Class societies add staff layoffs to coronavirus cutbacks

Some class societies such as Lloyd's Register are furloughing staff to weather the economic storm caused by the coronavirus outbreak. Others, such as DNV GL, have temporarily laid off staff.

News ID: 80493

Date: 08 April 2020 - 13:12

While two of the largest class societies have started to cut back on staffing temporarily, most others are adamant they can weather the current storm without needing to furlough workers

CLASSIFICATION society Lloyd’s Register is putting in place “furlough arrangements”, while DNV GL is temporarily laying off workers amid the coronavirus epidemic.

LR chief executive Alastair Marsh said the body has been managing the situation since January, and staff in China are now returning to work.

“We have learnt much from their experience, both from a safety perspective and also from supporting our clients. This has helped us to proactively respond as the virus has spread west,” he told Lloyd’s List.

“As a matter of prudence, where colleagues in Europe have less work, we are applying for government support schemes and putting in place ‘furlough’ arrangements,” he added.

It, along with other societies, has increasingly been using remote technology to inspect vessels, but LR is actively encouraging regulators and recognised organisations to establish a uniform approach on the postponement of ship surveys.

DNV GL has said it will generally accept the coronavirus situation as an exceptional circumstance in terms of granting postponement for those surveys where this is possible based on class rules and statutory conventions.

“In the event that the survey in question does not have a provision for postponement and we are unable to perform the survey, DNV GL will consider the application of force majeure and allow the vessel to proceed to an agreed port for the required surveys.”

It said on Monday that it was reducing staff hours across the group, with partial layoffs for employees in support functions in Norway.

In total, about 10% of the company’s 2,050 employees in Norway are affected, it said in a statement, adding that the layoffs will take place from April 16, and will be in effect for three months.

“Further measures may later be necessary in other countries as well,” said the company, which has a footprint in the oil and gas and renewables sectors as well as maritime.

“The new digital tools and processes we have developed contributed to a strong 2019 for DNV GL,” the group’s president and chief executive Remi Eriksen said. “Now, faced with the physical distancing measures related to the coronavirus, those same tools play an important role in overcoming some of the short-term challenges faced by our customers”.

“Mindful of the economic impact of the coronavirus, DNV GL is taking extraordinary measures to safeguard the company against the expected drop in revenue, including the temporary, partial reduction in working hours for some employees,” he continued. “The extent of these measures will vary dependent on country and business area.”

Prepared to cope

Other classification societies, though, remain confident that the industry disruption will not affect staff numbers.

The American Bureau of Shipping told Lloyd’s List it was “well prepared to weather the storm of the coronavirus pandemic due to the strategic investments we’ve made in people, processes and technologies”.

“Our recently announced expansion and extension of remote survey offerings is one example of how we remain prepared to continue our full industry support,” a spokesperson said, adding that there were no plans at this time to furlough any employees or make any salary adjustments to staff.

Italy’s RINA said coronavirus has had little impact on its operations. Its staff are able to work from home effectively. The marine unit is one of five businesses that includes oil and gas and infrastructure.

Although there has been a slowdown in activity, with some surveys postponed, it has reached an agreement with some of the major flags to keep inspections going, RINA’s boss Ugo Salerno told Lloyd’s List.

It expects some impact to full-year results but “it is not a disaster” as the company has been preparing its systems for some time now. He said no layoffs were planned and although the Italian government has funds it can offer to companies during times of distress, RINA has no plans to tap into this.

It set up an emergency task force and does company stress tests, he said, adding that the company was in a strong position.

French class society Bureau Veritas said measures were in place “to ensure that Marine & Offshore surveys and delivery of services can continue and that requirements for certificate continuity can be addressed to minimise the chance of operational disruption. If either physical or remote surveys are impossible short-term certificate extensions will be available.”

Lloyd’s List understands that some BV staff have been invited to take leave during the disruption so they will be available for work in the second half of the year when a backlog of deferred projects and contracts is expected to hit hardest.

The Polish Register of Shipping said that two-thirds of its workforce is currently working from home, while the rest were working from various offices. It has had to declare force majeure in isolated instances, otherwise it is business as usual insofar as is possible.