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Annual Report 2016

Electrical & Automation in a nutshell

Following Wärtsilä’s acquisition of L-3 Marine Systems International (MSI) in 2015, we asked Stephan Kuhn, Vice President of Marine Solutions’ Electrical & Automation business line, to answer three fundamental questions on the topic to help stakeholders understand the potential of Wärtsilä’s expanded marine offering.

1.

What is it?

The newly formed Electrical & Automation business line is basically the digital heart of Wärtsilä Marine Solutions. This isn’t the first time I’ve used a metaphor like this to describe the business over the past year: some stakeholders may remember me referring to a vessel’s electrical connections as its veins, while its automation technology could be compared to the brain.

It’s a useful way of thinking about things. But let’s take a step back, and see how these new additions to the Wärtsilä marine offering actually work in practice.

Our traditional business has been engines, devices that convert fuel into mechanical energy and requires some measure of digital control to maximise their performance. That element of control is one important role for automation, but the topic is much wider than this.

An example, then. If you take a look at a modern cruise ship, the place you’ll see our offering at work is the bridge. Here, hardware is fed information from sensors all over the vessel, including radar, GPS, weather, or motion-related. Now, on large computer systems, certain software is processing all this information and calculating its effect on the operation of the vessel.

Then there are other sensors at work, which provide data on engine conditions, compressor conditions, and cargo handling; all of which are reported to a central automation system. This is also our domain; in fact, Wärtsilä Nacos Platinum is the only truly integrated automation navigation and bridge system.

So, from the bridge our cruise-ship captain can see all the pertinent navigational data as well as the condition of the vessel’s critical components. And the processes which are automated by this mass of hardware in front of him? All of these are enabled by software we have programmed. As well as the hardware-related engineering competences, we bring expert software engineers into the equation, establishing, for example, how navigation corridors are defined in a cruise ship’s systems.

This is just one instance, of course, but it shows the network of expertise that comes together in Electrical & Automation to provide for our marine customers’ needs in terms of digitalisation. Very demanding geographically distinct challenges, such as the negotiation of difficult shipping lines like the English Channel, can be addressed using our technologies, providing solutions our customers often hadn’t previously thought possible.

2.

How does it fit in?

The acquisition of MSI brought 1,700 new personnel into Wärtsilä, and I can quite confidently state that in general they are happy about the acquisition. The principle reason behind this, I believe, is the fact that Wärtsilä has solid roots and a strong future outlook within the shipping industry.

With this acquired business coming from a company focused on the defence industry, here at Wärtsilä there is more of a common language. It means something when you’re talking automation and your colleagues are talking engines. This is altogether a more natural home for the competences MSI has brought to the organisation.

Now, all of this is not to say that integration is an easy process: things can still go awry if you don’t handle things properly. The key issue in integration is to prevent organisational matters from damaging the essence of the newly acquired company’s skills and capabilities. After all, in an acquisition, the entire motivation for buying that company rests in its unique qualities, and you certainly don’t want to see any of those harmed or diluted in the process.

Whether we’re talking about SAP topics, HR procedures, questions to do with rewarding, or even how people’s titles will translate in the new organisation, when you get right down to it none of these have anything to do with the customer. And providing value to that customer is what we’re all here to do. Any distraction from that aim is a point counted against us, so we have to take care to be sensitive when it matters, and guide people into place in a way that doesn’t put focus on the wrong issues.

What can we do to mitigate these risks? Well, first of all you need a clear guideline in terms of what you want to achieve in the integration, and then you must communicate consistently about what you are doing. In acquisitions, you cannot overcommunicate. You need to tell the story 10 times, and then 20 times: it doesn’t matter. But the same story. And maybe you yourself are fed up with the story, but you need to keep telling it, to make sure that what you’re doing and how you’re doing it is reaching those people who actually do the work.

You need to have a team set up right from the beginning, with clear roles, particularly when it comes to troubleshooting. Then, when issues pop up, you need to react quickly and tackle them head on.

Normally – and I use that word hesitantly as really there is no ‘normal’ in an acquisition situation – if you make sure these elements are in place, things work reasonably well. And I’m happy to add that this has been the case in the foundation of Wärtsilä’s Electrical & Automation business line.

3.

What does it mean for Wärtsilä?

We’ve addressed what you might call the human side of this acquisition, but from the business point of view there are synergies in terms of customer base and sales leads that neither set of experts could have seen coming.

The business logic is very straightforward here. Wärtsilä Marine Solutions’ growth strategy is to become the leading provider of products and solutions to the marine and oil & gas industries. An industry-leading portfolio needs to be comprehensive, and the substantial body of electrical and automation assets which now comprise a major part of Marine Solutions’ business are on board for one very good reason: to help capture new market opportunities. We want to be a one-stop shop for our customers.

And when it comes to the customer, we’re seeing encouraging signs. I heard from one chief executive recently that he has strong motivation to buy as much as possible from a single, multi-capable supplier such as Wärtsilä for one very simple reason: responsibility. As the sole major partner in a given project, we take on the full role of ensuring that the job is done right, done well, and done on schedule. That’s an appealing prospect for our customers.

As I mentioned earlier, Wärtsilä is now in a position to offer a fully integrated marine package, including navigation and automation. We have no need to dissect our solutions once they become reference cases, pointing out where this or that element was sourced: the radar, the communications system, you name it. We’re now the one-stop shop, taking full responsibility for the complete solution. That’s what it means to have a comprehensive offering, and that’s why I see this acquisition as strategically sound and good for our customers and other stakeholders.

A comprehensive offering of products and solutions

  • compressors
  • gas systems
  • exhaust gas cleaning
  • marine lifecycle solutions
  • integrated solutions
  • ship design
  • automation
  • entertainment systems
  • navigation
  • safety and security
  • dynamic positioning
  • sonar and sensors
  • ballast water management
  • project management
  • engines & generating sets
  • services
  • gears
  • inert gas
  • oil separation
  • power electric systems
  • propulsors
  • pumps & valves
  • seals, bearings & stern tubes
  • waste & fresh water management
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International
  • John Crane-Lips Aker Kvaerner Power and Automation Systems AS SCHIFFKO Vik&Sandvik Hamworthy Conan Wu & Associates PTE Ltd Marine Systems International

Post-Hamworthy success

Wärtsilä’s last noteworthy acquisition was of Hamworthy in January 2012. Since then, the success of those strands of Wärtsilä’s business bolstered by the arrival of expertise from Hamworthy has been remarkable.

Technologies for the gas value chain have been key. With the new competences on board, Wärtsilä has excelled in regasification plants, receiving terminals, and biogas liquefaction plants. We have also delivered numerous gas cargo handling solutions for various sizes and types of ships, with a recent order for 11 systems representing one of the largest single deals for such solutions ever received by the company.

The combination of new and existing expertise has also paved the way for successful concepts such as Wärtsilä Mobile LNG, which enables small- and medium-scale LNG power generation.

Another highlight has been the area of environmental solutions such as exhaust gas cleaning and ballast water treatment, which upcoming regulatory decisions have made a hot topic for Wärtsilä’s customers.

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