Oceansaver, the privately-owned Norwegian ballast water treatment equipment maker, has filed for bankruptcy after reporting substantial losses in the past few years.
“The company had a number of problems, but the foremost of them was the fact that the cost production of the equipment in Norway was too high compared to Asia and China in particular,” said Karen Margrethe Rime, administrator of the estate of Oceansaver.
“The company also had a cash flow problem as they only received 10% to 30% (of the contract price) during production and the rest on completion of each project,” she told IHS Markit.
In addition, Oceansaver suffered considerable expenses from guarantees it had issued to its clients as some of the units it had delivered to its clients required rectification during the guarantee period.
“It also seems that they were not very good at purchasing – they only made one component by themselves and purchased the other parts from third parties,” Rime continued.
A number of potential buyers are interested in acquiring the service part of the company Rime said, adding that she has meetings with them scheduled for the near future. “However, it will be very difficult to find a buyer for the production part of the business,” she said.
Oceansaver made a pre tax loss of NOK104.8 (USD13.3 million) million in 2016, a sharp weakening from a profit of NOK95.1 million in the previous year, while revenues fell to NOK195.1 million from NOK201.4 million, according to figures Oceansaver has filed with Bronnoysundsregistrrene, the Norwegian registrar of companies.
However, the operating result has remained negative in the past three years and losses amounted to NOK93.4 million last year, NOK78.4 million in 2015, and NOK104.0 million in 2014, figures from the same source show.
As a result of poor operating performance, Rime said that the owners of Oceansaver had to inject fresh capital into the company from time to time in order to maintain its liquidity position at a viable level.
In December 2016, Oceansaver obtained final US Coast Guard type approval for what the company described as the first electrochlorination ballast water treatment system in the world.
Norway has an extensive maritime cluster and the equipment makers play a significant role in this. Oslo, its capital, was recently ranked as the world’s foremost maritime nation as far as technology is concerned. Oceansaver is based at Drammen, which is in the greater Oslo area.
Most of the shipbuilding and equipment manufacturing is located on the west coast of the country, where e.g. Rolls Royce, the UK based technology group, has the headquarters of its commercial marine business. The company is investing heavily to develop automated ships.
Against this background, it seems that the reasons that drove Oceansaver to failure were more company specific than an indication of general weakness in the Norwegian maritime equipment sector.
Although the crisis in the offshore sector has hit the country’s yards, which again has impacted the equipment industry, but there have not been large numbers of business failures in the sector. This is partly due to the fact that the industry is well established in the world’s most important shipbuilding countries in the Far East.