Interview: Paul van Gelder, Mammoet CEO

Mammoet has a long history punctuated with takeovers and name changes, the latest of which is the acquisition of ALE. Such big news was naturally a major topic of ICST’s interview in the December 2019 issue. Paul van Gelder, Mammoet CEO, talked to Alex Dahm about the company and the industry going forward.

In talking to Paul van Gelder the aim was to learn something about him, the state of the market and the direction the world’s largest heavy lift and transport company will now take, especially in light of its takeover of fellow international transport and lifting specialist ALE.

Although van Gelder has only been in the crane industry since 2017, he knows it well. Following a distinguished career in the Dutch Navy, van Gelder returned to the civilian world in 2004. After a couple of years in the aviation industry he joined BP in the Netherlands as a maintenance manager. Soon after he was made project director and, at the end of 2007, he became managing director. In 2010 he changed jobs to become CEO of the national grid company in the Netherlands. After three years he left to troubleshoot a company in distress. A couple of years later he was approached by SHV, Mammoet’s parent company, where he joined the board of sister company Eriks.

In 2017 SHV asked him to join Mammoet from where van Gelder takes up the story. “At that time Mammoet was in a period of ongoing change and had some difficult projects. When I stepped in Jan Kleijn [existing CEO] and I already knew each other. We changed the whole structure of the company, putting in place a new board. I stepped in as CEO and since then have been working on a new strategy, strengthening the regions and also really navigating this ship through some storms, I would say. This is where we are right now and things are looking much better.”

New strategy

At the end of 2017 Mammoet started an in-house strategy called Reshape to Win. “Its purpose is to transform Mammoet and prepare it for a future in which customers, employees and societies place ever greater demands, not only on our performance as such, but also on the way we do business: safely, responsibly and sustainably.

“Our industry will be greatly transformed, say, 30 years from now. Although that looks like a very long time, the industry at large and so Mammoet, too, will need such time to develop according to demands of a globalising economy that’s conscious of its social and environmental footprint. In doing so we want to retain our market leadership.”

Of course, this is first and foremost about commercial excellence, van Gelder says. “It’s about serving our customers in the best way and trying to achieve maximum customer satisfaction. For Mammoet it means we focus on three areas where we serve our customers best: projects, including mega-projects; long term service agreements and master service agreements; and daily rental of cranes and transport equipment. These areas complement one another and each area has its own customer requirements regarding engineering capacity, service levels, safety and efficiency.

“This can only be achieved if we have the best people in the business which, in turn, means being the employer of choice. It also means operational excellence and efficiency. From that basis, we want to grow the company further, both from within, with our innovation agenda, for example, and outside in the market place through organic growth.

“As a CEO I’m a strong believer in organic growth. You should always go for organic growth and try to retain your customers. Inorganic growth is also something we should be looking at. Out of that came the incentive to acquire ALE.

“We also laid down a number of basic principles we want to adhere to and drive through the organisation. For example, we want to reduce complexity and to improve the speed of decision making. We’d like to see entrepreneurial people taking accountability.”

July 2018 saw the rollout of Reshape to Win. “I am very proud to say that we’ve already achieved quite something, with the acquisition of ALE and the development of the Focus crane. We’re now looking at developing a new wind crane for higher altitudes. We’re also pushing for modular concepts. All these things have come about already as a result of the strategy that we’re executing right now.”

Ownership incentive

Changes were also made to reduce complexity. The number of operating regions was cut from nine to five. They now comprise: North America; Europe and Russia; Middle East and Africa; Asia Pacific, including Australia; and Latin America. What does that mean in terms of the equipment fleet?

“In general, what we try to do is make sure that the regions feel ownership of the equipment. If they feel ownership, they will have an incentive, they will feel a push to utilise the equipment, to push the equipment into use. Cranes north of 1,600 tonnes lifting capacity, however, are part of the global pool of equipment.”

In terms of the market generally, while much of the work is still oil and gas, where else is Mammoet looking for business?

“We are looking with our innovation department at how we can open up new markets. We are already quite active in civil construction and we feel we can do more. We look at our home market, the Netherlands, as a testing ground for new concepts. What we see there is that construction sometimes needs to take place in a congested city, not just in open areas.

“Continuously we are having internal discussions on how we can add value to construction in the civil side. We also experience that the markets need these rapid replacement options. Nowadays you can’t take out a bridge for longer than two days, otherwise traffic really becomes a mess. You should be looking at concepts that help in the construction of bridges and viaducts to do it overnight or in a weekend. We are looking at how we can use our SPMT, how can we make use of special skidding techniques, to allow for rapid bridge replacement.”

