Possibilities for establishing Norwegian –Chilenian projects.

Innovation Norway’s work with the Seafood sector in general and aquaculture in particular.

What does Norwegian companies have to offer?

Presentation AquaNor 2007 Trondheim

Svein Hallbjørn Steien Veterinarian AVSF

2

Contents:

Facts about Norway

About Innovation Norway

Norwegian seafood Sector

Innovation

IRD Contracts

The presentation from IN in the workshop will be a short version of this file

Facts about Norway

4

Minifacts about Norway 2007

5

Norwegian petroleum activities….

6

New energy

7

8

Fishing and Aquaculture 1995 vs. 2005

Organisation and management Innovatio Norway

10

Innovation Norway

• Established 19 December 2003 as a statutory company

• Started its activities on 1 January 2004

• Took over the initiatives formerly offered by TheNorwegian Industrial and Regional Development Fund (SND), the Norwegian Trade Council, the Norwegian Consultative Office for Inventors (SVO) and the Norwegian Tourist Board.

• 750 employees in offices distributed throughout all of Norway’s counties and in 30 countries. The Head Office is located in Oslo.

11

Objective

”Innovation Norway’s objective is to

promote private- and socio-economic

profitable business development

throughout the country and to release

the commercial opportunities of the

districts and regions by encouraging

innovation, internationalisation and

profile-building.”

12

Vision

”We give local ideas

global opportunities”

13

Seamless service, based on customer needs

• Innovation

• Internationalisation

• Profile building

• Skills-based financing

• Consultancy

• Putting together networks

• Network building

As a customer you have your needs – together we

will find a solution to those needs

Focus Initiatives

14

Innovation Norway – an active business partner

• Regional Authorities

• The Norwegian Ministries

• Local Authorities

• The Research Council ofNorwegian

• SIVA - The IndustrialDevelopment Corporationof Norway

• The Norwegian Design Council

• The bank sector and financial institutions

• NHO - Confederation of NorwegianBusiness and Industry

• NSEC – The Norwegian SeafoodExport Council

• The Industry

• And others…

15

Tromsø

Bodø

SteinkjerTrondheim

Ålesund

HermansverkBergen

StavangerKristiansand Arendal

Tønsberg SarpsborgSkien

Drammen Oslo og Akershus

Molde

Hamar

Vadsø

Lillehammer

Tynset

Tinn

Førde

• Regional knowledgeof business and thecommunity

• Regional differentiation ofInnovation Norway’sproducts and services

An organisation close to its customers

District Offices

Local Offices

Alta

16

Customer’sproject

Government incentives

RefiningUnderstand Decide

The way in for the customers

Regional priorities

17

The Innovation process

• The Innovation process, or to innovate (to achieve innovation), requires coordination (competition and collaboration) between a number of private and public players, and forms part of what is called the innovation system.

• Innovation takes place locally with national and international links.

Source : Parliamentary bill 51 INITIATIVES FOR AN INNOVATIVE AND CREATIVE INDUSTRY

18

Innovation Norway’s strengths

• Decentralised and close to its customers

• International and close to its markets

• Broad range of skills in commercialisation, internationalisation, company and business development and profile building

• Broad range of financial schemes for risk hedging

• Network connections to other skills, financial and initiative players

• Close contact with national and regional authorities

• Close contact with the Foreign Office

19

Effective and result-oriented

Around NOK 4 billion for the reinforcement of Norwegian industryInnovation Norway contributes to the establishment and protection of 7,000-8,000 jobs each year

Customer surveys indicate that at least 90% ofInnovation Norway’s funds is devoted to projects thatare regarded as important for companies’ survival and profitability development

70% of the companies who were promised funding in 2000 think that the projects will lead to a high degree ofskills development in one or more professional fields

Seafood Sector in Norway

21

Natural advantages

Wild Atlantic salmon population

Knowledge about hatching

Clean water

Long coast, numerous of potential sites

• Coast line: 83.281km included fjords and islands (equatorial line: 40.077 km)

Temperatures fit for farming salmon and trout and marine cold water species

Well-built infrastructure

Coastal pioneers, coastal culture

22

An important industry for a small country

Landed catches 2.5 mill. tonnes

Farmed salmon and trout 0.6 mill. tonnes

95 % for export - all over he world

Generating export revenues close to NOK 36 billion NOK

The challenge is to increase the profit

A sustainable seafood industry that will take over for oil/gas in 2030!

Total production (2006) of

3.1 million tonnes

23

24

Regulation and legislation

Salmon farming is strictly controlled by a number of laws and regulations administered by 4 ministries:

• Ministry of Fisheries has the superior responsibility

The system imposes limitations with regard to the maximum allowed biomass of each license, as well as to the maximum number of licenses given

The licensing system is the main instrument used by the authorities to maintain the fish farming industry as a profitable and viable regional industryPhoto: Fjord Seafood

25

Creativity vs. Innovation

Innovation is doingsomething about it

Creativity is to create

something new

26

THIS IS INNOVATION.

