IT IS WITH SOME PLEASURE THAT WE PUBLISH THIS, THE FIRST
FEATURE WRITTEN FOR OUR 2004/2005 WRITING COMPETITION. FOOD FOR THOUGHT FROM
GEORGE HORSINGTON - OF COURSE AT THIS POINT WE HAVE TO EMPHASISE THAT THE VIEWS
EXPRESSED ARE ENTIRELY THOSE OF THE WRITER.
I am an odious
little jerk. But I am not alone, as most ship managers fall into this category,
generically, if not personally. At least I am sure that is what David Ogilvy
would think of us. When his company Ogilvy and Mather was being taken over by
Martin Sorrell’s WPP agency in the late 1980s, Mr Ogilvy famously commented,
“The idea of being taken over by that odious little jerk really gives me the
creeps. He's never written an advertisement in his life.”
I have never
commanded a ship in my life. I have been to sea for a rig move and some cargo
runs, but simply as a passenger, and fortunately upon the benign waters of the
Persian Gulf in late summer. I was conspicuously absent from the back deck when
the first anchor clattered onto the crash plate and had left the vessel for the
comforts of Dubai before the first shamal storm of the season swept down
the Gulf. Seven years on, with the winter weather closing in here and force ten
winds whipping up six metres seas offshore on the Caspian Sea, technology means
that I can now listen by mobile phone to the excitement that occurs on the
bridge of a supply boat in heavy seas. This has convinced me further of my own
odiousness and of the nobility of those who undertake perilous journeys at sea;
journeys which must be all the more perilous if you have a smug manager sitting
in a warm office asking stupid questions about the latest batch of purchase
orders and the client’s fuel reconciliation statement, whilst a tempest rages.
In response to the question “Why do the righteous suffer?” I think it was C.S.
Lewis who responded “Because they are the only ones who can handle it”. I am not
sure that is much consolation, but then there are few careers less mundane than
commanding an anchor handler in sixty knots of horizontal rain and spray.
The division of
labour between those who “do” on boats in the offshore industry and those who
“manage” on shore has never been wider. Many shipping companies have taken the
separation to an extreme, outsourcing all the hassles of operating the vessel to
professional ship management companies, with a couple of shore-bound captains
for ISM purposes and a vast troupe of book keepers to maximise profitability,
such that the owners never even see or meet the people operating their “asset”.
It is a disconnect that is dangerous and should concern us all, whether odious
little jerks or heroes at the helm. It is a concern because without
opportunities ashore, the industry will simply become a brief training ground
for warranty surveyors, wannabe marine lawyers and other types of consultant;
offshore companies will bereft of the expertise they need to manage their assets
and their operations safely and effectively; the industry’s ability to recruit
and retain talented sea staff will be jeopardised if the bridge of supply boat
becomes a dead end in terms of career opportunities. We see the problem manifest
in falling real wages for offshore officers, which makes it hard for those
living in high cost, developed countries to make a living at sea, and in the
ageing officer age profile, indicative of the fact that many are staying in the
industry because they have reached a point in their lives where other
alternatives are limited.
So who is to
blame for this? Looking at the wider marine industry similar trends can be seen
in the container industry – an endless cycle of cost cutting and “dumbing down”.
Without wishing to sound odious, if at this point you don’t know what I mean by
“dumbing down” you are probably part of that process. However, the container
industry has a very different risk profile to the offshore industry with a very
different client base. Most container trades are dictated by schedule and the
need to move from A to B; what happens along the way is irrelevant provided the
containers reach their destination on time. Liability by the liner trade to its
clients is very limited. If everyone got compensated every time a container was
delayed, there would be no solvent container trades.
industry has a very different risk profile, but many odious little jerks fail to
recognise the difference between “cost” and “value”. Last month one of our
vessels towed out a $750 million topside unit which had taken two years to
construct and from which 300,000 barrels per day of production will come in a
few months. The day rate for the vessel was thus less than one ten thousandth of
the potential downside for the client in the event of the loss of the unit in
cash terms, and less than one millionth in terms of consequential losses in the
event that production was delayed.
blindness to these downside risks is prevalent among both ship owners and
charterers. Despite industry profitability at a twenty year high, many energy
companies continued to be driven by a myopic focus on cost in the narrowest
sense. And many ship owners have joined them in this short-sighted, self
defeating drive which focuses on cost, but not value. The disjoint between those
offshore and those onshore means that many ship owners and managers are not able
to communicate the real value created by high standards. Instead of championing
a healthy, vibrant industry, they take the course of least resistance and join
the clients in a futile hunt for the next cost to hack down.
I recall one
senior manager of a major offshore company complaining that he spent his life at
investor road shows, making powerpoint presentations to rooms full of
disinterested suits, who cared only about “Ebidta” and “FCF ratios”. He seemed
genuinely surprised when I suggested he begin by conjuring up the image of a rig
move West of Shetland in mid winter. He was so absorbed in his spreadsheets and
trying to talk about a cash flow projections that he had forgotten what the
business is about.
is the courage to face the perils at sea which make this industry and its people
special and different compared to all the widget makers and software wizards of
the world. Not everyone wants to spend every winter being pounded by the sea
while the rig calls up and demands one last cargo snatch in marginal weather,
and not everyone should have to. If the industry is to prosper in the long term,
a bridge must exist between the odious and the offshore.
Horsington Nov 2004
The author is a
ship manager based in the Former Soviet Union
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