On May 19th, the Singapore government’s Multi-Ministry Taskforce released the 3 phases for safe reopening after the circuit breaker ends on June 1. It will be a gradual opening of the economy, but it is certainly not a quick “back to normal” approach. Companies and people will need to adapt to this “new normal” situation.
The infection rates in the local community is very low today (single digit) but the migrant workers’ daily infection rate is still in the hundreds. With a majority of the 320,000 workers out of action, industries such as the building and construction, shipyards and logistics have been badly affected.
In my seventh interview, Michel Goedegebuure, MD from Damen Shipyards Singapore had the interview with me via Microsoft Teams on May 14. Damen Group is a Dutch defence, shipbuilding and engineering conglomerate company, with headquarters in Gorinchem, South Holland, the Netherlands.
Michel has the full responsibility for the shipyard in Singapore, which I have the opportunity to have tour a few months ago. It was great to see how the fast boats are built “one piece at a time” and to admire the unique patented structure of Damen’s boats. He has been in the MD role for almost 3 years and he successfully increased the productivity and customer satisfaction level of the shipyard.
Here are the excerpts from our interview:
There is no turning back now!
Ricky “R”: Hi Michel, it’s great that you can join me for this interview. We last met at your shipyard and I supposed the work situation is quite different today.
To start off, can you share with us your overall perspective on the COVID-19 pandemic situation?
Michel Goedegebuure “MG”: I think the world will be walking on a tight rope until the virus is under control – either there is a vaccine, a cure or we have a naturally built up sufficient immunity.
If it does not happen, I think we will go in and out of lockdowns as governments want to limit the spreading of the virus. There is almost no turning back now from these measures. There are lots of debates in Holland on “is this the right thing to do?”
I expect this will lead to quite a deep recession or even a depression. (R: I certainly hope not, but it seems quite probable!) People are losing their jobs and they will be extremely cautious in spending money. Many people can still keep their jobs, but they are afraid to lose it and they will try to save more money.
The pandemic will have impact on our supply chains. There will be companies who will not survive this crisis. The crisis will impact both demand and supply sides. The virus will stay for the foreseeable future. It will have a lasting effect to the economy, and it can take years to recover.
Just to give some perspective: during the Global Financial Crisis in 2008, I was in Europe and it took about 5 years to recover. In Singapore and the U.S., the economies rebounded faster. Maybe Singapore will recover faster from this crisis as well.
The more developed countries can spend a lot now to boost up the economy – the same goes for Holland, who has a lower % of GDP in terms of debt. In southern European countries, the debt is already higher than the GDP – they will take a longer time to recover from the crisis.
Emerging economies will struggle more with these government support programs, if not now, then later due to the higher government debt.
R: What is the impact to your business?
MG: My yard is now closed. However, most of the yards in the DAMEN Group can continue their operation. The impact is large as we cannot produce. All the staff who can work from home are working from home. Some departments always have work to do, such as accounts payable. Departments closely supporting the production see a decline in work. We can work ahead as the production planning in a yard has a relatively deep horizon, so we work ahead. Now, in the 6th week of the circuit breaker, we do see workload being too low.
We are preparing for a restart of production. With production stopped for a long time, it will take a while for us to get back to normal way of working, especially because I expect the migrant workers to be allowed to go back to work in batches.
We accrue our revenue based on project progress. With production stopped, the revenue for this period has naturally decreased accordingly.
We can do a lot via video conference
R: How is it disrupting your supply chains and business operations?
MG: We have not really seen the impact on the supply chain, yet. A lot of the equipment that we use have long lead times. We ordered well before the crisis hit, with most the expensive equipment coming from Europe. The equipment was already in transit to Singapore. I do expect to see the impact after the restart.
Looking at the customer side, we have customers who bring in their teams to check and support the production – they are not able to come to Singapore now. We also have specialist who flies into Singapore to do their work and they cannot fly in now.
We have a Dutch saying, “under pressure, everything becomes fluid”
However, I discovered that you can do a lot via video conference. We have a Dutch saying, “under pressure, everything becomes fluid”: this means that with new realities, things deemed impossible before, become possible.
I expect that 80-90% of the specialist’s work can be done via video conference without a problem, the last 10% will be more difficult. We will make it work. Of course, the efficiency will be lower.
Thankfully, we have built local capabilities over the years so our dependency on specialists from Europe is low.
Keeping the customer up to date
R: How are your customers reacting?
MG: I can only comment from the scope I am responsible for. Currently, a few ships in my yard should have already been with the client.
We are supporting our customers by keeping them closely up to date on the ground situation and make plans to recover delays as much as possible. Customers are relying more on us to perform the acceptance tests. Most of our customers have had ships built at Damen Singapore previously. They know us and trust us.
We have a new customer who was scheduled to come to Singapore. We explain to him that anyone entering Singapore must be isolated for 14 days – and naturally, he did not come.
R: How do you give them the transparency of the information?
