Sat, Jun 6, 2009
By Signe Hansen
With a yearly turnover of US$2 billion and more than 5,000 employees, Stolt-Nielsen S.A.’s CEO and Director Niels G. Stolt-Nielsen, 44, is a very busy man. Nevertheless, he recently took time off to show Scan Magazine around the company’s corporate office in London and to have a chat about the significance of being a family-operated publicly listed business and the opportunities and challenges facing the successful company.
When Mr. Stolt-Nielsen’s father Jacob founded the company in 1959, it was with just one time-chartered parcel tanker. In the 50 years that have since passed, Stolt-Nielsen has become the world’s leading provider of bulk liquid chemicals logistics services, with a global fleet of more than 140 deep-sea, coastal and inland tankers. Along the way they expanded the business beyond tankers and into terminals, tank containers and even fish farming. Throughout the last half century, SNSA has been steered by the steady hand of Jacob Stolt-Nielsen and his family who still control the majority of the company, which is today listed on the Oslo Stock Exchange.
SNSA’s corporate office is in London, where CEO Niels Stolt-Nielsen is based. “We are a family controlled business with Norwegian roots, but at the operational level Stolt-Nielsen S.A. is very much an international business. London has a strong banking community and it is an excellent location for the head office of a global business like ours,” he says.
Because of its worldwide activities, the office in London is busy throughout the day. In the morning it follows the operations in the Asian markets, in the middle of the day the European and in the evening the American markets. “We offer our customers a global transportation solution, combining deep-sea tankers, smaller regional transports and a worldwide network of storage terminals and tank container services,” says Mr. Stolt-Nielsen. “That is our core business. In addition to that, we have Stolt Sea Farm, where we have pioneered much of the sophisticated technology required to successfully farm such species as turbot and sole, as well as sturgeon and caviar.”
Facing challenging times
While the diversity and global scale of the business have always demanded long working hours, the challenges of the current economic crisis have substantially ratcheted up the pressures on management. “Our parcel tanker division has been hit the hardest, because of the dramatic decline in volumes of chemicals being shipped world wide as inventory levels were drastically reduced during the initial months of this year.”
Stolt-Nielsen’s extensive industry experience has already proved its value in dealing with the crisis. Though the next couple of years are expected to be very tough, the downturn did not come as a surprise to Niels Stolt-Nielsen. “On the contrary, we were surprised that the strong market in shipping lasted as long as it did,” he says. “Shipping is a cyclical business. We typically have two to three good years followed by three to four weak years. During the last up market, we saw five strong years, with enormous world trade fuelled by growth in Asian markets, strong consumer demand and low-cost credit. Yet, despite the strength of the market, we started to hold back a bit toward the end.”
While the company continued to expand, it did so at a more modest rate and began to take steps to prepare for the inevitable downturn.
Stolt-Nielsen’s Chief Financial Officer, Jan Chr. Engelhardtsen, explained the company’s strategy: “From a financial perspective, our major accomplishment was that we obtained financing for all of our capital expenditures just before the collapse of Lehman Brothers in September of 2008. After that, the door to obtain financing slammed shut. Granted, it took a while to formally conclude some of those arrangements. But all of our financing is now secured, which is very significant given the current situation in global credit markets.”
Stolt also accelerated its timetable for the recycling of older ships, in order to reduce the size of its fleet in anticipation of the expected decline in demand. Though the pain will be mitigated, the effects of the downturn cannot be wholly avoided. When asked, Engelhardtsen anticipates a 20 per cent decline in the company’s yearly turnover from 2008 to 2009. And a sustained recovery, he adds, will be slow to materialize. “We provide transportation and storage services to the world’s leading chemical companies. For the recovery to start, we will need to see the credit crunch resolved and renewed growth in consumption, not only in Europe and the US, but in the Middle East and Asia as well.”
Keeping it in the family
The company has weathered significant challenges before, and Niels Stolt-Nielsen has already proven his abilities as CEO. After he became a Director in 1996 and was appointed CEO in 2000, he led the company through a financial crisis in 2003, followed by a victorious landmark battle against the U.S. Department of Justice. Although Jacob Stolt-Nielsen has handed over the reins to his son, he continues as Chairman of the SNSA Board of Directors. Niels’ brother, Jacob B. Stolt-Nielsen, is also a Director and has held a number of senior management positions in the company.
According to the CEO, being a family operated business has both its advantages and disadvantages. “With a family owned or operated company, there are no doubts about the leadership’s commitment, not when the company bears your name. But, of course, it is a challenge for any family. You know what they say: the first generation builds it up, the second generation maintains it and the third generation throws it away.” But he is optimistic and believes that the company will continue to benefit from being in the Stolt-Nielsen family’s hands. “I do hope that one of the children from the next generation will find the interest to take over. But they are still young, the oldest one is 20 and the youngest just one, so I still have to work for some time before retiring,” he smiles.
With his father’s impressive, classically furnished office just around the corner from the CEO’s more modern quarters, it is hard to imagine anything but a smooth transition when the 44-year-old is ready to retire.
For more information visit: www.stolt-nielsen.com