-2015e, M€
Number of employees
2009-2015e
Revenue by industry
segment 2014
Sources: information provided by the companies, VALOR analysis
0
500
1 000
1 500
2 000
2 500
09 10 11 12 13 14e15e
0
1 000
2 000
3 000
4 000
5 000
09 10 11 12 13 14e15e
67 %11 %
10 %
12 %
TechnologyYardsand
engineering
Sub-contract
ors
Other
Companies’ outlook for their offshore
businesses
Sources: information provided by the companies, VALOR analysis
14 %
51 %
27 %
4 %
3 %
22 %
39 %
29 %
7 %
3 %
25 %
58 %
13 %
4 %
0 %
Grows rapidly
Grows moderately
Remains constant
Decreases moderately
Decreases sharply
Finnish Offshore Industry 2014
Finnish Offshore Industry 2013
Finnish Offshore Industry 2012
Finnish offshore industry 2014
Page 19 (44)
opportunities in those areas where they possess globally recognized know-how and proven
references, and thus are especially competitive, however. Finnish companies expect the growth of
their offshore business to settle down to a level of between 5 and 10 percent in the near future.
Nevertheless, in 2013, the total revenues of Finnish technology companies amounted to 1.25 billion
euros and the corresponding figure is expected to near 1.3 billion euros in 2014. Notable is that the
largest sub-sector in Finnish offshore technology sector, i.e. propulsion, motor and marine
technology, constitute approximately 65 - 70 per cent of the total Finnish offshore business. The
convergence between traditional marine industry and offshore has been one of the key factors
driving technology companies particularly in propulsions and motor technology sector to become
the single largest product and service area in the Finnish offshore industry. The rest of the core
technology sector in Finland comprises of companies with a background in other industries than
offshore, but regard offshore as important focus area them. These companies possess strong
technological expertise in a variety of technologies and businesses such as crane, automation, valve,
drives, or measurement technologies.
Finnish yard sector is instead in a process in finding new solutions on fuelling future growth and
opportunities. In spite of the fact that Mäntyluoto yard has mainly been focusing on Spar platforms
lately, it possess proven references of constructing other platforms as well. On the other hand, STX
Finland was acquired4 by Meyer Werft, one of the major German shipyards, and the Finnish Industry
Investment (FII), a Finnish government-owned investment company. Arctech Helsinki Shipyard has
demonstrated great confidence in gaining momentum in a specialized niche segment with continuous
innovations and the company has been awarded with 4 offshore ice-breaker contracts in 2014 so
far. It seems that also Arctech’s ownership structure strongly supports its business and growth. Also
a recently established offshore yard Rauma Marine Construction (RMC) is adding future
opportunities to Finnish offshore yard sector.
Finnish engineering companies have been active in finding
opportunities for growth and divergence from the
traditional setting of being closely related and inclined to
the operations of Finnish yards. Engineering companies
have set their sights abroad and created international
business and customers not only organically but also
through acquisitions and setting strategic partnerships. For
example, Elomatic and Wellquip decided to merge their
operations and Citec was able to establish itself in the
Norwegian offshore markets by taking over local M7
Offshore. On the other hand Deltamarin’s owners and management found a new partner to fuel
company growth by selling majority of its shares to AVIC International Investments Ltd., also
creating robust prerequisites for future expansion opportunities in offshore business as well.
Besides, the growth in offshore business, particularly in deepwater operations with operational
needs similar to those of maritime industry, has provided Finnish traditional maritime industry
engineering companies a new opportunity to expand the scope of their business. This all has enabled
4 As of 4.8.2014, the acquisition is still subject to clearance by the antitrust authorities and banks.
Copyright © Citec
Finnish offshore industry 2014
Page 20 (44)
Finnish engineering companies to expand their customer base and taking the advantage of the
growing offshore business. Many engineering companies regard offshore business has become more
and more important to them relative to their marine business.
Subcontractors, which have traditionally been inclined to domestic yard and technology sector, have
also been able to penetrate international markets and in 2013 nearly half of their revenues were of
international origin. Finnish subcontractors are typically engineering workshop companies
specialising in a product area or by material treatment method, such as casting or coating. They are
particularly competitive in highly customised delivers with short lead time and small series size, or
in a specific product area such as gears or casting. Subcontractors’ revenues are expected to be 225
million euros in 2014 in offshore industry.
In addition to abovementioned sectors, Finnish companies are also providing materials and other
service business in offshore industry. Finnish steel, tube, copper and chemical, and other material
companies supplying offshore industry are expected to generate revenues of approximately 150
million euros in 2014. Offshore business is one of the few growing segments for many material
companies and they are investing in the business robustly, study reveals. The sector covering other
services and products for offshore industry comprise of around 50 million euros business annually.
One of the most prominent actors in this sector is Arctia Shipping, a state owned company having
ice-breakers operating in the ice-management duties in the arctic offshore fields and development
areas.
Offshore business has increased its relative importance for those companies operating in the
industry against their other operations based on the study results. Offshore share of total revenues
of the companies of this study has increased from 7 percent in 2009 to 11 percent in 2013. Driving
forces behind the pattern of development include the underlying challenges in global traditional
marine industry and the trend of providing more advanced solutions in offshore industry and thus
more value-adding solutions especially when moving toward deeper waters.
3.1. Yards and engineering
Yards and engineering companies employ in total
approximately 1 200 persons in 2014 in offshore
business in Finland. In 2014 combined offshore
revenue is expected to be approximately 220
million euros of which around 95% is expected to
be exports, increasing from 70-80% share in 2009-
2012. The share of exports has increased rapidly
due to low activity in the Finnish multipurpose ice-
breaker investments and other offshore supply
vessels. The export share is expected to stay high in
the coming years as well.
’
Copyright © Arctech Helsinki Shipyard
Finnish offshore industry 2014
Page 21 (44)
Offshore yard companies are large and employ directly hundreds of employees and indirectly even
thousands when business and construction activity is peaking. This indirect influence applies
particularly in material and subcontracting sectors. Engineering companies are typically mid-sized or
small in size, except a few large companies. In total 22 Finnish yard or engineering companies in
offshore industry were identified in this study. These companies include 7 large, 4 mid-sized and 11
small companies. In total 16 yard or engineering companies participated the study in 2014.
Finnish yard sector is actively finding its way to leverage the scope of its
business. In spite of the fact that Mäntyluoto yard has mainly been
focusing on Spar platforms lately, it has experience of constructing also
more commonly used Semi-Submersible platforms in the 80s. Also, it
has the capabilities in subsea undertakings and it is developing actively
offshore wind solutions. Rauma Marine Construction (RMC), a recently
established yard, on the other hand is adding vigour to the sector and
entering the market with a new operating model based on flexibility and
a strong network of partners. Also STX Finland resolved its future as
Meyer Werft, one of the major German shipyards, and Finnish Industry
Investment (FII), a Finnish government-owned investment company,
announced that they have agreed to acquire5 the shares of STX Finland.
