Uneven competition, scarcity of talent, rising costs, heavily fluctuating global demand, and closure of shipyards. Since the 2018 dredging industry report by Rotterdam School of Management, Erasmus University, these challenges have only intensified.  In their new report, professors Tarakci and Van den Ende call upon the Dutch-Belgian dredging suppliers and contractors to forge partnerships and build an ecosystem to sustain the sector.
 

“The dredging industry is not just a crucial economic sector; for the Netherlands and Belgium, it is a strategic asset that supports the present and secures the future. It is a lifeline that sustains their roles as maritime leaders and shields their territories from environmental and security threats. With vast areas covered by lakes and waterways and large parts of the countries lying below sea level, dredging is a key value-added activity in managing water levels and maintaining flood defences – an increasing concern as climate change accelerates.” 

CSD SPARTACUS at work
TSHD PRINS DER NEDERLANDEN at work

Murat Tarakci, Professor and Chair of Innovation Strategy at the Rotterdam School of Management, Erasmus University, has been closely following the industry. In 2018, Tarakci and Professor of Innovation Management Jan van den Ende collaborated on the publication The Dutch and Belgian Dredging Industry – An Exploration of the Future. The report focused on the question which strategies the sector might adapt to retain their competitive advantage. It advised the sector to reinforce collaboration “vertically as well as horizontally” and explore new business models. In addition, it called upon national governments and European institutions to facilitate innovative and sustainable projects and support the sector “by putting much more pressure on the creation of a level playing field internationally in this sector.”

In 2024, with a new report by Tarakci and Van den Ende in the making, these calls to action have only gained in importance and urgency.

“The industry can no longer bury its head in the sand and ignore what is going on in the market: overwhelming Chinese competition and commoditisation of dredging equipment,” says Tarakci. “The Dutch-Belgian dredging industry needs to join forces; the old playbook based on Michael Porter’s five forces no longer works in favour of the sector, but against it. Porter’s five forces framework emphasises cut-throat competition and dominance over suppliers, customers, new entrants, competitors, and customers ability to find substitutes for the sector's products. In order to sustain a dredging sector and secure national control over land and water, suppliers and contractors need to build an ecosystem, innovate together and work on joint value creation.” 

Murat Tarakci

The Dutch-Belgian dredging industry needs to join forces; the old playbook no longer works for the sector.

Murat Tarakci - Professor Rotterdam School of Management, Erasmus University

Uneven competition 

It will come as no surprise that the upcoming report's key question picks up the story where it was left off in 2018: how can we sustain a competitive dredging ecosystem in the Netherlands and Belgium or even develop it further?

According to Tarakci, the challenges have only intensified.

“Asian competition, backed by substantial government support, is showing steep growing and increasingly winning contracts in regions in which European companies once dominated. The lack of an industry policy, coupled with an open stance towards foreign competition, may leave Dutch and Belgian dredging companies vulnerable to foreign entrants. This could lead to a decline in competitiveness, as companies face uneven competition from state-supported rivals.”

“In addition, access to external funding and subsidies is crucial to large-scale dredging projects, particularly those with long payback periods or high upfront costs. In contrast to their foreign competitors, European dredging companies often face challenges in securing such financial support.”

Challenges to the sector abound, according to a sneak peek into this year’s report: examples include uncertainty about future energy sources and alternative fuels, scarcity of technical talent, rising costs of materials and labour and heavily fluctuating global demand. Closure of shipyards in Europe and the offshoring of manufacturing to regions with lower labour costs is another. 

Welder at work
TSHD Breydel DEME

According to the report “the number of shipyards that can build dredgers has decreased considerably. Many yards in Belgium, The Netherlands, Germany, Croatia, and Spain have gone bankrupt. The remaining European shipyards’ financial position has also deteriorated sharply, making it increasingly difficult to build large and complex dredging vessels in Europe.”

As the dredging industry struggles with these challenges, it also needs to keep an eye on rapid technological advancements and innovations that are redefining the landscape. Among these, data sharing, AI, alternative fuels, and autonomous vehicles and vessels are the most prominent. Tarakci has a strong message: “The industry as a whole is on the brink of disruption. Don’t be like the European car industry and lag behind Chinese electric vehicle manufacturers. These technological disruptions offer the dredging industry an opportunity to shake off the dust and leapfrog to regain its competitive advantage. Critically, the Dutch-Flemish dredging industry needs to take this leap collectively!” 

Partnerships and ecosystem building 

The report mentions three scenarios: a ‘green’ scenario, which is sustainable, highly innovative and with low levels of protectionism around the globe; another which the report calls the ‘teal’ scenario, which is shaped by medium levels of global protectionism, regional importance of sustainability policies, and high levels of technology development. A third ‘brown’ scenario is marked by fierce competition, high levels of protectionism, weak sustainability policies and resource scarcity, accelerated by climate change.

“Across all three scenarios,” Tarakci says, “certain themes consistently emerge as critical to success: technology and innovation, partnerships, and attracting talent. These elements form the foundation of the industry's ability to navigate the uncertainties and opportunities ahead.  

CSD KRIOS
Van Oord dredging vessels at work

“Consider technology and innovation. Whether it's adopting AI and autonomous vessels in the green scenario, focusing on incremental innovations in the teal scenario, or relying on automation for cost reduction in the brown scenario, the industry's capacity to innovate will determine its competitive edge. Partnerships and ecosystem building are equally crucial, whether they involve regional alliances, co-opetition, or strategic collaborations to pool resources and share risks.

“These partnerships enable the industry to adapt to varying degrees of market protectionism, resource availability, and regulatory environments. Attracting and developing talent is the third cornerstone, as the industry's ability to draw skilled workers and foster a versatile workforce will directly affect its operational success and ability to innovate.” 

Murat Tarakci

An ecosystem approach offers a significant advantage by focusing on the interdependencies and collective success of multiple actors rather than viewing the market as a battleground.

Murat Tarakci - Professor Rotterdam School of Management, Erasmus University

The report mentions the ‘HR Ecosystem’, introduced by the Dutch Ministry of Defence, as a model for the dredging industry: “Through an ecosystem encompassing government bodies, educational institutions, and private sector companies, the Ministry of Defence has created a network in which talent can be continuously developed, shared, and deployed across a variety of sectors based on evolving needs. For the dredging industry, adopting a similar HR ecosystem could be transformative. By building it, the industry can ensure a steady pipeline of skilled workers while fostering greater collaboration between companies, universities, and government agencies.”

Tarakci concludes: “An ecosystem approach offers a significant advantage over Porter's five forces framework by focusing on multiple actors' interdependencies and collective success rather than viewing the market as a battleground of firms. The industry needs to work on building stronger relationships and fostering a culture of trust to ensure collaboration efforts are successful.”

The report is expected to be published at the end of 2024 or early 2025.  

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