Norwegian companies sharpen competitive edge with new Vietnam facility
(Monday, March 17, 2014)
On March 20th, Norwegian Minister of Trade and Industry Mrs. Monica Mæland will officially open the new production plant of Vinomarine Co. Ltd. in the coastal city of Hai Phong in the northern part of Vietnam. Behind Vinomarine and its new facility are three Norwegian industrial companies: IMS group, Jets Vacuum and Libra-Plast. The common goals of these three companies are to improve their access to the important Asian ship building markets, and to strengthen their own competitiveness.
Top photo: This brand new 3,000 square meter facility paves the way for highly efficient production in the center of Asian shipbuilding, for the three Norwegian companies behind Vinomarine. The plot of land it sits on is also large enough to accommodate an equally big extension for a total of 6,000 square meters if necessary.
Modern industrial facility
The facility that Mrs. Mæland will open is situated in a well-regulated industrial area on the outskirts of Hai Phong, where global players such as Toyota and Pioneer are already established. At first there will be some 35 employees, a number which is set to increase shortly. In the more long-term perspective there are also plans for two shifts, which will require an even larger crew. Setting up shop in a foreign country is challenging, but Chairman Mr. Arne Lillebø and Managing Director Mr. Knut Ringstad of Vinomarine both have the necessary background to pull it off. Lillebø is the majority owner and leader of Libra, as well as CEO of Libra-Group, while Ringstad has sailed and worked abroad for a number of years through employment in large maritime companies. As such, Ringstad has long and broad international experience both from Asia and from other parts of the world.
Planning for growth
Both Lillebø and Ringstad have lived in Vietnam for prolonged periods of time through the last couple of years, and have built Vinomarine from the ground up. They are now in charge of a 3,000 square meter modern industrial facility, and an increasing number of employees. The building plot is spacious enough to double the size of the facility, should any future expansions make that necessary. Libra and IMS group are already producing goods at the facility, while Jets Vacuum is about to get started.
- I am fortunate in the sense that I have extensive experience from different cultures, something that comes in very handy here in Vietnam. We have made an effort to recruit highly skilled personnel - good people with varied maritime and technical background. Even though access to qualified labor is abundant here, we have been very selective in our recruitment. The result is a professional and devoted workforce, says Ringstad.
Common model for initiatives abroad
Each of the Norwegian companies have dedicated staff members for their respective products at Vinomarine, with the exception of administrative tasks which are to be carried out by a single group of staff. There are three production lines, one for each company, Ringstad points out.
The Vinomarine facility will manufacture components and products in mild steel, and among other things it features a large, state-of-the-art sandblasting and paint system dimensioned for the sewage treatment plants made by Jets Vacuum. Jets and Libra also co-own a metal business in Latvia, which carries out aluminum, mild steel and stainless steel production. IMS group and Libra were also previously familiar with each other, since both of their product ranges include doors for maritime use. These three companies, having founded Vinomarine, firmly believe in their approach to establishing production abroad; operating tightly together on common ground. Joint ventures with foreign production companies, however, they consider to be risky.
Kåre Audun Haddal is Chairman of the board at Vininvest AS, which established and now oversees Vinomarine of behalf of its owners IMS group, Jets Vacuum and Libra-Plast. He is very pleased with how Arne Lillebø and Knut Ringstad have set up the company in Vietnam.
Have solved the challenges
Vinomarine is owned by Vininvest AS in Norway, which is in turn owned by the three Norwegian companies responsible for the project. Chairman of Jets Vacuum, Mr. Kåre Haddal, is also Chairman of Vininvest AS. He believes that Knut Ringstad and Arne Lillebø are doing an excellent job in Hai Phong.
- Arne Lillebø is the one who started things off in Vietnam, and he has worked systematically with Vinomarine since the early days of planning. Knut Ringstad, with his maritime Norwegian background, possesses the practical skills necessary to get things done. There has been no shortage of challenges and situations where we have been forced to make decisions. Where to locate the facility, identifying and handling risks, recruiting a qualified workforce, implementing quality and HSE systems to ensure quality throughout the operation. All of these factors are crucial to our success, says Haddal and elaborates:
- For a while we considered a location in southern Vietnam, where several other Norwegian companies were doing business successfully. But if you place the tip of a bow compass in Hai Phong and draw a circle, you will quickly realize that this city is located at the very center of Asia. It has the largest seaport in northern Vietnam with excellent opportunities for import and export, and its fairly close proximity to great shipbuilding nations such as Japan, China and Korea was obviously significant. Vietnam also aims to be on that list of nations, so we are now optimally located in the midst of Asian shipbuilding. We minimized risk by securing a plot of land in an industrial park controlled by Japanese holding company Nomura, where both infrastructure and security measures were well in place. Longevity too contributes to risk reduction, which is why we have pre-paid the plot lease until 2044. And we were fortunate to have plenty of young applicants, eager to learn, and in need of new jobs, says Haddal.
Luck and government contributions
Admittedly, a bit of fortune was indeed involved, from circumstances no one could have predicted. The maritime industry in northern Vietnam was affected by a crisis not long ago. Several shipyards closed down, and so workers with a high level of maritime competence became available. Vinomarine has of course benefited greatly from these circumstances.
The Norwegian government has also lent a hand to Vinomarine. The Norwegian Agency for Development Cooperation contributed funds to cover 50% of the cost of training the Vietnamese employees. For even though the staff has long experience from shipbuilding, considerable resources have been spent on specialist training in both Vietnam and Norway.
Innovation Norway with its offices in the neighboring city of Hanoi has been a valuable sparring partner, and assisted in the planning phase. The help Vinomarine received is emphasized by Kåre Haddal: - They know the region, and that is always an advantage, is his short conclusion.
Ensures growth at home
- Vietnam is a long and narrow country that borders on the sea, with a coastline of more than 3,000 kilometers and a large maritime industry. It differs from most other Asian countries in the sense that communication is very direct and up-front. In those respects, it is quite similar to Norway. But that may also be where the similarities end, says Haddal.
Because with its near 90 million inhabitants spread across a country no larger than Norway, it is far more crowded. If Vietnam were in Europe, its number of inhabitants there would be second only to Russia. But the Vietnamese population’s average age is very low, so even under communist rule the direct approach and young mindset makes it relatively easy to conduct business in the country.
- We cooperate very well with the authorities both on local, regional and national levels. There is always a will to find a solution, and the systems are not as rigid as one might think. This is probably due to the fact that the authorities appreciate new companies such as ours, and that we have been assisted by local advisors. Vinomarine is the result of organic growth in the three founding companies through increased customer bases and sales, as well as long-term planning through the last few years. And with what we intend to do in Vietnam – make steel products for maritime use – the country helps us stay competitive by being a hub in the middle of the Asian markets. That being said, we will of course keep growing in Norway as well. It may seem contradictory, but establishing production abroad actually secures our continued growth back home, says Kåre Haddal.