Also, Arctech Helsinki Shipyard has been highly successful in providing
icebreaking supply vessels and is demonstrating a viable business model
specialising in a niche segment. In 2014 the company has been awarded with agreements to construct
4 ice-breakers to Russian offshore customers in Arctic and its ownership structure may be regarded
to support its business model strongly particularly in the Russian Arctic offshore business.
5 As of 20.8.2014, the acquisition is still subject to clearance by the antitrust authorities and banks.
Finnish yard and engineering sector offshore business
Revenues and exports
2009-2014e, M€
Number of employees
2009-2014e
Offshore share of total
revenues* 2009-2014
Sources: Company information and forecast, VALOR analysis *) Companies involved in the study
0
50
100
150
200
250
300
09 10 11 12 13 14e0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
09 10 11 12 13 14e
16 %
21 %25 %
34 %
48 %
40 %
0 %
10 %
20 %
30 %
40 %
50 %
60 %
09 10 11 12 13 14e
Structure of the
segment no. companies in each size
category
Source: VALOR analysis
7
4
11
Large Midsize Small
Finnish offshore industry 2014
Page 22 (44)
Engineering companies have traditionally been very inclined to the volatility in the local yard business.
However, Finnish engineering companies have become more and more independent of the Finnish
yards’ by building business on their competence and increasing international presence and customer
base. This has been particularly viable model as Finnish engineering companies have been able to
benefit from offshore industry’s global growth. Companies are particularly competitive in designing
complex, innovative and unique vessels and platforms for offshore and companies have also found
their special niches in which they have world-class expertise. For instance, Aker Arctic is globally
recognised for its services on ice-going ships and Arctic vessel design. Deltamarin is on the other
hand specialized in providing comprehensive engineering and project management services for
offshore projects but it also possess world-class knowledge e.g. in designing floating platforms and
vessels, including drilling vessels, floaters and special vessels. Additionally, many Finnish engineering
companies specialize in designing highly detailed offshore structures and systems, including e.g.
accommodation, electrification, HVAC or construction process lines.
In 2014 export share of combined revenues of yards and
engineering companies is expected to be over 90 percent, which
is a consequence of the fact that markets for Finnish engineering
and yard sector are international due to limited number of end
customers in Finland. Key export markets to Finnish yards and
engineering companies include North Sea, Northern Europe,
Russia and North America. Also increasingly importantly is Asia,
which is the hub for offshore construction activity, and is
particularly interesting for engineering companies. It is also
important to notice that since the markets for the products and
services are truly global in nature, also the shifts in the structure
of the export markets are very rapid.
3.2. Technology companies
Finnish offshore technology companies are expected to employ approximately 1 800 person in 2014.
Companies are expected to generate about 1.30 billion euros in revenues annually in their offshore
business. Finnish companies are also very internationally oriented and each technology company is
exporting significant share of their revenue: Total exports amounted to 1.25 billion euros in this
sector in 2014, in other words, implying over 95 per cent of their business is in international markets.
Also offshore share of their total business has been growing steadily and according to the results of
the study today offshore equals to approximately 14 per cent of their total business compared to
only 9 per cent in 2009.
Exports
Source: Company forecasts, VALOR analysis
27 %
51 %
0 %
18 %
0 %
4 %
0 %
North Sea
Russia
Middle East
North America
South America
Asia
Others
Finnish offshore industry 2014
Page 23 (44)
Offshore provides one of the most encouraging growth areas for traditional marine technology
companies. Finnish technology companies have typically grounded their business robustly on their
core competencies and specific product area where their technology is globally among the most
advanced. These companies include companies with diverse background. Globally most well-
established companies with strong marine industry background include Rolls-Royce, Wärtsilä, ABB
Finland, Steerprop and Cargotec. Specifically Rolls-Royce and Wärtsilä are today global market
leaders in providing advanced propulsion and power transmission solutions to drilling and OSV
vessels. Other traditionally strong marine industry companies in the sector include e.g. Vaisala, GS-
Hydro, Vacon and Napa. Finally, technology sector include also companies having firm background
in other industries but have been able to leverage their expertise in offshore. These companies
typically have proven technology with major competence and reference in a specific product area.
The most important export market to Finnish offshore
technology sector is Asia. Of the Asian countries especially
China, Singapore and South Korea were mentioned significant
markets due to their role in offshore platform and vessel
manufacturing. Other key markets include Norway, United
States and Brazil. The share of Asia of the total Finnish
technology companies’ offshore export revenues is almost 50
per cent. Other important regions include North Sea and
North-Europe with 30 per cent and Americas with 15 per cent
share of total export revenues. Middle East, Russia and Africa’s
share of total export revenues are small amounting to only a
few per cent in 2014.
For technology companies offshore represents a market where competition has not eroded price
levels thoroughly, but rather it is a market where customers are willing to pay for quality and the
best possible solution – an area whereof a premium is paid. The key decision criteria for offshore
Finnish technology sector offshore business
Revenues and exports
2009-2014e, M€
Number of employees
2009-2014e
Offshore share of total
revenues* 2009-2014
Sources: Company information and forecast, VALOR analysis *) Companies involved in the study
0
200
400
600
800
1 000
1 200
1 400
09 10 11 12 13 14e
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
09 10 11 12 13 14e
9 % 10 %11 %13 %14 %14 %
0 %
10 %
20 %
30 %
40 %
50 %
60 %
09 10 11 12 13 14e
Exports
Source: Company forecasts, VALOR analysis
31 %
3 %
1 %
7 %
8 %
47 %
3 %
North Sea
Russia
Middle East
North America
South America
Asia
Others
Finnish offshore industry 2014
Page 24 (44)
customers include not only health, security, environment and quality (HSEQ) considerations but
also aspects such as product reliability, traceability, innovation and quality. This is why offshore is
seen as an attractive market for Finnish companies as they represent globally renowned high-end
technology solution and innovation sector.
In the study, in total 38 Finnish technology companies were identified
operating in offshore. Companies include 12 large, 19 mid-sized and
7 small companies. Of the 38 identified companies, 18 companies also
participated in the study. These 18 companies represent 95 of the
estimated total technology sector revenues. Finnish offshore
technology companies are mostly either large or mid-sized companies.
However, this tendency for them to be relatively large in size is
explained by the fact that companies need to be internationally
recognised and credible in order to be included in supplier short-lists
for the offshore projects and deliveries. For example, earlier
references, especially in offshore project, are considered essential for
technology companies in order to show they have proven solutions
available for offshore sector. Also it is becoming more and more
important to have a service network world-wide in order to increase
product availability in offshore.
