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Restructuring amid market downturn crucial for offshore players, says Sinwa CEO
Internalisation is still a key priority.
With offshore players suffering from extremely low oil prices, Singapore Business Review caught up with Bruce Rann, CEO of Sinwa, a homegrown marine, offshore supply and logistics company. Rann shared his thoughts on how the downturn has affected local offshore players, and unveiled his winning strategy to keep Sinwa afloat despite the ongoing downturn.
1. Extremely low oil prices and slowing economic growth have taken a heavy toll on oil and gas service providers in Singapore. Analysts are particularly bearish on offshore support services providers, whom they say will be greatly impacted by capex cuts from oil majors. In your opinion, what is the biggest challenge that the offshore and marine industry is facing? How has the market downturn impacted Sinwa’s operations, and what strategies has the company employed in order to ride out the slump?
The biggest challenge facing the offshore and marine industry is to restructure and to reassess its priorities in order to survive the downturn. There has been a flow on effect from the owner operators down through various tiers of support and service providers and those with low leverage and debt ratios will adjust and survive easier than those without.
Sinwa’s largest income source is centred around our Singapore operations (79%) which comprises about 80% Shipping and 20% oil and gas. This spread, together with our support from new build clients, has enabled us to report notable results in 2015.
We operate a resilient business model and with our strong relationships, vast experience, efficient infrastructure and strong balance sheet, we are well positioned to ride out the downturn and take advantage of any opportunities that come our way.
2. What are your key business philosophies?
Our key philosophy is ‘Reliabilty is our Business’.
3. What are your three key goals this year?
a) Improve Operational Efficiencies. We are in the midst of a major building extension (approx. SGD$11 Million) at our current premises in Singapore, which will enable us to increase our service levels to our clients and provide them with additional savings.
b) Focus on Opportunities in the APAC Region. Retain and strengthen our relationships with our existing client base, whilst taking advantage of the opportunities that may come our way during the current challenging economic climate, where many potential clients may test the market, whereas in the past, they may have not been willing to do so.
c) Tight control of our costs and expenditure. Continued monitoring of operations to ensure costs and expenditure stay in check to buffer against volatile industry climate as well as boost performance should industry conditions be maintained or improve.
4. Tell us about Sinwa’s internalisation efforts. As a homegrown company, what was the biggest challenge you encountered when it came to gaining a foothold in an international market?
When expanding into international locations there are significant changes to consider in comparison to local market conditions. These include cultural, political and logistical aspects that need to be carefully researched, considered and duly acted upon to provide you with every chance of success. Staff recruitment, remuneration and conditions are also major considerations. Whilst it is most rewarding to be recognised as an international company, it comes with a diverse range of challenges and ongoing responsibilities.
5. After expanding to China, Australia, and Thailand, what other markets is Sinwa eyeing for expansion? What is your outlook on these aforementioned markets?
The markets that we have operations in globally were not spared from the volatility and each had its own challenges. That being said, through perseverance, experienced management and capable staff on the ground, we have secured contracts which give us some visibility of what is to come. In our newest market, Thailand, we broke even in FY2015 and we have established key quality support facilities, dedicated transport systems and proficient personnel teams which will enable us to ramp up our operations.
We are continuously being asked by our clients for support throughout the APAC region. Whilst it would be nice to accept all these invitations, the simple fact is that it is just not possible in today’s challenging market. That being said, out of all these requests, we do have a number of emerging markets under close watch, including Myanmar and perhaps the Philippines.
6. The offshore and marine industry has been one of the most impacted by domestic economic restructuring. What’s your outlook on the industry going forward? In your opinion, what does the sector need most in order to cope with the effects of restructuring?
After being in the industry for over twenty five years, I have experienced many ‘’comings and goings’’, ‘’highs and lows’’ and ‘’changes for the better’’ from external sources. Singapore in particular, is an efficient, safe and welcoming environment to carry out business. I think in the offshore and marine business, the key words for survival are reliability, resilience and flexibility.
7. What is your biggest achievement to date as Sinwa’s CEO? What are your plans for Sinwa's future growth?
I am in the fortunate position of being the CEO of a very successful company that has been in operation for decades before my arrival and undoubtedly will be going for decades after my departure. The credit for that success belongs to the senior management and staff over that period of time. I am very proud to be a part of that success over the past eight years and get a great deal of personal satisfaction out of our continued expansion and to those staff that continue on this journey with me. As I have mentioned previously, Sinwa is in a prime position to take advantage of all opportunities that come our way and we fully intend to do so.
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