Van Oord presentation

Van Oord presentation

Family business and the success of a country

Pieter van Oord, CEO at Van Oord

Pieter van Oord has been the CEO of Dutch marine contracting company Van Oord for five years. The family business was established in 1854 and has done many land reclamation and dredging projects worldwide. Last year, it turned over €1.7 billion

“Being a family makes our company different to others,” said Van Oord. “We can learn a lot from family businesses.”

The Dutch are innovative and creative, said the CEO. But bolstering the Dutch competitive position depends on the Dutch government ensuring that embassies and other international missions remain open to promote Dutch exports. His company has completed many innovative international projects, such as the artificial palm-shaped island Palm Jumeirah in Dubai, and building a new Hong Kong airport on land reclaimed from the sea. The company is also active in offshore oil, gas and wind projects.

Quoting from his own experience and the success of the company, Van Oord spoke of learning from family business, from business models in Germany, the operation of business clusters in the Netherlands, and expectations of leadership in a family company.

‘Family businesses have a long-term focus’

He summed up findings from a Harvard University study about the success of family companies; they are economical, acquire fewer companies, carry little debt, are flexible in changing their focus, can more easily expand internationally, retain talent better than competitors, have a long-term focus, and may show a surprising level of diversification. Heads of family businesses typically last longer than those in public companies; 15 or 20 years as opposed to only five years for CEOs.

“Family companies do better in times of economic recession than in times of economic growth,” said Van Oord. Germany has done better than the Netherlands since the beginning of the global recession, he said, adding that the Netherlands can learn from Germany’s success. He repeated RSM Dean Steef van de Velde’s words: the Netherlands “is a great country, but it has a serious problem. And it’s lagging behind Germany.” He said it surprises him that many European business students aspire to study in the USA or Singapore, but not Germany.

Van Oord believes the Mittelstand, Germany’s small- and medium-sized enterprises (SMEs), are behind the country’s success. “It’s the reason that they do better than the ones in the Netherlands, France or the UK. Even the USA is sending people to Germany to figure out the success behind these family businesses.” He said these German companies have created an excellent balance between stakeholders, such as customers, suppliers, their regions, and banks.

“They stay where they’re from, that’s their identity,” said Van Oord. He added that the dual education system, which includes learning and working in the same programme, works well there. “This creates jobs and explains why the unemployment rate there has gone down.”

Working within clusters

Van Oord explained that the ‘unknown factor’ in this success is the Mittelstand companies’ relationships with larger companies such as Bosh, Volkswagen, and Siemens, in which they play a key supplier role. The combination is unique. They work together in clusters – for example in manufacturing or automotive clusters.

Cluster development is important to the success of the Netherlands, said the CEO, as long there’s a sustainable relationship between suppliers and customers. With more clusters, the Netherlands would be able to reclaim a top position in the global economy, he said. Ahold is in a successful food cluster, while Van Oord is part of a marine construction cluster along with companies such as Boskalis, IHC Merwede, Huisman, and Royal HaskoningDHV. The Dutch government has also played its part, by commissioning the Delta Works, and the Rotterdam port expansion Maasvlakte 2.  “[The smaller family companies] are crucial in the supply chain of these large companies. Engineering and consulting firms also play a key role in clusters, as does the government.” 

The Netherlands’ success in the oil and gas service industry relies on family companies in the exploration, field development, and production clusters. Chinese and Korean companies are coming in, but the Netherlands has a top five position, he stressed, which was down to what he called the ‘Dutch Mittelstand’.

Too conservative

The downside of family companies is their inability to adapt to new markets, said Van Oord, adding that they’re often too conservative or find it difficult to embrace succession through changes of generations.

In addition, leaders of family businesses should be patient and not afraid of taking risks. There’s a lot of entrepreneurship involved, according to Van Oord. The largest three container companies in the Netherlands are family businesses. Again, he emphasised the importance of taking risks. “The construction of a €2 billion vessel was taken on by a family business in Delft. I bet that a listed company wouldn’t do that,” he said. “Family companies have a passion for what they do, yet they dare to take risks.”

Leaders in family businesses must be visible, as opposed to anonymous. “They must be passionate about their job because work, family and personal life all mingle. They care about people,” he said, adding that “a successful family company needs a leader with a long-term vision to manage the company for the next generation.”