To make a final note, a few Finnish offshore technology companies are established almost entirely
on global basis and do not have almost any operations in offshore in Finland. For example, Cagrotec’s
offshore business is entirely based abroad and employees, assets and service networks are located
in markets near offshore markets in e.g. Norway, Americas and Asia. Accordingly, by definition these
companies are excluded from the figures of this study and the corresponding business abroad is not
included in the Finnish offshore industry numbers. These born global companies, however, are
supporting the development of offshore knowledge and expertise in Finland, which is contributing
to the Finnish offshore industry.
3.3. Subcontractors
In 2014 subcontractors are expected to employ approximately 1 150 employees according to the
study. The total offshore revenues of the subcontractor sector are expected to amount to 230
million euros, of which around 100 million euros is exports.
Historically subcontractors have mostly relied on serving domestic customers mostly particularly in
Finnish in yard and technology sectors and export revenues have been modest. In 2010 exports
accounted to some 30 per cent of the offshore revenues, while the corresponding figure was almost
50 per cent in 2013. This implies that also Finnish subcontractors have been able to build
international business based on their competence by finding their market and customers abroad
recently especially in Norway. Based on the interview and questionnaire comments, Finnish
subcontractors regard specifically Norwegian very attractive market in the future as well and they
are actively looking for growth opportunities in the market. Finnish subcontractors are particularly
Structure of the
segment no. companies in each size
category
Source: VALOR analysis
12
19
7
Large Midsize Small
Finnish offshore industry 2014
Page 25 (44)
competitive in components and providing labour hire services for the construction and other project
in the market.
Many subcontractors are very important partners for large companies. Often large companies have
their own networks of trusted subcontractors backing them in offshore undertakings. For example,
Technip has cooperated actively with over 100 subcontractors during offshore undertakings in
Mäntyluoto yard and STX instead has its own network of subcontractors with marine based
background. Also technology companies, including Wärtsilä and Rolls-Royce Finland, have their own
network of proven workshops as partners. Often technology companies are willing to investing in
their subcontractor partners in order to support their own business. Subcontractors are significant
employers and they employ 25 per cent of total offshore employees in Finland making the sector
third largest employer in the industry alongside technology and yard sectors.
Finnish subcontractors are especially competitive in
offshore in heavy workshop engineering, welding,
assembly, machining, material coating and heat
treatment work, providing labour hire for projects,
and supplying components all the way from
engineering to assembly including e.g. fire protection
door, electrical equipment and other product as
comprehensive project deliveries. Majority of
subcontractors’ deliveries include projects with
detailed specifications and blueprint from
customers. Additionally, subcontractors have been
able to further commercialise their advanced products and services so that in practice they have
moved up in the hierarchy of supply chain and to become a company resembling a technology
provider. For example, in hydraulic heavy workshop engineering products and casted propellers are
Finnish subcontractor sector offshore business
Revenues and exports
2009-2014e, M€
Number of employees
2009-2014e
Offshore share of total
revenues* 2009-2014
Sources: Company information and forecast, VALOR analysis *) Companies involved in the study
0
50
100
150
200
250
09 10 11 12 13 14e
0
200
400
600
800
1 000
1 200
1 400
09 10 11 12 13 14e
18 %
28 %
19 %21 %
25 %
35 %
0 %
10 %
20 %
30 %
40 %
50 %
60 %
09 10 11 12 13 14e
’
Copyright © Telatek
Finnish offshore industry 2014
Page 26 (44)
products in which Finnish subcontractors have become strategic partners to selected technology
companies not only domestically but also internationally.
Finnish offshore subcontractors include for example, Hollming Works that is a subcontractor
specialised in manufacturing of medium weight and heavy engineering products, Leinovalu which is
a renowned in custom-made deliveries for advanced casted components and Telatek who is
specialised in manufacturing and repairing large, massive workpieces and working in demanding
condition. ATA Gears manufactures highly customized spiral bevel gears and has become of the
most renowned manufacturers of their special products in the world and has a position close to a
technology company in the supply chain.
Majority of the offshore subcontractors are either medium-sized or
small companies. Typically these companies operate and are located
near yards or technology companies and employ some dozens of
employees. In this study, in total 64 subcontractors were identified in
offshore business. These companies include 7 large, 19 mid-sized and
38 small companies. Of these, 30 companies also contributed to the
study this year via offshore industry survey and interviews.
Subcontractors also serve their important purpose in levelling the
capacity of the large players in technology and yard sectors. Thus the
revenues of the subcontractors reflects strongly their customers’
growth opportunities and business volumes in offshore. Finnish
offshore subcontractor segment is expected to grow modestly in the
next years, especially due to the good prospects in the technology
sector. Also subcontractors have been active in pursuing international
expansion, and particularly in Norway, and developing new value added services to customers.
3.4. Material companies
In 2014 material suppliers employed over 300 persons in total in offshore business. In total the
aggregate revenue of the material companies is expected to be 150 million euros, of which
approximately 65 million euros is exports.
The offshore business of material providers is typically highly dependent on the Finnish yards’
business volumes as material suppliers typically are domestic in their offshore specific business. This
is because most of bulk and basic material is sourced locally, as elements delivered to offshore
platforms and vessels are very heavy - weighting tens of thousands of tons - and consisting of
substantial amount of metal, steel and other materials. As an illustration, in 2011 the material
sector’s offshore revenues were two-fold compared to 2010 due to the large offshore project in
Technip’s and STX’s Finnish yards. On the other hand, some material providers, particularly those
who are specialized in some specific offshore product, are also globally established in offshore
business and their offshore business volume is less correlated to domestic demand.
Structure of the
segment no. companies in each size
category
Source: VALOR analysis
7
19
38
Large Midsize Small
Finnish offshore industry 2014
Page 27 (44)
Finnish material suppliers in offshore industry include e.g.
Ruukki/SSAB - steels in either normalised or thermomechanically rolled condition;
Ovako – steel bars, and rolled and forged ring products;
Outokumpu - high performance stainless steels and alloys;
Luvata – copper tubes and special copper products & solutions;
Stalatube – stainless hollow sections;
Kemira – chemicals to oil & gas; and
Teknos and Tikkurila – paints for offshore applications.
Additionally, a number of other Finnish companies supply offshore industry with materials ranging
from welding consumables to plastics.
It is important no notice that for some the largest material companies offshore represents only a
small fraction of their total revenues. Thus, large volatility in offshore business does not have critical
impact on their total volumes: Offshore amounted to some 2 per cent of company total revenues
based to the results of the survey in 2014. On the other hand many material suppliers consider
offshore as an interesting opportunity as many other industries are experiencing a downturn in
Europe. This is why also many companies are investing in their offshore business and developing
new solutions, and Finnish companies have actively developed e.g. new offshore wind basement
solutions and more advanced materials to the needs of offshore solutions. Particularly solutions
developed to Arctic are seen as an attractive opportunity in the future as requirements are most
stringent and most advanced solutions are highly value-added. Material companies’ products also
differ from each other, and product overlaps are rare and therefore material companies typically do
not closely cooperate with each other.
