Norway’s economy has weathered the storms of the past three years but most Norwegian companies are preparing for what some fear may be crisis times ahead. While many see signs of slowdown, though, others aren’t worried and don’t see the euro zone trouble as a major threat.
“This is an incredibly difficult and uncertain situation, which can have many different outcomes,” Camilla Grieg, head of the Bergen-based Grieg Group, told newspaper Dagens Næringsliv (DN) earlier this month. She’s been worrying about a collapse of the euro and how her family’s shipping-based business can steer an steady course.
“We are heavily involved in shipping and seafood and the markets are challenging,” Grieg said. Grieg Shipping alone has a fleet of 26 vessels, operates another fleet of between 15 and 20 dry cargo ships and is in the midst of its largest newbuilding program ever, reported DN, with 12 new vessels on order from shipyard in China and South Korea.
Like other shipping companies, Grieg built up a buffer during the good times of the past decade but faces challenging chartering markets now, the effects of the global finance crisis and a drop in consumer demand. “We’re trying to stay flexible, to deal with the various effects of the crisis,” Grieg told DN. “But 2012 will be tough.”
Industrialist Jens Ulltveit-Moe, active in several fields from restaurant operations to shipping and offshore, doesn’t think next year will be as bad some fear. “I don’t see any catastrophes on the horizon,” he told DN. He thinks European leaders are tackling the crisis and concedes growth will be low in the euro zone for many years, but expects “the rest of the world will have acceptable growth of between 2-3 percent.”
The Norwegian central bank’s decision to cut interest rates earlier this month, to help boost Norwegian exports and offset funding challenges, was followed by a rise in the stock market, and the chief economist at First Securities, Harald Magnus Andreassen, is among those who don’t think the downturn in Europe will be as steep as originally thought. “The economy in Europe is weak, but not life-threateningly weak,” Andreassen told DN just before the Christmas holidays.
Some of Norway’s largest companies, including Statoil and Norsk Hydro, though, have been bracing for a downturn. DN reported back in November that Statoil had laid crisis plans for a breakdown in the eurozone, while Hydro managers are prepared for a lean 2012. Large projects have been put on ice to save money, according to DN, with new investments in plants in Norway and Qatar postponed. Hydro chief executive Svein Richard Brandtzæg told DN that the euro crisis has forced restructuring and staff cuts.
“The long-term outlook for aluminium is still promising, but we clearly see that the debt situation in Europe is negatively affecting our markets,” Brandtzæg said. He said Hydro needed to impose “financial discipline and risk management.”
Views and News from Norway/Nina Berglund
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