What is the situation in Aibel now?
Management in Aibel have been working diligently on actions and plans to handle the corona crisis. The situation has been very dynamic, with rapid changes in the pandemic itself, initiatives from governments and changes in the business environment. Our first priority has been to safeguard the health of our employees, secondly, we have had a strong focus on business continuity. We have implemented a broad set of initiatives to inhibit the spread of covid-19 in the company. We have had a few cases of confirmed infection amongst employees, but none that have required medical aid so far. I wish our colleagues all the best with hopes of speedy recovery.
What measures have been taken in order to reduce the risk for spread of the covid-19 virus?
We have continuously implemented the recommendations from the government health authorities and we continue to take measures to ensure proper hygiene for infection control. As an example, at our yard in Haugesund, reinforced cleaning routines have been introduced and safety delegates and other managers are helping in disinfecting areas in our buildings. This is a true team spirit! We also have a clear focus on keeping recommended distance between our workers, both in the offices and at the yards. We have shut down canteens and encourage employees to work from home to the extend it is possible. Now two thirds of our employees in offices work fully or partly from home.
Has the situation affected our projects and daily operations?
The pandemic has huge consequences for our society and businesses, including Aibel. After health and safety of our employees, our focus has been on ensuring optimal progress on our ongoing projects. This will secure continued revenues and defer the need for temporary lay-offs.
With joint efforts throughout the entire company, we have managed to ensure fair progress in many of our projects, particularly the ones that are in the FEED or engineering phase. Our operations in Thailand and Singapore have maintained reasonable progress and local measures have been implemented to avoid spread of covid-19. Other projects are suffering a bit more due to the special circumstances and the different measures introduced by the authorities.
Have these measures had a direct effect on Aibel?
First, let me emphasize that I fully sympathize and support the measures implemented by the government. Secondly, we appreciate the economic and financial measures implemented by the government to aid the situation. However, as we have seen in the media, the government measures have large impact on all businesses, also Aibel. Let me illustrate with a couple of examples:
Due to the quarantine rules for people entering Norway, nearly 400 hired foreign operators working in rotation have returned to their home countries. Rotation and quarantine are incompatible, as the work period is similar to the quarantine period. This has reduced our capability and capacity, particularly at the yard in Haugesund. In Spain, the situation has forced our supplier Navantia, who will deliver the HVDC module for Johan Sverdrup P2, to shut down the yard.
We are also experiencing challenges in our supply chain as our suppliers and subcontractors suffer from similar challenges. In addition, our customers reduced staffing offshore rapidly in order to minimize risk for disease on production platforms. Almost 200 Aibel personnel were demobilized over a very short period. We are now redeploying many of them into the yard to ensure further progress on the projects in the construction phase and to limit the need for lay-offs.
In light of the circumstances, how do you look upon the months to come?
One of the most demanding feature of this crisis is the unpredictability, which further provides breeding ground for uncertainty and concern. It is very difficult to predict how the pandemic will evolve, what measures will be taken by governments, and how this will affect our customers and our business. The oil price outlook is an additional factor that will also affect the activity level in our business segment.
"If we can progress the projects without increased risk to employees and without increased cost, the projects will continue"
We are in regular and close dialogue with our customers at all levels of the organization. So far, we have agreed on a common ambition: To maintain project progress and value creation provided we are able to keep our high safety and health standards as well as achieving a satisfactory productivity. In other words, if we can progress the projects without increased risk to employees and without increased cost, the projects will continue. To achieve this, we are also very dependent on progress in our supply chain.
Our customers within the oil and gas segment express concern about the oil price, both the current price, but also medium-term outlook. The increased production and reduced demand may lead to suppressed commodity prices for a considerable time. This will lead to reduced investments and reduced operational spend in the oil companies, and we are already now seeing various plans evolve around this topic. We expect hence that E&P companies will re-evaluate their project portfolio and prioritize hard in weeks and months to come.
Our customers in the offshore wind segment are still moving forward with activity and plans and we will continue to further develop our solid position within this industry segment.
On a positive note, we are still submitting tenders on a regular basis and expect new requests from customers within both oil & gas and offshore wind. We see that some bids are being postponed, both in Norway and internationally, so we will continue to closely assess the market development going forward in order to maximize business opportunities.
What is your focus now?
As I said earlier, the health and safety of our employees is always our number one priority. Following that is business continuity. We know from recent history that there will be an even stronger focus on costs in time to come, and we must ensure that we can maintain a good productivity and cost development going forward. If we are unable to achieve this as a company, I fear that projects can be put on hold, leading to substantial downscaling of our business. The management team in Aibel are planning and preparing for several scenarios, and I guess it’s fair to say we are all hoping for the best, but we are also preparing for the worst, which will involve substantial lay-offs.
We are not there yet, and I urge everyone to keep the good momentum. The Aibel management and I will strive to keep all employees informed and updated in the dynamic time to come. The overall ambition is to come through this unprecedented challenging period and remain a strong and leading supplier to the European energy industry.
Published 25 March 2020