By Wendy Laursen
Roy Norum bought 50 percent of PG Marine Group from founder Per Gjerdrum when the company was at a crossroads that could have led to failure. Gjerdrum had established the offshore pump company in 1982 and built a solid reputation for technology, competence and creativity. However, he never took the company beyond Norway, and times were changing. During the 1970s and 1980s and even into the 1990s, most of the sophisticated offshore supply vessels were built in Europe, especially Norway, so there was little incentive to expand internationally. But shipbuilding wasincreasingly becoming the specialty of Asia.
Norum, having completed a degree in mechanical engineering at Vestfold University and an MBA at BI Norwegian Business School, had worked exclusively in the pump industry and held a top management position with PG’s main competitor. In 2000, restless after 20 years with that company, his long association with Gjerdrum led to the opportunity to buy into PG and navigate the company out of danger with Gjerdrum staying on in the background as Chairman.
Norum was leaving a position with a large corporation that had over 3,000 employees to take over a company that even today has only about 100 employees. His approach was to be leaner and more focused than his competitors and not swayed by the sales creed he had experienced elsewhere, which said that the only way to grow was to increase product range. “The thinking in my old company was very much based on commodity-oriented activities. That was actually the reason I left, because I saw that shipyards, shipowners and oil companies would rather have fewer suppliers, but suppliers that take more responsibility and are able to package and systemize their deliveries,” he explained.
Future success, as he saw it, meant a more system-oriented approach. Working in a country that was remote from Asia and had a reputation for high costs meant that market competiveness hinged on innovation.
“We had to be at the forefront of development, and we had to take much higher risks and much more responsibility. That has been what has really paid off for PG.”
Making It Work
Under Norum’s leadership, PG has grown from approximately $12 million in annual turnover to an expected $100 million in 2012 – mainly through strong growth internationally and several ground-breaking patents: for cargo solutions (PG-MACS®) and subsea pumps (PG-MAPS®). Competitors have so far been unable to match these high-end offerings. “Most of PG’s products are technology- and competence-driven. Hence they are not heavily exposed to cheap labor fabrication sites,” said Norum.
Today PG is a pump-solution provider that delivers everything from single-standing pumps to skids, modules and complete cargo management systems. The company has its headquarters in Hvalstad, Norway in a new 15,000 square-meter facility set up in August 2011. Additionally, there is a 6,000 square-meter fabrication facility, PG Construction, in Drammen and another 8,000 square-meter factory under construction nearby. PG Hydraulics is situated outside Alesund on the west coast of Norway. Globally, PG maintains partnership agreements with leading maritime products providers (such as Hyde Guardian) for local sales and distribution. Although he has no plans to deviate from this general model of operation, Norum has agreed with Petrobras to set up local manufacturing capacity in Brazil in the future.
The company’s largest single delivery to date was a chemical injection module weighing 162 tons for the Gjøa platform in the North Sea, and PG has recently won contracts for further such units. Norum remains focused exclusively on the offshore oil and gas market: offshore rigs, the ships serving them, and specialized tankers for chemicals or asphalt. “This strong focus has brought depth and width in basically all offshore-related pump applications, placing PG at the absolute forefront of innovative technology,” he stated.
During the Offshore Technology Conference in Houston last year PG and technology partner Techni won the OTC Spotlight on New Technology 2011 Award for PG-MAPS, a compact, lightweight and cost-effective pumping system for a range of subsea and topside applications including subsea mud and drill cuttings handling, tophole drilling, subsea or topside highpressure injection of water or chemicals, subsea liquid boosting and well intervention and fracking. By using a software-controlled linear actuating system with a permanent magnet motor from Techni, combined with a proven topside pump head technology from Feluwa Pumpen, PGMAPS boasts several technical and cost-efficient advantages, including improved energy efficiency. PG claims the system is the most efficient subsea pump solution existing today and is easily scalable from a few hundred kilowatts to four megawatts.
