BUS604: Innovation and Sustainability

After much deliberation, Goof's strategy was adopted and the company expanded overseas, at first to Belgium, Germany, France, and Spain, and later outside Europe. Another key part of the strategy for conquering new markets was to find partners and so increase its knowledge and equipment base by working together. "With the hindsight of today," says Koos van Oord, "long-term business partners have played a crucial role in the development of our company. We have always been keen to invest in good long-lasting working relationships with our business partners. They have been instrumental in our growth".

One by one, the shareholders in ACZ sold their stakes to their partners so that in 1973 Van Oord Utrecht became the sole owner. But the family's ambition to become an international dredging contractor was seriously hindered by two circumstances: first, it lacked the capital to invest in seagoing equipment, and second, it did not understand how the world outside Europe worked. Hence the company decided in 1979 to join forces with the Rotterdam shipping company Phs. Van Ommeren. On a 50/50 basis they established Dredging VO2 to jointly enter the trailing suction hopper dredging market. This collaboration also proved to be successful and was a decisive factor in the further worldwide growth of Van Oord. In 1983, when Phs. Van Ommeren restructured its activities, Van Oord Utrecht bought its share of VO2.

In the 1970s Van Oord benefited from the boom in the Middle East, where it was involved in the reclamation works for the new port, industrial and urban area of Jubail, Saudi Arabia. But this turned out to be a double-edged sword: when a fall in oil prices in the 1980s led to a global recession, the major oil-exporting countries halted such projects. Meanwhile, dredging contractors like Van Oord had invested large sums in new equipment. A shake-out in the industry was inevitable. In the late 1980s a number of smaller family dredging companies closed down or were taken over by larger companies. It was a huge challenge for Van Oord, at that stage still one of the smaller international dredging companies. The family was determined to remain independent, but was the company big enough to survive? By now, Koos van Oord Sr. - one of the younger brothers - was in charge: he explored the possibility of a merger with other dredging companies but to no avail. The solution he arrived at was to merge the two operating companies Van Oord Utrecht and ACZ into one company called Van Oord ACZ. This took place in 1990.

At the same time, the risks of working overseas became apparent during the Sentosa Island project that the Singapore government was developing as a holiday resort and in which Van Oord was heavily involved. Van Oord had been keen on participating in this project in the hope of raising its international profile. Serious problems were uncovered in its design and execution, forcing the company to suspend operations. In Kuwait another problem appeared without warning when on 2 August 1990 the Iraqis invaded the country. Several Van Oord employees were in Kuwait at the time for the construction of a port. All international flights were canceled and telephone lines were down. After repeated attempts to get out of the country, they finally succeeded after five weeks.

The setbacks in Singapore and Kuwait, on top of the generally depressed market situation, meant that Van Oord had to pull out of a planned takeover of the German dredging firm Broekhoven from its parent company Hochtief. Fortunately Van Oord's financial position was strong enough to withstand these shocks and enabled the company to survive and eventually prosper again as an independent, family-owned entity. But it was a difficult period in its existence.

Things improved in the 1990s, with Van Oord ACZ's involvement in a number of Asian countries, for example in Hong Kong for the construction of Chek Lap Kok (the new Hong Kong airport), the connecting road projects to Kowloon and Hong Kong Island, and huge reclamation developments in Singapore to extend the land base of the city. Then, out of the blue, projects in Dubai surfaced. This came at an unexpected but crucial moment for Van Oord as the large reclamation projects in Singapore had come to a standstill because of the "sand war" between Singapore and its neighbors Malaysia and Indonesia.

At the start of the twenty-first century Dubai's ruler Sheik Mohammed bin Rashid Al Maktoum presented his masterplan. Given the country's modest gas and oil reserves, the sheik gradually developed a grand strategy for Dubai - its future would lie in service and tourism. To make the country attractive to investors, substantial investments were made in infrastructure, accommodation, and iconic buildings.

However, the sheik's greatest dream, developed in only a few years, was the construction of a series of islands resembling palm trees by using sand dredged from the sea bottom. They would give Dubai a drastically different view, even from space. In less than a decade, Dubai achieved the ultimate in city rebranding. Because of Van Oord ACZ's major role in a number of Dubai's leading projects, the company benefited greatly from the country's skyrocketing ambition.

It all started for Van Oord ACZ with the construction of the Palm Jumeirah island. The project was awarded to Van Oord for two reasons: the innovative design of palm and crescent, and the deployment of dredging equipment that traditionally had not worked in the Middle East. This resulted in substantial cost savings. The successful completion of this project led to even bigger projects: The World and Palm Deira. The World comprised a series of small islands shaped in the form of countries and continents which, seen from the sky, looked like the world. These new islands were 10 times larger than Palm Jumeirah, costing €2.5 billion, and it was the largest land reclamation project ever in dredging history awarded to a single company.

In 2003 Van Oord ACZ merged with a much larger company, Ballast Ham Dredging (BHD). The main reason for this expansion was that the ever-increasing size of projects such as Dubai required a much stronger and bigger company in terms of staff, equipment and knowledge. Van Oord ACZ had an 8 percent share of the top lead dredging and marine construction market and considered itself too small in view of the latest developments. Although BHD had a 22 percent market share, the new, enlarged company bore the name of Van Oord.

Unprecedented Quantities of Sand and Rock

• Paris' Eiffel Tower is 317 meters tall, New York's Empire State Building is 381 meters tall and Kuala Lumpur's Petronas Twin Towers are 414 meters tall. At 828 meters tall, Dubai's Burj Khalifa is the world's tallest building.
• Here, Van Oord's total sand production during the years they were active in Dubai is compared with the volume of Egypt's Great Pyramid. The Great Pyramid would be dwarfed by the imaginary pyramid that could be built with all the sand they dredged and handled during the Dubai Decade, which would tower over even the world's tallest building.
• It is difficult for most people to imagine what a billion cubic meters would really look like, or what a weekly production rate of 500,000 tonnes really means. To make this a bit easier to imagine: the total quantities of sand and rock that Van Oord used to build Palm Jumeirah, The World, Deira Corniche, and all of the other projects it constructed in Dubai would build a pyramid so large that it could house all of the largest structures in the world.
• All of the sand that Van Oord supplied in Dubai for the construction of the various projects would build a pyramid 910 meters tall on a square base measuring 1,818 meters on each side.
• All of the rock that Van Oord transported and installed in Dubai would build a pyramid 323 meters tall on a square base measuring 646 meters on each side. For comparison purposes: The Great Pyramid is 147 meters tall on a square base measuring 230 meters on each side, and its volume is approximately 2.5 million cubic meters.

Figure 4: Reclamation Works in Dubai 2

The new firm benefited greatly from the increasing number of projects in Dubai until the global financial crisis struck in 2008. At that time the Dubai projects accounted for a €500 million annual turnover. In November 2008 Dubai imploded overnight and immediately all projects were put on hold. The consequences for Van Oord were severe. Within months it had to cut down drastically on its local workforce of 2,000 employees, whilst moving its dredgers and expat staff elsewhere in the world.

The firm proved flexible and financially strong enough to overcome this major setback. This was partly due to Van Oord's move into a new and exciting area: offshore wind power. The opportunity arose because of Western Europe's concerns about climate change and its focus on clean, sustainable energy. In 2017, offshore wind brought in revenues of €403 million, accounting for 27 percent of Van Oord's annual income of €1,530 million (dredging accounted for 60 percent, oil and gas 13 percent).