Finnish material supplier offshore business
Revenues and exports
2009-2014e, M€
Number of employees
2009-2014e
Offshore share of total
revenues* 2009-2014
Sources: Company information and forecast, VALOR analysis *) Companies involved in the study
0
20
40
60
80
100
120
140
160
180
200
09 10 11 12 13 14e
0
50
100
150
200
250
300
350
09 10 11 12 13 14e
1 % 1 % 2 % 2 % 2 % 2 %
0 %
10 %
20 %
30 %
40 %
50 %
60 %
09 10 11 12 13 14e
Finnish offshore industry 2014
Page 28 (44)
In total 15 Finnish offshore material suppliers were identified.
Companies include 5 large, 5 mid-sized and 5 small companies. 11
companies contributed to the study this year. Many material suppliers
are large international companies with significant business world-wide.
Medium-sized and small companies are typically specialized in niche
products, like welding consumables, assorted electrical products or
treated metal products. Differentiation strategy enables them to build
their competitive advantage on specific solution increasing their
credibility and significance not only domestically but internationally.
New material companies targeting offshore were also identified during
the study, but as these companies do not have any offshore business
currently, these were not included in the numbers. However, it is likely
that new coating and other material supply/technology companies
enter the offshore business in the coming years.
3.5. Other identified offshore businesses
Other identified offshore business in Finland is mostly related to offshore wind, and shipping and
ice-management services. The total volume of the sector is modest compared to other sectors
identified in this study, partly because this sector includes businesses at a growth stage. More
specifically, the revenues of other sector is expected to amount to 45 million euros in 2014.
Offshore wind and wave energy are promising businesses but currently only at a development phase
from investors’ perspective and, based on the interview comments, those are not economically
viable businesses yet in large scale with current political subventions in Finland. Instead shipping
services and other service operations at sea is regarded as an interesting segment having great
potential to grow rapidly in the near future. Companies consider services related to Arctic area
particularly interesting market as Finland is one of the world’s key hubs for Arctic knowledge and
R&D. For example Finnish companies have robust experience in ice-breaking and ice-management
operations which can be leveraged in providing critical services to offshore in Arctic.
For example, Finnish company Arctia Shipping, a state
owned company specialised in providing ice-
management operations, is an aspiring example of a
Finnish company levering its ice-breaking expertise to
offshore business. The company is especially
competitive in Arctic area supporting oil & gas
exploration and production activities from ice-
management to oil recovery services with their
multipurpose vessels. However, their vessels have
also been serving customers in the North Sea, Gulf
of Mexico, West Africa and the Mediterranean.
Structure of the
segment no. companies in each size
category
Source: VALOR analysis
5 5 5
Large Midsize Small
’
Copyright © Arctech Helsinki Shipyard
Finnish offshore industry 2014
Page 29 (44)
3.6. Finnish offshore company size & employment
Offshore companies in Finland include many established global large corporations having well-known
products and services, and significant business volumes in offshore industry. In addition to these key
international companies, offshore industry includes many mid-sized and small companies. According
to the results of the study large companies create 85 per cent, and small and mid-sized (SME)
companies constitute the rest 15 per cent of the total industry revenues. However, SME’s
importance in terms of employment is relatively larger as those employ approximately 30 per cent
of the total employees in the offshore industry in Finland – the rest, i.e. 70 per cent of the employees
are working in large companies. SMEs are more typically more labour-intensive companies especially
in subcontracting sector.
Offshore specific stringent requirements and the global nature of the business provide large
companies increased opportunities as they have the capability to make the required investments to
comply with the requirements. For example, maintaining global network of offices and service
operations, and building international networks of customers, suppliers and other stakeholders in
offshore industry require resources and long-term commitment to the business. Equally important
is to have proven references in oil & gas industry and to be a credible author. However, SMEs are
also able to benefit from being part of the supply chain network of a large corporation. This is
because, according to company comments, SMEs are often given opportunity to assume increased
role & responsibility in the supply chain of large companies, e.g. by specializing in a specific area of
product or service.
Offshore industry by size of company*
Offshore industry revenues
by size of company 2014
Offshore industry employment by size of
company 2014
Sources: Company information and forecast, VALOR analysis *) Companies involved in the study
85.0 %
10.3 %
4.8 %
Large
Midsize
Small
69.6 %
21.9 %
8.5 %
Large
Midsize
Small
Finnish offshore industry 2014
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4. Finnish offshore cluster composition
4.1. Finnish offshore as a part of marine industry
Offshore markets are considered as a natural extension to Finnish marine industry expertise.
Technology products and services is the single most significant business in the Finnish offshore
industry, corresponding to approximately 70 per cent of the total revenues of the industry. In 2014,
the total revenues of the technology companies in offshore in expected to rise to a level of 1.3
billion euros, of which exports are expected to amount to 1.25 billion euros.
Since 2012, the Finnish Offshore Industry –reports have documented the most important industry
figures and future outlook. The report is published by Prizztech. Based on research and data, the
industry report has clearly defined Finnish offshore as a separate industry during the last two years.
Finnish offshore as an association industry has organised through Finnish Maritine Industries
association. The picture below illustrates the Finnish Offshore Industry as a part of Confederation
of Finnish Industries (EK).
Finnish offshore industry as a part of Confederation of Finnish Industries (EK)
Source: Finnish Industries
As a Branch Association of The Federation of Finnish Technology Industries, the association coordinates cooperation in industrial and economic policy between the companies in the sector.
As a Member Association of Confederation of Finnish Industries (EK), the mission of the Federation of Finnish Technology Industries is to ensure that the Finnish technology industry has the preconditions for success in the global marketplace.
Confederation of Finnish Industries (EK) is the leading business organization in Finland. EK’s main task is to create an internationally attractive and competitive business environment for companies operating in Finland.
2014 the total exports of the industry exceed 1.6 billion EUR. Technology is the most important segment accounting to 70 % of the industry’s revenues.
Finnish offshore industry 2014
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4.2. Finnish offshore cluster geographically
Historically Finnish companies took their first steps in the offshore industry though delivering many
platforms constructed in Mäntyluoto yard to operate in oil and gas fields at sea worldwide. This has
also been the driving force behind the geographical concentration of the industry around Pori area
since the activity in Mäntyluoto has also created the need for strong and integrated network of
supply chain to serve the needs of the yard during offshore undertakings.
