Many questions face us at the start of the new millennium - what future challenges and changes shall we meet ? Will they be beneficial? How will they affect our business? As a new decade and century begin, six influential business executives here explain to FORUM editor Stuart Brewer what they believe is in store for their respective industries.
Leif T. Løddesøl is president and group CEO of the shipping company Wilh.Wilhelmsen ASA.
The shipping industry is having to consolidate, to adapt to the challenges of globalisation, growing competition and greater political and economic risks. Smaller companies may need to merge to achieve economies of scale, and to reach the critical mass necessary to compete with the major players.
We have recently established a joint operating company in the Ro-Ro sector with the Swedish shipping group Wallenius, and noticeable results are anticipated, partly due to the compatibility of the two companies. Not all mergers are successful, but in this case the companies match very well.
As the consolidation trend continues to sweep through virtually every industry, it is likely that more and more companies will go for strategic acquisitions, mergers and restructuring. This, in turn, will make the shipping industry stronger and benefit its customers.
Shipowners and managers will need more comprehensive and fully integrated systems in order to meet competition, and to survive in the more demanding commercial and regulatory environment. There will be increased pressure to operate safer and more efficient ships. There will be much more focus on managing the enterprise as a whole, than on individual ships; attention will concentrate on productivity and profitability. Minimising downtime and reducing costs are critical to success throughout our industry.
Today, the aim of the shipowner is to be a market leader by providing the most modern, efficient, top-quality tonnage to meet the high expectations of the cargo owner and shipper.
Industrial shipping is moving towards a quality culture, and each shipowner must convince both new and existing customers that he can provide transport that is safer, faster and cheaper than his competitors. Customers are looking now to forge long-term partnerships with shipowners to ensure efficiency throughout the transport chain; there will be less room for short-term players.
Sustainability through innovation
Bjørn Sund is director of R&D at Norsk Hydro, the largest industrial company in Norway.
In addition to the obvious ethical and regulatory reasons to put environmental sustainability high on the management agenda, we see good environmental performance in production and in product design as a prerequisite for a successful business.
Main focus at Hydro in the oil and gas sector is on the production process, as we try to separate oil and water in the reservoirs. I believe we will see significant developments in the near future, particularly as regards the recycling of effluents back to the reservoir, and the elimination of emissions through the use of downhole or subsea separators.
Troll Pilot, the worlds first subsea separation and injection system, has recently been installed on the seabed at a depth of 340 metres, about a mile from the Troll C platform. Its objective is to separate water from the oil and gas well streams by means of gravitational separation, then reinject the water - even if not necessary for pressure support - directly from the seabed into the reservoir. This has never been done before on any other offshore field. Until now, water has been separated and reinjected on the offshore installation, or released to the sea.
The benefits can be counted in both economic and environmental terms. Besides saving money on future field developments, since less equipment is needed on the platform, the system will increase and improve oil production levels. On the environmental side, reinjecting water into the reservoir reduces the emission of produced water.
Another issue is that growing consumption of fossil fuels will continue to increase carbon dioxide emissions, which in turn could lead to climate changes. I believe that companies will have to focus more efforts on how to reduce their carbon dioxide emissions related to energy consumption.
In the future, perhaps 50 years from now, renewables such as the wind, sun, tides and geothermal heat will be the main energy sources. These will generate electricity, which will be converted to hydrogen through electrolysis, and there will emerge the hydrogen society.
In the meantime, decarbonising fossil fuels will help us to bridge the gap between todays fuels and the next generation of renewables. This is the main reason why we are concentrating research on decarbonising fossil fuels.
We must be cost-efficient in how we use resources - our business is about creating more value with less environmental impact, of doing more with less, and thus being environmentally responsible.
Mobile telecommunications
Jon Fredrik Baksaas is deputy managing director of Telenor, Norways leading provider of telecoms services.
Not too long ago, people were talking of the advent of a competence and information society. Now I feel this transition is well under way. The Winter Olympic Games were held in Norway five years ago, and at that time we believed we had the most modern telecommunications solutions in the world - even though we werent hooked up to the internet. Today, one third of the population of Norway is using the internet regularly. 60 per cent of the population have mobile telephones.
In a further two years time the user changes will be even more significant. In our offices of 2002, we will probably surround ourselves with new technological solutions that will be mobile and have access to the internet. Our standard telephones will disappear and we will work solely on our mobile telephones, which will be an integrated part of the fixed network. The mobile and flexible aspects then will be more visible in our everyday lives.
These changes are partly due to the wave of consolidations in the market place. The Scandinavian countries, in particular, already have a considerable penetration in these fields, and service developments will probably take place in these countries. For example, Swedens Ericsson, Finlands Nokia and Norways Telenor are major players and world leaders in service development.
We have the least costly communication services in Europe, and in turn have the highest markets for many services and products. Consumers purchasing strength will also continue to rise in the future.
Future growth will come through mobile and internet activities. Mobile phone operators across the world are gearing up to offer a host of new services, such as high-speed internet access, online banking, shopping, share trading.
