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China grow, BV expects to be a major facilitator for that expansion. ECONOMY OF SCALE: SYNERGY WITHOUT SAPPING RESOURCES Achieving economy of scale in terms of back office operations had to be a key metric in the decision to merge the two global outfits. Synergies are expected from improved operating efficiency notably through op- timisation of back-office functions, IT investments, pro- curement, and laboratories. As BV seeks out cost reductions – reducing duplicate offices, for example – it is too early to say how much that will bring. Bernard Anne qualifies that effort by insisting, “In any case, our focus is on growth, not cutbacks.” In addition to structural synergies, Bureau Veritas' ex- perience and network is expected to accelerate Inspec- torate’s development, notably by extending Inspectorate’s technical expertise throughout the Group's geographical network. Bernard Anne states flatly, “The reasons for acquiring Inspectorate were based on strategic growth. That is the big story. We di- versify the group, we penetrate the oil and petrochemi- cals market, matching our upstream position in the market with Inspectorate's more downstream position and we develop our network globally.” SGS today is arguably the global leader in inspection and testing services, but Bernard Anne is confident that the new-look Inspectorate can soon overtake them. “The competitive landscape is interesting. SGS turns over just over Euro3bn, so we expect to be close to or past that soon. Looking behind us, we see Dekra, TUV Sud, In- tertek; all of which are around half our size. When it comes to groups which are also classification societies, then we will be more than double DNV, three times Lloyd’s Register and about six times ABS. That is im- portant.” Size alone won’t get the job done for Bureau Veritas, but this and a wide range of activities gives them the scope to invest in R&D, the ability to control costs and offer better services at lower prices. TURNKEY GLOBAL SERVICE Today’s Bureau Veritas classed fleet stands at 9,479 ships totaling 76,6m gt with an orderbook for newbuildings at 2,200 ships totaling over 28m gt. The fleet and orderbook continue to grow, espe- cially since BV remains particularly strong in off- shore energy and with the expectation for Deepwater Horizon aftermath to result in demand for more verification. But the traditional marine business made up just 12 percent of the groups’ revenues in 2009. Because Inspectorate’s revenues are difficult to quantify where industrial certification of offshore energy structures stops and marine verification begins, Bureau Veritas downplays what to call the services; marine or industry or testing. Instead, says Bernard Anne, “Bureau Veritas will provide all services and link them so the client has a one stop shop for trust and risk mitigation right across their business.” For emphasis, he adds, “If you are looking for a massively expanded marine division in Bureau Veritas you will be disappointed. Rather, we will create synergies where they exist across a full range of services. The obvious things are fuel testing, cargo inspection and testing. For bunker and lube oil suppliers, the chance to do business with an inspection company with deep ties to the world’s shipping community could also have its advantages. And, Bureau Ver- itas fully intends to leverage opportunities in out- sourcing and fuel blending which can be now undertaken using Inspectorate’s expertise. Bernard Anne insists that this won’t come at the expense of integrity. “We are the trusted independent third party who inspects, tests, verifies, measures, and we will not compromise that.” Turnkey trust: that’s what Bureau Veritas and Inspec- torate are selling on a global scale. That’s hardly risky business. March 2011 www.marinelink.com 35