However, over time the footprint of offshore in Finland has clustered geographically more
widespread as many other companies from traditional marine and other industries have entered the
offshore business. A strong trend in offshore business has been the convergence between the needs
of the offshore technology and traditional marine industry as offshore operations have been taken
to deeper water horizons at sea. This has created a need for transferable and flexible vessels and
platforms, requiring also more and more sophisticated solutions in offshore and creating a natural
collision between traditional marine and offshore industry. This has been significant force driving
many traditional marine companies in Finland to become an essential part of the global offshore
network.
Besides, the backbone of the Finnish offshore business rests also on companies with a background
in other industries as well. For example, Neste Oil’s oil and gas knowledge has increased oil and gas
knowledge in Finland. Moreover, offshore industry is a technology driven where quality
requirements are very stringent. Thus, the industry provides attractive opportunities for many
companies assuming international leadership and renowned expertise and capability within specific
product area to provide unique solutions for customers. This is why many companies particularly in
technology sector have also been able to deliver enormous value-added in offshore and increased
their share in offshore market within their niche product or service area.
The significance of yards is yet important in
determining the geographical presence of the cluster
and one can still notice Finnish engineering and
subcontractor network as well as other companies
with maritime industry background to be
geographically clustered around major yards in Turku,
Helsinki and Pori area. This is because as discussed
above, geographical presence nearby has many
advantages for companies involved in the network of
supply chain. Also knowledge spillover tend to
concentrate geographically as companies research and
development, operational and advisory activities as well as educational and other institutions create
optimal preconditions for the development of clusters.
The figures below illustrate the geographical presence of the Finnish offshore industry by sector,
where the location of identified Finnish key players in offshore industry is mapped. It is important
to notice that the purpose of the figure is not to map every company in the Finland offshore industry,
but rather only point selected companies for illustrative purpose.
This photograph is reproduced with the permission of Rolls-Royce plc, copyright
© Rolls-Royce plc 2012
Finnish offshore industry 2014
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Yard and engineering company
Technology company
Subcontractors
Material and other company
Finnish offshore industry 2014
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5. The Finnish offshore industry outlook
In line with the global expected growth in offshore business, the Finnish offshore industry companies
expect their business to increase in value in the future, based on the results of the study. Companies
note that in the future they will invest both in their current strengths, business and resources but
also are actively finding new opportunities and business areas where to reap additional growth and
leverage their strengths.
5.1. Exports
Finnish companies consider Norway, Russia, Asia, Brazil, North America and West-Africa as
important offshore market areas for the Finnish cluster. Norwegian offshore market is seen as the
most important market for Finnish companies, however. It is a stable market and many Finnish
companies regard Norway as their domestic market in offshore. The market has seen drastic growth
in recent years and Finnish companies expect it to develop robustly also in the future in spite of the
current breath-taking as Statoil decided to cut offshore spending due to rising industry costs.
Norwegian market is particularly important for Finnish high-end technology and innovation solution
providers since Finnish companies feel they do compete on providing the best possible solution and
the customer decision criteria is on risk management rather than low price. The market is seen
highly auspicious for every sector in Finland - also emphasizing the Finnish offshore industry
competitiveness in Norway.
Additionally, based on company comments, Russian market is seen as a market with opportunities
particularly for Finnish companies having a strong interest in Arctic projects. As mentioned in
Section 2, many companies regard Arctic knowledge as one of the main competitive advantages in
Finland and Russian market is one of the largest for Arctic solutions since 60% of the arctic
continental margin is in Russian waters. Finnish companies are very well-positioned in the market
with robust references in high-end technology and innovation solution as well as having
Key areas where Finnish offshore companies are active in the coming years
Source: Company information, VALOR analysis
Arctic regions
Brazil
Norway Russia
AsiaWest-Africa
North-America
Finnish offshore industry 2014
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uncompromising quality in operations throughout the entire offshore supply chain. These both are
highly valued when delivering undertakings for projects in extreme operational conditions, e.g. in
Arctic environment where risks are amplified. Arctic offshore investments are expected to actuate
in the mid-term but, however, companies are already willing to invest in developing their existing
product and service, and capability to meet increasingly stringent requirements and regulation
framework imposed for companies operating in the area. On the negative side, current disputes
between Russia and Western countries are expected to hold back Arctic investments particularly
in Russia.
Other interesting markets include Asia and Brazil as well as North America and West-Africa.
Particularly Asia is seen as an important market area for companies as global construction activity is
shifting toward South Korea, Singapore and predominantly to China. Asian market is expected to
grow in line with global offshore investments. This is why particularly technology companies regard
Asia an important market when building future business.
Brazil is instead seen as one of the most promising opportunities in the mid- or long term with all
the fundamentals in place. The market is particularly attractive since it is driven by the investments
to exploit the reserves that are in deep-sea and under thick layers of salt, requiring enormous
investment to extract it. On the other hand, local content requirements are distracting the
development of the area although Finnish companies have been able to adapt to the market
requirement with very innovative approach, as mentioned above in Section 2.
North American markets, particularly GOM and Alaska, are seen lucrative due to challenging
climatic conditions. Potentially increasing activity provided by the new legislative framework in
Mexico that is expected to actuate investments in offshore exploration and production in GOM.
This is seen particularly attracting market for Finnish yard sector, as they are very competitive and
equipped with proven references in delivering solutions for harsh environment, particularly in GOM.
Alaskan markets, as well as North-Canadian markets to some extent, are instead important due to
the potential in Arctic offshore. Companies also expect investments to West-African offshore
markets to increase rapidly in the future, creating large markets particularly for service operations.
5.2. Products and services
As mentioned above, Finnish offshore cluster is known for its technology know-how, quality and
innovation. Thus, competitiveness is not based on price competitiveness. Finnish offshore cluster is
most renowned in providing solutions meeting stringent quality requirements and delivering projects
as agreed. Quality is seen holistically covering not only product durability and technological specs
but also project delivery, and communication and cooperation vertically both within customer as
well as supply chain. Companies also emphasize that they invest robustly in quality also in the future
and will ground competitiveness on it in future offshore deliveries as well.
In line with product and service quality, Finnish offshore cluster has also been very active in
developing solutions and value-added service business as well and expect this to be a vital asset in
building future business. Particularly Finnish companies have been active in developing advanced
service concept and taken the traditional aspects of the business one step further. For example,
preventive maintenance, including not only proactively monitoring and identifying product condition
Finnish offshore industry 2014
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but also optimizing maintenance work, is a function with remarkable added-value to offshore
operators and oil companies. Finnish technology cluster has deep understanding and robust
references of advanced service concepts acquired in other industries as well. It is also important to
note that the importance of service business is amplified when operating in harsh environment, e.g.
in Arctic region, where risks and knock-on effects are augmented.
