Sumitomo Corporation "Forming a Scrum" LIVE REPORTS Vol.1 Aiming for the Best Mix of Global Energy Sources
Strong Partnership is the Key to the Success of a Gigantic Project
Need for a Strong Partnership
Solar power, wind power, geothermal energy, and biomass are among the renewable energy sources being developed across the world. Offshore wind power, in particular, is moving ahead at full speed in Europe. Power generation using wind power turbines installed on the ocean has the huge advantage of being able to utilize a much larger area compared to onshore wind power, which has land space restrictions. The powerful ocean wind is also an advantageous condition for power generation.
However, there are disadvantages as well. As the scope of the business is gigantic, a large investment and precise project management know-how is required. "In order to make our offshore wind power business succeed, we needed a strong partner who has the capital and the capability to lead the project to success," comments Mr. Francois Van Leeuw, CEO of Parkwind, a company which has been leading three offshore wind power projects in Belgium since 2008.
After graduating from Vrije University in Brussels, he spent his career as a researcher at Vrije University Research Institute and as a bank financial analyst and corporate IR before joining Parkwind as CFO of the “Belwind” project in 2009.
In 2011, he became CFO of the "Northwind" project and was appointed as Parkwind CEO in 2015.
Integrated Corporate Strength Supporting the Gigantic Project
Capital, project management and organization capabilities are needed to build a long-term partnership. The company which provided the above and which Parkwind appointed was Sumitomo Corporation.
"We have been successful with onshore wind power projects up to now both globally and domestically but this was our first time to enter the offshore wind power business. Not only is it a potential market which can expect further growth - we can also harness Sumitomo Corporation Group's collective capabilities such as finance, accounting, legal and its global network to the fullest. That was the key for us in deciding to enter the project,"
comments Shinya Ikeda, who has been working on this business since last year.
Ikeda, who joined Sumitomo in 2002, studied in the US for two years through the internal studying-abroad system after working in the logistics and environmental business divisions. He says enthusiastically, "What I need to focus on now is accumulating project management skills. I would like to lead the project as project manager in the future."
However, building the partnership with Parkwind was not an easy process.
"The differences between the two companies were way too large. Honestly, that was my first impression,"
comments Mr. Van Leeuw with a smile, four years after April 2012, when they entered the capital investment discussions. However, he continued that in the beginning he saw that it would be extremely challenging to close the gap between the two. So, what were the "considerable differences"?
"The biggest difference was the view of risk management," explains Hisayuki Doi from Sumitomo, who leads communication with Parkwind, currently stationed in Belgium.
"Sumitomo is a company which examines and considers throughout, ensures that it is prepared for any circumstances, and will not hesitate to spend time on it.
That is the culture we have established over the years. But our culture was not easily understood by the people at Parkwind, which was a newly established young company. 'Why do we need to do this much' and 'This will delay the decision' were typical reactions. Members involved in the initial phase of the project had to listen to such comments repeatedly."
"The best part of this job is to experience the moment of joy when the partnership contract is closed," says Hisayuki Doi, who joined the company in 1992 and has worked on an onshore wind power project in the US. "Belgium is known to have 700 or 800 different types of beers. He broke into a smile as he said, "my goal is to drink all the beer brands during my years in Belgium."
Strong Trust Built by Persistent Communication
There Are Many Things We Need to Learn
This was actually a A"very favorable difference" (Mr. Van Leeuw).
"Offshore wind power construction obviously takes place on the ocean. Many people work in a severe environment, so we need to ensure the relevant and safe methods so that they can pursue their work. Additionally, extremely high quality is required of a facility that operates for a long period on the ocean. There were many things to learn from Sumitomo's know-how about the project and risk management," points out Mr. Van Leeuw.
Sumitomo Corporation is a global company that has worked on various projects in the world and Parkwind is seeking to grow further toward the future. Would the two companies with varying strengths and backgrounds be able to develop a relationship to learn mutually and solidify their partnership? This was the biggest factor determining the success or failure of the project.
As a result, it was persistent communication which formed the best partnership. Staff from Sumitomo continued to stress the importance of risk management, communicating the management of "Sumitomo quality" to convey their passion for the project. Of course, we did not just force our ideas on them," said Doi.