Since mobile networks can already locate users within network cell areas, they will soon be able to provide tracking services, announce advertisements for stores as we pass them, or warn us of traffic jams ahead. New services that we cannot imagine today are not so far away&
Superiority of rail
NSB Gardemobanen is Norways first high-speed railway. Its president and CEO is Berit Kjøll.
Recent years have seen remarkable growth in new air-rail links. This trend is likely to continue, as rail is fast becoming recognised as one of the easiest, least stressful, most economical and environmentally compatible means of moving people to and from airports.
The importance of air-rail links such as Gardemobanen, which already carries 34 per cent of all air passengers, is that they provide better access to airports - better from the point of view of the environment, the passengers, the neighbours, the airlines, the airport and the railway operator. Everyone gains.
Speed, comfort and safety are superior by rail. The only way to get from Oslo to Gardermoen airport in 19 minutes is aboard our new express trains on the Gardemobanen. Similarly, the Gatwick Express is the only easy way to get from London to Gatwick. Some of the new trains, such as Hong Kongs Airport Express, Swedens Arlanda Express and those serving Gardemoen also reach new standards of silence.
There are many new air-rail link developments, especially in Europe, Australasia and North America. These may be stations on high-speed networks, high-speed dedicated links, regional links or metro-style links - or combinations of these.
High-speed rail service links have tremendous potential. In New York, a high-speed train is being built to run on tracks to JFK Airport, carried on a viaduct above the highway. New air-rail links are also being built in Kuala Lumpur and in Athens, where a new airport is under construction. Milan also has a new high-speed rail link.
All these are prime examples of the realisation worldwide that railways are the transport mode of the future.
Mastering change
Terje Mikalsen, a leading business investor in Norway, considers IT as the future catalyst for change.
The growing use of information technology is giving rise to a new industrial revolution that will lead to sweeping social and economic changes worldwide. Future society will be in constant flux, and the challenge for business leaders and politicians will be not to avoid change but to encourage people to cope with it.
Our society is changing from an industrial one to an information-based one, where knowledge is more important than labour and capital. The main reasons for these changes are globalisation and the explosive development of IT. The huge increase in functional capacity and the combination of telecommunications, electronic data and mass media at affordable prices are what makes IT so powerful. Society will be affected at the same accelerating rate as the technology.
IT and telecommunications are not only bringing closer international corporations, but also transforming the way society functions at work and play.
The attendant globalisation of trade and the economy results in more exposure to overseas competition for individual countries. In future, companies will find that increasing their levels of expertise through making more use of information technology will give them an important competitive advantage.
As IT systems become better and less costly, knowledge will be developed and spread more and more rapidly throughout all technological and competence-based companies. In turn, change will take place more quickly on all fronts.
In future, constant change will be normal, so instead of attempting to prevent this process, the challenge for companies, society and the individual will be to learn to cope with each transition and look on it as a positive opportunity for progress. This will stretch our abilities and refocus our ethical standards.
Stay abreast of technology
Sverre Skogen is president and chief executive officer of Aker Maritime, one of the worlds largest contractors to the oil and gas industry.
The international oil industry is gradually recovering from a deep crisis. In the course of one year, oil prices have risen from below US$ 10 per barrel to a level of around US$ 25 per barrel. The industry is becoming more optimistic and work on new development plans is being intensified.
In my view, the most important reason for the high oil prices is the effective production cuts implemented by OPEC. These production cuts apply until March, though some suggest that OPEC is likely to continue restricting output beyond this date.
I believe that these reports, combined with high winter demand for oil in the U.S.A and Europe, have pushed oil prices up to a slightly artificial level over the past few weeks. But even if the oil price should slide back to the US$ 15-20 per barrel, I expect this to represent a good foundation for high activity among the oil service companies.
Improved cash flow from operations and confidence that the oil price will remain at a relatively high level spur oil companies to increase spending on exploration and field development activities. A relatively significant portion of the growth is expected in deep-sea areas such as the Gulf of Mexico, West Africa and Brazil, as many oil companies see a great potential for giant discoveries in these frontier waters.
Petroleum exploration and production in deep waters require advanced solutions, including floating production systems, sophisticated processing plants and subsea technology. Our marine heritage combined with more recent achievements as deepwater solutions provider leaves us in a good position in this new market.
Activity is also recovering in our traditional home markets in the North Sea region. Exploration drilling activities on the Norwegian continental shelf are expected to increase slightly this year. 25-30 wells are planned. New field development projects are likely to be sanctioned before summer.
Whether 2000 will be better or worse than we expect, primarily depends on developments in the global demand for oil, and on OPEC members´ ability to cooperate. In the long term, however, I see few alternatives to increased investment in exploration and production - and in turn greater profitability particularly for players involved in technologically challenging deepwater areas.
Tomorrows winners amongst the oil service companies will not only have to stay abreast of technology. We will also have to master change. This will require a much more flexible management and organisational culture and the ability to implement sustainable cost cuts.