STRATEGIC DIRECTION
One of KONGSBERG's objectives is to ensure
continuous improvement throughout the Group.
In 2006, we set a target, i.e. to double consolidated operating revenues
in three to five years from the 2005 figure. A distinct improvement in
operating revenues and margins in 2007 means we are making good headway
towards reaching that target.
1
Improve the Group's international presence
It is decisive for KONGSBERG to have an international presence, while maintaining a local presence gives us marketing power and better cost efficiency.
The markets in which KONGSBERG operates are largely abroad. Many countries would like to build up their own industry. They would like to build up as much local added value as possible, create local jobs and build up expertise. In other words, it is important that we develop local enterprises to comply with authorities' wishes. In some markets, we work with or set up a joint venture with a local partner. This helps us address cultural differences and allows access to important networks. All our international ventures are set up in compliance with KONGSBERG's principles for corporate social responsibility.
The shipyard industry in Asia is a major market for KONGSBERG. There has been a steep increase in capacity, and the Asian shipyard industry is now the largest in the world. One consequence of this growth is that KONGSBERG has expanded its capacity in terms of employees as well as space in Singapore, South Korea, India and China.
The defence industry is highly protectionistic and is exempt from international free trade agreements. The framework agreement with the US Army for Remote Weapon Stations (RWS) for the CROWS programme has made it necessary for KONGSBERG to expand its presence in the US. One criteria on which we were judged prior to winning the CROWS contract was our local 'footprint'. The vast majority of the delivery to CROWS is being produced in the US using American suppliers.
A stronger international presence also cuts foreign currency exposure, reducing production costs..
The countries in which KONGSBERG operates.
Facts
South Korea is the world's largest shipbuilding nation. The
shipyards there account for almost 30 per cent of the world's
production of ships. The largest have increased their production
capacity by an average of 15 per cent annually since 2003.
Each of the five largest shipyards launches a large commercial
vessel every fifth day. Almost two-thirds of all gas tankers
and large container vessels are made in South Korea, as are
more than half of all offshore exploration and production vessels.
China currently has approx. 110 shipyards competing
on the international market for commercial vessels and offshore
supply vessels. The backlog of orders comprises more than 2000
vessels, 850 of which are scheduled for delivery in 2008. The
Chinese shipyard industry is expected to grow by about 20 per
cent each year. China has already surpassed Japan as the world's
second largest shipbuilder in terms of the number of ships
and capacity.
Japan has almost 60 shipyards and a capacity of about 450
vessels a year. Several Japanese and South Korean shipyards
are now in the process of setting up production facilities
in China, the Philippines and Vietnam.
Singapore is No. 1 when it comes to offshore platforms
and supply ships. India is currently carving out a position
in this market with certain types of vessels.