MG: We do it via our sales colleagues. I write status updates to 20 to 30 people in the headquarters so everybody has the same information.
We are now preparing to go back to work. We cannot recover 7 weeks, but even recovering 2 days is important to a customer. We will work hard to recover as much of the delay as possible.
R: Do you have a recovery plan?
MG: Not in detail yet! We are dependent on the migrant workers from India and Bangladesh. It is uncertain when the migrant workers can start working again. Even if the government lifts the circuit breaker today, my shipyard will still remain ‘not working’, because the migrant workers cannot work. Once we know when we can start production, we will firm up our recovery plan.
On the other hand, our workers will be well-rested, and we can ask them to make more over time than normal, all within the laws. Everybody is craving to go back to work!
R: What is your perspective on the migrant workers?
MG: We have about 25 of them on our payroll and another 150 to 200 from our contractor. The Singapore economy is dependent on migrant workers. I won’t be surprised if there are significant changes to the living conditions after this crisis to prevent re-occurrence of this situation.
R: The migrant worker situation certainly needs to be improved. This can be an opportunity for Singapore. In the latest news today, Singapore is discussing that "doing business without new foreign workers could become the new normal".
R: Where do you see the opportunities in the current situation?
MG: We have time to train people now and also to clean up the systems. In production support engineering (PSE), my team is cleaning up the data. This is the way the lean philosophy works – if you have time to improve, you immediately improve. When the yard is in operation, there is a constant flow of work to the PSE department. There is little time available to maintain the data in the databases. Now we are performing this maintenance.
Virtual communication will only enlarge your image.
R: How are you managing your team and workforce?
MG: We have implemented a system – at the start and end of the day, each HOD (Head of Department) will meet with the team. They check in on what is not going right and how they can help the team to resolve issues and to remove barriers.
I did a lot of work on the IT side – making sure that everybody can do their work at home. I went to buy hardware, so that everyone has a camera (for video conference).
After the morning meeting, I have meetings with my HODs. We do not have a fixed agenda – we discuss the urgent and relevant topics – and I’m surprised on how effective we can still be.
Unfortunately, on Teams, we cannot see the responses of more than four persons. I was told there is going to be an upgrade soon.
(R: the upgrade to see 9 people “3x3 view” on Teams is already done, thank you Microsoft! But hey, Zoom can show 49 (!) people. Still a long way to go!)
We have a deep and thoughtful discussion via Teams. We are a good team. People don’t hold back – they have been working with the Dutch for a long time. They are not keeping quiet and they are speaking out willingly – we challenge each other.
I do miss my whiteboard. I constantly use whiteboards to visually support what I am saying, In MS Teams meetings this is not possible. I feel it takes a bit longer to understand each other completely.
I’m in contact with some staff directly – not nearly as much as I want to. It is quite different than meeting a colleague at the coffee machine or the pantry. Initially, when I call people and ask them “how are you doing?” – it was met with a little scepticism – I genuinely want to know how they are doing!
The team will only enlarge the image that they have of you. If they know that you are genuine, this is what they will see."
Fortunately, the groundwork was done earlier. The team will only enlarge the image that they have of you. If they know that you are genuine, this is what they will see.
I recalled putting up a “laughing emoji” in Teams and it was the wrong emoji. I quickly clarified to the team that I was not laughing at them. The reply was that “we know that it is not your style”. If you are not sensitive, if you have no relationships, you cannot reach this level of trust. Working from home only expands what is already there.
Final advice for business leaders
R: What final advice do you have for business leaders?
MG: The most important thing to do is to show your people that you care for them. You will meet them after the circuit breaker. If you make sure that they are safe and healthy, they will take care of your clients. Don’t be too ‘kiasu’ (this is a common Singlish word, meaning a “fear of missing out”) and looking at every hour or every minute. If you are generous now, you will get it back later. Use the downtime to train people, update SOP/procedures and clean up ERP/PDM data structures.
There are positive elements to be seen, some of which we would have been extremely happy with 5 months ago:
- Oil price is at the lowest point since 18 years
- Interest rates are at a very low level, but they have been low since the previous crisis following 2008
- Talented people are searching for work
- Staff and other companies are open to change
- There is time now to redesign your product and business model
- Time available to upgrade staff and hardware
Business leaders must make the most of these opportunities. Without looking at boundaries, such as limited financial resources, my advice is:
- This is the time to rethink your offering
- See if you can integrate further in the production chain
- Remote working will be the new norm, think about how this will impact your customers and where must your product change to match the needs and wants of the customers
It was an interesting discussion with Michel to get an insight into how he is managing the shipyard. My conclusion is that we need to play our role as a leader during the crisis and don’t try to over-achieve during this time. People need to feel that they are cared for and they will do the extra hours eventually. In times like this, leaders will need to rethink their roles and be more compassionate towards people.
If you are interested in how to select and develop leaders to be “fit for the new normal”, drop me a note at email@example.com and we can start a discussion.