Class action

Class faces a series of challenges both in the short-term and further ahead. In the face of the newbuildings downturn and changing regulatory environment, societies explain how they will adapt. Miriam Fahey reports

Classification societies have come under real pressure over the past year – they have all been hit by the downturn in newbuilding orders, cancellations and postponements, and have responded in varied ways. While Germanischer Lloyd (GL) reduced its workforce by 380 jobs, ClassNK was hardly affected.

Meanwhile, some owners have reacted to hard times by making compromises on vessel safety. Not surprisingly, class societies are adamant that this practice is unacceptable. GL spokesman Olaf Mager says his company makes no compromises on safety, but has responded to challenges of the market by focusing on improving operating efficiency. A new efficiency consultancy service has been launched – on the premise that efficient ships have lower operating costs.

So far Lloyd’s Register has not been forced into redundancies. However, LR’s marine strategy manager, Hector Sewell, warns that the company might suffer as owners cut back on expenditure. “Owners, shipbuilders and component manufacturers will be looking to control more tightly what they spend on maintenance; that could impact on quality and safety,” he said. But LR sees this as an opportunity to help ensure customers manage their response to the downturn safely.

Korean Register admits that it has faced huge challenges during the past year that have prompted changes to its business portfolio and management style. “We realise we need to diversify our business portfolio into areas that drive future growth,” says KR spokesman Jane Park. These include environment-related sectors such as ocean energy.

“We have also adopted an aggressive management philosophy, instead of a defensive management style that might save costs up front, but would end up downgrading the quality of services we provide to customers,” she adds.

Similarly, Ugo Salerno, head of Italian class society RINA, describes a period of scrutiny. “It was a year of consolidation and careful attention to detail within the group to ensure we are doing things right. We had to consolidate the companies acquired in 2007, control costs and work hard to get the right people with the right skills and the right management support into the right places around the world.” It seems to have worked: RINA posted revenue growth of 17% in 2008 over its three operating divisions, despite the downturn.

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