Norum acknowledges his co-innovators: Anders Eide, PG’s Marine Technical Manager for PG-MACS, and Andreas Larsen, PG’s Oil and Gas Technical Manager for PG-MAPS. He also acknowledges companies such as Petrobras, Farstad Shipping and DOF Subsea – forerunners in the adoption of new technologies in an industry that often doesn’t move as quickly as Norum would like. “I wouldn’t say it’s traditional, but it is a very conservative business,” he stated. “For an innovative company like us, this is quite a challenge because everybody loves our new ideas, our new products, but everybody is hedging and waiting for somebody else to go first.”
He added that “Once this inertia is overcome and you are recognized as a company that can be trusted and taken as a partner, it is possible to have a very favorable position in the market chain.” Norum is very positive about the company’s prospects for 2012: “The business volumes are back. The optimism is back.”
PG played catch-up in 2011 after the economic crisis by landing two major business deals. The first was a partnership agreement with specialist pump manufacturer Putzmeister of Germany to address the rapidly growing global market in drill cutting handling and transport. The performance of PG-MACS for this application had already been proven under challenging North Sea conditions and, through access to Putzmeister’s high-density, high-pressure pump solutions, the companies created the widest available portfolio of solutions for handling drill cuttings from seabed to rig, rig to ship, and ship to shore in the safest, fastest and least resource-consuming way.
The second was a frame agreement between PG and DOF for the supply of Hyde Guardian ballast water treatment systems to equip DOF’s fleet of 70 offshore support vessels in accordance with the forthcoming International Maritime Organization convention expected to enter into effect in 2013. PG is well positioned to participate in this market, havingpreviously secured more than 100 contracts for such units globally as part of its partnership with Hyde.
2012 and Beyond
2012 is shaping up as a banner year for PG as the PG-MACS cargo solutions, PG-MAPS subsea pumps, PG-Hyde ballast water treatment systems and the company’s other businesses are all expecting strong growth.
“Our core markets appear extremely strong, and January alone brought close to $20 million in new orders to the company with all-time-high project values pending,” he stated. PG has a strategic plan to more than double its business by 2015 based mainly on developing products related to subsea installations. The plan was “pressure-tested” by Bain & Company last year, and Norum is fully focused on its implementation. The challenges will be organizational – building infrastructure and employing more people to cope with rapid growth. PG increased staff by over 25 percent in 2011 and continues to expand, searching for skilled engineers at a time when they are in high demand globally.
While there are significant market insecurities emerging in 2012, PG’s unique relationship to the oil and gas sector and the strength of the Norwegian offshore market shelter it well. “Our ground-breaking solutions put PG in a special position where the potentials widely exceed the threats. Basically, we only see opportunities with perspectives 2012 to 2015 in mind,” Norum stated.
The company has invested heavily in understanding and controlling permanent magnet drive technologies for pumps as part of a program to improve energy efficiency. Norum believes that many top-side applications for vessels and rigs will have to become submerged in the future as oil and gas reserves will increasingly be found deep and far from shore. The transfer of electric power either from ships or rigs to the sea floor, or the generation of power subsea, will trigger demands for extremely energy-efficient solutions for pumps and compressors, he explained.
PG is currently developing a PG-MACS solution that will be used on a new offshore support vessel whose duties will include oil spill clean-up in Arctic waters. The vessel will have a large cargo capacity and the flexibility to handle recovered oil, which with PG-MACS will mean sophisticated heating and cargo segregation functionality.
With projects like this, the company’s reputation for technology development continues to be enhanced. Norum is ever aware of the challenges related to cheap manufacturing and cheap labor countries, but the majority of PG’s solutions are logic-engineered, object-specific and customized, and that makes them significantly more challenging to copy than commodity-oriented products. However, competence and technology continue to migrate into such regions every year. “We do appreciate that we have to stay proactive and progressive on new developments – developments of high value to our customers – to ‘defend’ our Norwegian/North European hub in a highly competitive global environment. We are far from arrogant about these issues,” he noted.
A Winning Philosophy
PG continues to adhere to the philosophy, established originally by founder Per Gjerdrum, that it is important to develop high-quality products and take responsibility for the processes related to pumping applications. “We keep our customers through performance, innovation, and our closeness to the market,” said Norum. “We focus as much on the integrated computer control and operation of our systems as on the products themselves. Long service life and the ability to resolve emerging issues fast belong to this profile, and mostly PG has done far better than its competition in this field.” - MarEx
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.