Companies identify that an important trend in offshore is increasing awareness of health, safety,
environment and quality (HSEQ) requirements in offshore operations. Particularly environmental
awareness has increased robustly lately and also sustainability and energy efficiency of the operations
in terms of e.g. carbon footprint has become a decision criteria especially for oil companies.
Nevertheless it is not only increased stakeholder management and reporting that is pushing
companies to increase their HSEQ awareness but also regulation. It is important to notice that
HSEQ requirements must be complied throughout the entire supply chain. This is why many Finnish
companies regard increased HSEQ requirements an opportunity and the trend increases the
importance of project management function in offshore.
Finnish companies’ competence in project management skill in offshore projects & deliveries create
also robust prerequisites for solid delivery time and meeting even the most stringent quality
standards and requirements. Finnish companies insists that further opportunities lie particularly in
assuming engineering, procurement and construction management (EPCM) deliveries and taking
larger role in projects where Finnish companies and other stakeholders could even further leverage
their core competencies. EPCM role could be assumed both by yards or engineering companies.
Offshore projects are moving to deeper water horizons. This implies particularly sub-sea technology
is expected to boom with this move. Subsea is regarded as an area in Finnish offshore cluster,
according to interview comments, where Finnish companies could leverage their expertise and there
is a robust consensus that the area will be important for offshore companies in the future. For
example, Finnish yard sector has prerequisites and capability for delivering sub-sea solutions. On the
other hand, subsea is an important area in product development for many technology and
engineering companies.
Another important product area stems from Finnish technology information and communication
technology (ICT) cluster. Particularly engineering companies, including e.g. Napa and Elomatic
Engineering, have been active in developing software for offshore manufacturing, production and
engineering activities. Also technology companies regard software and ICT important. For example,
Pemamek has deep understanding of e.g. robotics and, on the other hand, many service applications
like preventive maintenance require ICT expertise.
Finnish offshore industry 2014
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To make a final note, in line with increased demand for
offshore hydrocarbons, also the production of offshore
alternative energy is expected to increase its volume.
For example, offshore wind provides business for many
companies today but also new sources of energy at a
development phase provide increased business in the
future. For example, wave energy has been recognised
as a potential new area in offshore. On the other hand
many imply that most probably it takes years before
wave energy is economically viable business with
current market prices and government subvention
levels.
5.3. Resources
Finnish companies note that their resources in offshore is multi-dimensional stretching its limits also
outside offshore industry. For example, companies cooperate in offshore with partners and other
stakeholders that are in direct relation to offshore business as well with those authors with unrelated
operations. For example, as discussed above, Finnish companies continuously invest in their network
of supply chain in order to improve their capabilities in offshore industry. Some companies have also
changed operational models e.g. by creating offshore joint ventures, also internationally.
However, equally important is to notice that stakeholders and partners with whom offshore
companies cooperate in their offshore operations are not always strongly linked to offshore. Perhaps
the most important group without direct contact with offshore industry is universities and other
educational institutes. Companies closely cooperate with educational institutions for two reasons.
First, they have joint exercises in order to increase research and development (R&D) capabilities. It
is also important to notice R&D cooperation is an important factor for increasing industry
knowledge spillover as well. Second, companies are willing to ensure they will get the brightest
students possibly available. Companies insist Finnish educational system provides top talents in
multiple disciplines, including e.g. automation, structural design and software engineering.
Finnish government and the services it is providing also have a dice in the Finnish offshore business.
For example, well-disposed attitude and intent from the Finnish government will support the
development of the offshore business in Finland. Direct measures, including e.g. export promotion
initiatives and efforts of the Finnish Ministries participate, are important for the Finnish offshore
companies particularly when extending networks. Also other facilities and services provided by e.g.
Finpro, Finnvera and TEKES in activities including financing and developing business and innovation
are highly appreciated by companies in offshore.
Finally, Finnish companies also recon that intellectual property rights (IPRs) management is becoming
more and more important in offshore business. Many companies, including Wärtsilä, Metso, Vacon
and GS-Hydro are owners of global patents protecting them from the most striking patent
infringements. IPR include not only patents but also industrial design rights, trademarks and trade
secrets. This is why it is extremely important to develop, enforce and protect company IPRs when
’
Copyright © Technip
Finnish offshore industry 2014
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the competitive advantage is based on innovation and technological solution. This is why also
companies having patents are often technology or engineering companies as well as subcontractors,
especially when providing commercialized products and services backed with substantial R&D
expenses and efforts. It is important to note that companies having patents include not only large
companies but also mid-sized and few small companies as well.
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6. Conclusion
In this report offshore industry is defined as including businesses conducting or supporting offshore
oil & gas exploration and production as well as other production and related activity at sea (for
example, offshore wind and wave energy and seabed mining). Instead, offshore industry does not
include oil & gas logistics related tanker or harbour activities since quality requirements are not
strictly shared with offshore industry.
Today in 2014, the Finnish offshore industry is significant business in Finland and over 150 companies
operate actively in the industry, according to the results of the Finnish Offshore Industry reports.
Offshore business is today a significant business in Finland and, in 2014, total revenues of the Finnish
offshore cluster are expected to amount to approximately 1.9 billion euros, of which exports
accounts to 1.7 billion euros. Offshore industry employs directly approximately 4 650 employees
and, according to the results of the study, Finnish companies are seeking to recruit additional 250
employees within the next two years.
In this study, the Finnish offshore industry cluster is divided in five different segments: Yards,
engineering companies, subcontractors, technology companies, material companies and other
identified offshore business, including e.g. offshore wind and shipping services. The sigle largest sub-
segment is technology companies and their combined revenues amounted to 1.25 billion euros in
2013 and the corresponding figure is expected to near 1.3 billion euros in 2014.
One of the most prominent strengths of the Finnish offshore cluster is technological expertise and
innovativeness. Numerous companies in the Finnish offshore cluster are in a strong position globally
in providing technology solutions within selected areas, but the single largest product area in which
technological know-how has accumulated and expanded broadly during the past decades is
propulsion systems. In this product area Wärtsilä, Rolls-Royce, ABB and Steerprop are major global
players in their specific applications in their Finnish operations. Particularly Rolls-Royce Finland and
Wärtsilä have been able to deliver a large share of advanced propulsion systems for solutions in
offshore platforms and vessels used e.g. in drilling, production and supporting activities in offshore
worldwide. Notable is that the propulsion, motor and marine technology is the largest sub-sector
in Finnish offshore technology sector as well, constituting to approximately 70 per cent of the total
Finnish offshore business.
In addition to the technological know-how and innovativeness, Finnish companies are also known
for their uncompromising quality in products and services. According to the company comments,
quality is viewed as a holistic concept covering traditional aspect of product quality, like technical
properties and product durability as well as reliability of delivery, and communication and
cooperation vertically both within customer as well as supply chain. Other strengths of the Finnish
cluster include, Arctic know-how, engineering work, project management, location near Norway
and Russia, and, finally, supporting political environment.