To achieve this will there be more specialized equipment or will Mammoet make more clever use of standard equipment?

“It’s both. We have a lot of standard equipment. We want to push utilisation of equipment we own as much as possible. Before we move into developing new equipment we will always first take a look at what we have on the shelf in our yards and see how can we make use of that. You don’t want to invest continuously in getting new equipment because these kinds of companies in general have a tendency to collect a lot of equipment. The trick is really to make use of your existing equipment in a smarter way.

Mammoet and ALE

At the time of writing Mammoet’s acquisition of UK-based international heavy lift and transport specialist ALE was reported as progressing well, with only a couple more countries to give approval. What Mammoet is paying for ALE is undisclosed. Van Gelder commented, “We paid the right price.” In terms of combined turnover van Gelder said, “Mammoet is around €1 billion [US$1.1 billion], ALE is around €350 million [$388 million] so you’re roughly looking at €1.3 or 1.4 billion [$1.4 or 1.6 billion].

“Mammoet is acquiring 100 per cent of the shares of ALE and, although it is a takeover, we treat it as a merger of two equal companies. We are buying ALE but in the way we are going to integrate it, we are trying to do that on a basis of equality and give everybody the same opportunity.

“In general, when I travel around in the Mammoet organisation I see that the people in both organisations are very enthusiastic and I hear the same thing from Mark Harries [ALE co-owner]. Both our employees view it as a great step because they see that our organisations are complimentary.

“It will help strengthen certain regions and together there is a new future for Mammoet and ALE. People are very enthusiastic. Regarding the integration we sometimes have to really calm the people down because they want to move very fast. At this time we are still awaiting the full approvals of the competition authorities and until we have that we will not move together with ALE.

“There’s absolutely great enthusiasm and so far I haven’t picked up on any major concerns in the people. There will be some redundancies but let us first look at the integration and define the new company structure. It is difficult to find the right people so our view is to first define the structure. We have already looked at the organisational structures of both companies and feel that it is a good match. Then will take it step by step. We will first announce the appointment of the people who will lead the regions. From there on those people will start to drive the integration through their respective regions.

“We will not keep the name ALE so the new company will be called Mammoet. We will continue with the tagline of ALE. After closing, when we become one company, it will read, ‘Mammoet, Smarter, Safer, Stronger. We’re saying farewell to the Mammoet slogan [The Biggest Thing We Move is Time]. The announcement has received very positive reactions.”

A good fit

In terms of the two companies being a good fit there are many areas where they will complement each other, van Gelder says. “If you look at the regions and you look, for example, at America, Mammoet has a very strong organisation in North America.

In Latin America ALE is strong in Argentina and we have an operation in Brazil, for example, so they are complementary. Europe, Russia and the Americas are the two biggest regions for Mammoet. In the Middle East ALE is stronger and in Asia Pacific ALE also has a very strong presence. Their presence in Asia Pacific and in the Middle East will certainly strengthen our regions for further growth and development.”

Turning to ALE’s equipment fleet, what is van Gelder really looking forward to getting his hands on? “Well, what we have really come to like in ALE is the fact that they are a very innovative company and that they’ve done great research and development, especially with the development of new equipment over the last five to ten years. Mammoet on the other hand is further in developing as a corporate organisation, since we are significantly larger. Following our fast growth from 2000 to 2012, we have implemented management practices that help us steer a company of this size in the right direction.

Taking stock

“We will look at what comes with the acquisition, what kind of equipment we will get. We are very glad to take over the SK cranes, which are different from our ring cranes. We think they are well engineered and efficiently constructed. We’ll have to learn their capabilities and how to integrate the people that come with them in our existing organisation. We want to focus on this first. It will take a couple of months or maybe even a year or so, and then let’s take it from there.

“We also are very glad to take over the Mega Jack systems. We have the skillset in jacking but they are further on than Mammoet. I think, however, the true value will not come from the equipment but from the people. The most important thing is that we want the best person for the job and we are looking at all the people in the ALE organisation and also in the Mammoet organisation. It will be a major step in the whole integration moving forward.

Looking ahead what is next for Mammoet in terms of further expansion? “Now we have to concentrate on the integration. Buying a company is a tricky process. The real challenge is in doing the integration. This is where you begin to create value or destroy value. For now in our strategy Reshape to Win, we will focus on the integration, reduce complexity, and get the maximum out of the new organisation before we will look at acquiring any other companies.”