Page 26: of Maritime Reporter Magazine (May 2003)

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NorShipping 2003 ; *

Kjelstad said the there are no firm acquisition offers on the table now, but if the company were to expand again, it would possibly cast its eyes to the Far East, where it currently has no presence.

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Circle 274 on Reader Service Card

Oslo-based Aker Kvaerner Yards is irony in action. It serves an ancient industry dominated by older generation, yet is led by a fresh faced young executive. It prospers in a capital and equip- ment intensive market, yet is helping to re-define some of these relationships via the Internet. The organization is the largest ship- building consortium in Europe, yet good prospects for growth lie in smaller, compact yards. — by Greg Trauthwein

Upon first meeting the new leader of

Aker Kvaerner Yards, the initial thought is "Good God, this guy is successful at a young age!"

Once the cover of the book is read, though, it is increasingly easy to see why Karl Erik Kjelstad, 36, was tapped to lead one of the top shipbuild- ing consortiums in the world. Aker

Kvaerner Yards is a collection of 16 yards and approximately 16,500 employees that generates an annual turnover of nearly $3 billion.

Kjelstad, officially named to the post of President and CEO on February 4, 2003, has occupied these positions in an acting capacity since early January 2002 when the previous incumbent. Leif-

Arne Eangtfy, left to become president and CEO of Aker RGI.

To set the stage, Aker Kvaerner Yards is a management company owned 50/50 by Aker Kvaerner and Aker RGI

Holding AS. It functions as the group management for the 16 yards variously owned by Aker Kvaerner and Aker RGI.

They are highly specialized, with a range of deliveries, which includes cruiseships, containerships, RoRo ves- sels and offshore service vessels, as well as traditional and fast ferries.

Aker Kvaerner Yards also acts as the management for the shipbuilding activi- ties of Aker Kvaerner. The wholly owned Aker Kvaerner yards in the group are Kvaerner Masa-Yards in Finland, and Kvaerner Philadelphia. Aker

Kvaerner also owns 40 percent of two

German yards, Aker MTW and

Kvaerner Warnow.

A Clear, But Not an Easy Path

The strategy to profitability at Aker

Kvaerner Yards lies in the diversity of its talents and the breadth of its reach. The company — which enjoys an approxi- mate 20 percent return on capital — is in the business of building high-value niche vessels. With 16 yards, it can tar- get most niches, helping to effectively smooth out some of the cycles inherent in the marine business. The problem today: there are few if any strong mar- kets, according to Kjelstad, a situation he sees improving in the 2004/2005 timeframe. It can be sure that top busi- ness schools are not modeling business success today as that of an equipment

Karl Erik Kjelstad, President & CEO, Aker

Kvaerner Yards. Kjelstad graduated from the

Norwegian Institute of Technology (now the

Norwegian University of Science and

Technology) in 1992. In the last 11 years he has held a number of leading positions in the mar- itime industry - with Aker Yards since 1998, and

Aker Kvaerner Yards since the company was established in February 2002. and capital-intensive venture in Norway.

Norwegians, generally very forthcoming with on-target self-analysis, make no secret of the fact that soaring costs in

Norway, including labor, is driving busi- ness out of the country.

Karl Erik Kjelstz

Norwegian Ma

March

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