"To make them listen to us, we need to listen to them seriously as well. It was also important to localize our ideas, in other words, to meet their needs."
Respect Others and Never Run Away
Jun Minase, currently working as a team leader of the offshore wind power business, has experience of the thermal power business based in Saudi Arabia and UAE. According to Minase, the basis for communication between people from different cultures is to "respect others".
"Be fond of the country you are involved with and respect your partners. Ideas must be stated based on this. I think this is the order of communication. Without the attitude of respecting others, you can never succeed by just forcing your ideas on them." (Minase)
Ikeda, Minase's direct subordinate, also has experience of being based in China for four years. His style of communication is to "never run away".
"Since we are in different positions, issues come up and we need to coordinate opinions. In any situation, it is important not to run away from it and manage in all sincerity taking into account the other's position. If you display such an attitude, they will trust you."
Minase leads the Japanese team for the Belgium offshore power business. He has worked on thermal power projects for many years since joining the company in 1994. "People with various work responsibilities and nationalities are involved in big projects. The role of a general trading company is to coordinate such factors in an appropriate manner."
The Truth is Always in the "Middle"
Here is an episode.
When Sumitomo first became involved in the Belgium offshore wind power business, they had a meeting with Parkwind employees at a Japanese restaurant in Belgium. After enjoying their meals, Sumitomo staff proposed that they eat katsu-don (pork cutlet rice bowl) together at the end. They explained to the Parkwind employees that this was the Japanese way of wishing for the success of the project, based on the superstition that eating "katsu" will bring good luck since the word "katsu" also means "to win" in Japanese. The Parkwind members were already full, but no-one complained and they joined us in this Japanese custom of eating katsu-don together.
"The old-fashioned style of loyalty is also appreciated in Belgium. But to do so, you need time to consistently engage with them. I cannot find the exact word of how happy I was when I recognized the trust built through both parties' efforts." (Doi)
"The truth is always in the 'middle'," comments Mr. Van Leeuw.
"We as well as Sumitomo have devoted our efforts to understanding one another. I feel that we have discovered the right spot between us by meeting each other half way. We were able to enhance the level of the projects with the support of Sumitomo. We could express our passion and vision from a new young company's perspective. Our partnership is functioning very efficiently today."
Carrying the Business into the Future Riding on the "Wind"
Accumulate Know-how and Expand the Business
Of the three on-going offshore wind power projects "Belwind", "Northwind" and "Nobelwind", the first project Belwind was in its operation phase when Sumitomo entered the project and the second project Northwind had finished the construction phase and was entering the operation phase. The third project Nobelwind, which is scheduled to be launched in 2017, is the first project in which Sumitomo has experienced all the phases of offshore wind power development, construction and operation.
With these three projects, Sumitomo will accumulate know-how of each phase and will expand its business to other European countries such as the UK, Germany and Holland as well as to Asia in the future. This is Sumitomo's offshore wind power business vision.
"Parkwind will lead the businesses in Europe and we will lead the businesses in Asian markets. That is our ideal for leveraging the current partnership." (Minase)
Energy Business Strategy with a Global Focus
Looking to the future is the grand vision which aims for the "best mix of global energy sources".
"We are dealing with energy business globally, including power generation businesses using fossil fuels such as coal and gas. To reduce CO2 emissions over the entire planet in the future, there is a need to expand renewable energy businesses. Even if it is difficult to support people's lives all over the world with only renewable energy sources, we need to increase their ratio. For that reason, our goal is to turn 15% to 20% of our energy business into renewable energy,"
points out Minase. This is a vision only a trading company with a global business network can picture, for sure.
The "Wind" is Blowing in the Offshore Wind Power Market
Not every business investment project succeeds all the time. In the past, there was a power generation project in the Middle East which was discontinued due to a financial crisis just when we were approaching the launch of the hard-earned project, recalls Minase.
"I was never more frustrated than at that time. I think that frustration drives me to pursue new projects."
His frustration in the Middle East became joy in Belgium. It was the partnership effort that made the change.
"We would like to achieve further growth through our partnership. Our future is bright," comments Mr. Van Leeuw with sparkling eyes. The offshore wind power business in Europe is steadily growing and it will further expand in the future. In the offshore wind power market literally the "wind is blowing".
How far can they take this business riding on this "wind"? Sumitomo's challenge continues.