The results of this study reveal companies regard offshore as an attractive industry with many future
growth and business opportunities. The industry has experienced a rapid growth in Finland with a
compound annual growth rate being approximately 10 percent between years 2009 and 2014.
Finnish offshore industry 2014
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Moreover, the results of the survey reveal offshore companies expect the importance of the
offshore business to grow for them in the future.
Companies note that in the future they will invest both in their current strengths, business and
resources but also are actively finding new opportunities and business areas where to reap additional
growth and leverage their strengths. Finnish companies consider Norway, Russia, Asia, Brazil, North
America and West-Africa as important offshore market areas for the Finnish cluster. Norwegian
market is particularly important for Finnish high-end technology and innovation solution providers
since Finnish companies feel they do compete on providing the best possible solution since the
decision criteria in the market is based on quality and managing the risk rather than low purchase
price. Finnish companies also recon this is one of their most critical competitive advantages in
Norwegian markets. Finnish companies often quote Norway as one of their home countries in
offshore business and the market is seen highly auspicious for every sector in Finland - also
emphasizing the Finnish offshore industry competitiveness in Norway.
Additionally, based on company comments, Russian market is seen as a market with opportunities
particularly for Finnish companies having a strong interest in Arctic projects. As mentioned in
Section 2, many companies regard Arctic knowledge as one of the main competitive advantages in
Finland and Russian market is one of the largest for Arctic solutions since 60% of the arctic
continental margin is in Russian waters. Finnish companies and other stakeholders have also a long
tradition of cooperating with Russian partners and Finnish feel they do have a competitive advantage
in communicating with Russian customers and other stakeholders.
Other interesting markets include Asia and Brazil as well as North America and West-Africa.
Particularly Asia is seen as an important market area for companies as global construction activity is
shifting toward South Korea, Singapore and predominantly to China. Brazil is instead seen as one of
the most promising opportunities in the mid- or long term with all the fundamentals in place. North
American markets, particularly GOM and Alaska, are seen lucrative due to challenging climatic
conditions. Companies also expect investments to West-African offshore markets to increase
rapidly in the future, creating large markets particularly for service operations.
Finnish offshore cluster has also been very active in developing solutions and value-added service
business and expect this to be a vital asset in building future business. Particularly Finnish companies
have been active in developing advanced service concept and taken the traditional aspects of the
business one step further. For example, preventive maintenance, including not only proactively
monitoring and identifying product condition but also optimizing maintenance work, is a function
with remarkable added-value to offshore operators and oil companies.
Companies identify that an important trend in offshore has been the increased awareness of health,
safety, environment and quality (HSEQ) requirements. It is important to notice that HSEQ
requirements must be complied throughout the entire supply chain. This is why many Finnish
companies regard increased HSEQ requirements an opportunity and the trend increases the
importance of project management function in offshore. Particularly environment aspect has
emerged as of greater interest recently, however, which may be derived from the fact it has been
with less significant importance historically compared to other aspects.
Finnish offshore industry 2014
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Finnish companies’ competence in project management skill in offshore projects & deliveries create
robust prerequisites for solid delivery time and meeting even the most stringent quality standards
and requirements. Finnish companies insists that further opportunities lie particularly in assuming
engineering, procurement and construction management (EPCM) deliveries and taking larger role in
projects where Finnish companies and other stakeholders could even further leverage their core
competencies.
Other particularly interesting opportunities include subsea and ICT solutions in offshore. For
example, Finnish yard, technology and engineering companies have prerequisites and capability for
delivering sub-sea projects. On the other hand, Finnish industry has a strong background in ICT
knowledge. Particularly engineering companies, including e.g. Napa and Elomatic Engineering, and
technology companies, e.g. Pemamek and Metso, have been active in developing software and ICT
solutions for offshore manufacturing, production and engineering activities as well as to robotics and
service applications.
Finnish companies have a multiple of partners and other stakeholders with whom they cooperate in
offshore. These partners and stakeholders are both operating in offshore industry as well as other
business areas as well. For example, Finnish companies highly regard and invest in their network of
supply chain in order to improve their capabilities in offshore industry. However, equally important
to notice that resources and partners are not always operating directly in offshore business
particularly when considering companies having strong background in unrelated industry. For
example, research entities, e.g. universities, and government-owned facilities and companies are
important in supporting offshore business in Finland.
Equally important is to note that Finnish companies also recon that intellectual property rights’
(IPRs) management is becoming essential part of offshore business. IPRs include not only patents but
also industrial design rights, trademarks and trade secrets. This is why it is extremely important to
develop, enforce and protect company IPRs especially when considering companies grounding
competitive advantage robustly on technology, brand or innovations.
Overall Finnish companies are in a position where they both show intent and capacity to assume
increased role and importance in global offshore markets. Companies are already highly distinguished in
selected areas of products and services. The backbone of the Finnish competence is derived from
excellent technological know-how and quality as well as to project management, engineering work,
location and Arctic expertise. They are also investing substantially in developing new product and service,
as well as operations in order to increase their boundaries in offshore industry.
Finnish offshore industry 2014
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7. Methodology and reliability of the study
7.1. Background and objectives
The purpose of the Finnish Offshore Industry 2014 study is to increase the understanding of the
Finnish offshore industry and its companies, the structure and volume of the industry in Finland, and
Finnish companies’ future prospects in offshore. Offshore industry is described in this study in this
report offshore industry is described as including businesses conducting or supporting offshore oil
& gas exploration and production as well as other production and related activity at sea (for example,
offshore wind and wave energy and seabed mining). In this year’s report, a special attention was
additionally given to offshore markets in Norway and Russia, and the Arctic.
This report is a continuum to the first Finnish Offshore Industry -report conducted in 2012. The
report is supporting the work of MEE Maritime industry operational environment development
programme. Financially the study is being supported by MEE.
7.2. Methodology
As the main methodology of the study, both web based questionnaire and half-structured interviews
conducted for selected companies as well as other financial data publicly available were used in
creating the data for understanding Finnish offshore industy. Therefore, this study uses a unique
dataset that is collected only for the purpose of this study.
The questionnaire was sent to each identified company potentially having business in offshore within
yard and technology sector as well as in their identified supply chains. The base list of companies
was recognized using the list of offshore companies in the offshore studies conducted in 2012 and
2013. The base list was then supplemented systematically utilising information from Finnish Maritime
Industry Association’s and Prizztech Oy’s databases of potential offshore companies as well as
searching companies from public databases using industry association codes. The list was then
updated by using systematic internet search strategy. The strategy included entry words including
”offshore”, ”oil”, ”gas”, “wind”, ”references”, ”FPSO”, ”jack up”, ”semisub”, ”spar”, “statoil” and
“norsok” among others. Moreover, .fi –domains or company websites with a word ”Finland” were
prioritized. Also interviews and questionnaire results served their purpose in identifying offshore
companies in Finland. The final list of potential offshore companies included 266 companies, i.e. 39
additional companies compared to the list in 2013.
In total, 243 companies were invited for the questionnaire and 23 key companies were interviewed.
The questionnaire was internet-based and the invitations were sent through e-mails to each
identified offshore company. In SME sector, the questionnaire was sent to the CEO of the company,
if no other offshore specific contact person was recognized in earlier studies. In large companies the
respondent was the director/vice president of marine/offshore business or, alternatively, the person
responsible for oil & gas or offshore industry sales in Finland/Nordics. However, in order to increase
the rate of responds, reminder messages were sent to those companies that did not answer for the
invitation message. In addition, the project team tried to reach 150 companies who did not answer
Finnish offshore industry 2014
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the reminder messages by phone calls. Phone calls were prioritized to companies with largest
offshore revenues based on project team assessment.
Selected offshore companies were interviewed. The selection of companies was based on project
team’s proposition of a list of the most relevant offshore companies in Finland for this year’s study
and then the final list was agreed together with the customer steering group in a project meeting.
Interviews were conducted either face-to-face or by phone. Face-to-face interviews were
prioritized, however. Typically the duration of interviews was between 30 – 120 minutes.
Interviewees were e.g. CEOs, offshore/marine directors, technical directors, sales managers,
country managers or project managers. The list of companies interviewed is attached.
7.3. Reliability of the study
In total 101 companies participated the study of which 23 companies were interviewed. Thus, the
rate of respond was 42 per cent (101 companies). The list of companies is attached. Compared to
the study in 2013, additional 27 new companies responded with an estimation of their offshore
business. A few companies did not estimate their offshore business as they did not know their
offshore business volumes as they did not have close interface with end-customer. This was mostly
related to companies having no offshore specific products in their offering or companies without
direct interface to offshore business in their operations.
On order to increase validation of the study, the questionnaire and interview structure was similar
to that of reports conducted in 2013 and in 2012. This increases the comparability of the
questionnaire and interview results to those of in 2013 and in 2012. Additionally, in order to increase
the reliability of the study, each step of the study was documented to a database designed for this
study. This is why the report may be conducted with similar methods also in the future.
The total Finland-based revenues of the companies involved in this study amounted to approximately
20 billion euros in 2013 based on the latest revenues figures. The interview and questionnaire results
in 2014 represent 93 per cent of the total offshore revenues in Finland. This is why the reliability
and coverage of the study may be considered as high. Also the reports are highly comparable
between the reports in 2013 and in 2014.
Nevertheless, it is important to notice that some companies do not separate offshore business in
their bookkeeping or they do not have precise information otherwise available of their offshore
business. In these cases their figures are based on company estimations of the person interviewed
or the respondent of the questionnaire. Based on VALOR experience, in these kinds of cases the
inaccuracy is not often related to the volume of the business but rather on the timing of the offshore
business. This is because typically offshore project are also significant in size and value. However,
the problem was minimized by carefully selecting the person or persons interviewed and the
respondent of the questionnaire and those persons having the best knowledge of company offshore
business were prioritized.
Industry revenue of the identified companies that did not answer the questionnaire was estimated
using the results of earlier years’ offshore reports, or qualitatively with company profiles and using
benchmark information.
Finnish offshore industry 2014
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The conclusions and inferences drawn in the study are formed objectively using company interviews
and questionnaire answers. The results are based on a syntheses created by VALOR based on
interview discussions and questionnaire results, and do not specifically represent company or
industry association opinions.
Finnish offshore industry 2014
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APPENDIX
Companies participated in the study
Table 1. Companies interviewed and respondents of the questionnaire.
ABB Oy Innopower Oy Esab
Adwatec Oy Justuxia Paramet Konepaja Oy
AIP-Mittaus Oy JTV Solutions Oy Pemamek
Aker Arctic Kaplaaki Oy PK-Tekniikka Oy
ALMACO Group KMJ-Engineering Oy Pocadel Oy
Alupro Oy Konecranes Qualifinn Engineering Oy
Antti-Teollisuus Oy Konepaja Wingmet Oy Rauma Marine Constructions
APX-Metalli Oy Konepaja Häkkinen Oy Rauma Plan Oy
Arctech Helsinki Shipyard Kvaerner Finland Oy Rolls-Royce Oy Ab
Arctia Shipping Labkotec Oy RR Site Service Oy
Arme Oy Lamor Corporation Ruukki Metals Oy
Ata Gears Oy Lautex Oy Stalatube Oy
Citec Leinovalu Oy Steerprop Oy
Colly Lehtosen Konepaja Oy STX Finland Cabins Oy
DG-Sukellusryhmä Oy LOGSTOR Finland Oy suomen hyötytuuli
Delcon Oy Länsiviivain Oy Takoma Oyj
Deltamarin Oy Machinery Acoustics Oy Team Electric Oy Ab
Elinar Oy Ltd Mekeltek Oy / Sata-Electro OY Technip Offshore Finland
Elomatic Marine Engineering Memar Oy Teknos Oy
Evac Mesekon Oy Telatek Oy
Fibox Meteco oy Uretaaniveka Oy
Finnish Meteorological Institute Metos Oy Ab Vacon
FSP Finnish Steel Painting Oy Metso Corporation Vahterus Oy
Furuno Finland Oy Miilukangas Ky Vaisala Oyj
GS-Hydro Oy Moventas Gears Oy Wello Oy
Haapasaari Works Oy Napa VEM motors Finland Oy
Hatanpää Oy Neste Jacobs VEO Oy
Helkama Bica Oy Norrhydro Oy Visedo
Hentec Ab Nurmi Hydraulics Oy wpd Finland
Hiekkapuhallus ja Maalaus Rautanen Oy O Aaltonen Oy Westecon Oy
Hollming Ocotec Oy Wirtain Metalli Oy
Imatran Työstöasennus ( ITA) Offshore Technology Center Oy Wulff Entre Oy
Indewe Oy Outokumpu Stainless Oy Wärtsilä Finland Oy
Ovako Imatra Yllin Talli
Prizztech Ltd.
P.O Box 18 (Pohjoisranta 11 D)
FI-28101 Pori
FINLAND
www.prizz.fi
Mr. Pekka Rouhiainen
+358 44 710 5326 / +358 50 305 4838
pekka.rouhiainen@prizz.fi
VALOR Partners Ltd.
Eteläesplanadi 24
FI-00130 Helsinki
FINLAND
www.valor.fi
Mr. Antti Halonen
+358 50 577 3180
antti.halonen@valor.fi
Contacts
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