27

Interplay for Innovation – Seafood sector

The Priority of Innovation Norway:

Interplay based on strategic development

Ministry of Fishery- and Coastal Affairs

Industry and their Organizations

Norwegian Export Council

Fishery and Aquaculture Research Found

Research Council of Norway

Counties

R&D Institutions

28Systemizing the World of Aquaculture and Fisheries 25.04.2005

Norway; harvest quantity Atlantic salmon and Trout from 1974 – 2005E

Tonnes round weight

0

50 000

100 000

150 000

200 000

250 000

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350 000

400 000

450 000

500 000

550 000

600 00019

74

1975

1976

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1987

1988

1989

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2004

2005

E

29Systemizing the World of Aquaculture and Fisheries 2.6.2004

Development in COP and market priceDevelopment in COP and market price

(FOB Norwegian border) (FOB Norwegian border) -- world supply of Atlantic salmonworld supply of Atlantic salmon

1987 1987 –– 2004E2004E

Inflation adjusted. Basis 1998

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

NO

K/k

ilo

0

150

300

450

600

750

900

1 050

1 200

1.00

0to

nnes

(rou

nd w

eigh

t)

Average export price FOB Norwegian border, fresh gutted salmonAverage cost/kg fresh gutted salmon(FOB Norwegain border)Global supply of Atlantic salmon

30©

150 companieswith appr. 840concessions in operation by theend of the yearProduction appr. 496.000 tonsSalmon + 60.000 tons Trout

OVA SMOLTS ONGROWING WELLBOATHARVESTING/PROCESSING

SALES AND MARKETING

Appr. 15-20 producers of ova

Appr. 255mill. eggs + trout, arctic char and halibut ovaappr. 39 mill

VALUE OF THE NORWEGIAN SALMON INDUSTRYVALUE OF THE NORWEGIAN SALMON INDUSTRY 2003E2003E

FarmedFarmed Salmon, Salmon, TroutTrout and and otherother speciesspecies

Appr. 180 smolt producingplants in operation

total delivery in2003 appr 135 mill. smolt +ca. 17 mill. trout+ other species

Appr. 100 approvedwellboats

100 mill 1.000 mill 6.800 mill 300 mill 2.700 mill 900 mill

Appr. 120 processing and packing plants.

Total harvestappr. 508.000tons salmon +75 000 tonstrout.

Total harvestappr. 583.000 tons

TRANSPORT

600 mill

7.900 mill 8.200 mill 10.900 mill 12.400 mill 1.100 mill

Appr. 120exportershandling bothexports and domesticdistribution

20 of thesesell 80% of thequantity

Transportto market carried out by Norwegiancompanies

11.800 mill.

150 companieswith appr. 840concessions in operation by theend of the yearProduction appr. 496.000 tonsSalmon + 60.000 tons Trout

OVA SMOLTS ONGROWING WELLBOATHARVESTING/PROCESSING

SALES AND MARKETING

Appr. 15-20 producers of ova

Appr. 255mill. eggs + trout, arctic char and halibut ovaappr. 39 mill

VALUE OF THE NORWEGIAN SALMON INDUSTRYVALUE OF THE NORWEGIAN SALMON INDUSTRY 2003E2003E

FarmedFarmed Salmon, Salmon, TroutTrout and and otherother speciesspecies

Appr. 180 smolt producingplants in operation

total delivery in2003 appr 135 mill. smolt +ca. 17 mill. trout+ other species

Appr. 100 approvedwellboats

100 mill 1.000 mill 6.800 mill 300 mill 2.700 mill 900 mill

Appr. 120 processing and packing plants.

Total harvestappr. 508.000tons salmon +75 000 tonstrout.

Total harvestappr. 583.000 tons

TRANSPORT

600 mill

7.900 mill 8.200 mill 10.900 mill 12.400 mill 1.100 mill

Appr. 120exportershandling bothexports and domesticdistribution

20 of thesesell 80% of thequantity

Transportto market carried out by Norwegiancompanies

11.800 mill.

31

Fish health - healthy fish without use of medicine

Fish health – importantNorway: “no” needs for antibiotics

• Good sites• Only one generation per site: Site

rotation - fallowing• Good management – fish welfare• Good vaccines• Strict veterinary control of all

farms• Focus on resistance to medicines• Moving live fish is strictly

regulated• All medicines approved according

to environmental effectsNorwegian research program for fish

healthFish health – a never ending story

0

100 000

200 000

300 000

400 000

500 000

600 000

700 000

1981 1984 1987 1990 1993 1996 1999 2002

Volu

me

(tons

wfe

)0

10 000

20 000

30 000

40 000

50 000

60 000

Ant

ibio

tics

(kg

activ

e su

bsta

nce)

Volume salmon and trout Consumption antibiotics

32

The Innovation process

• The Innovation process, or to innovate (to achieve innovation), requires coordination (competition and collaboration) between a number of private and public players, and forms part of what is called the innovation system.

• Innovation takes place locally with national and international links.

Source : Parliamentary bill 51 INITIATIVES FOR AN INNOVATIVE AND CREATIVE INDUSTRY

33

Internationalisation and innovation to be integrated into our services

ServicesServices

Internationalisation Image-building

Innovation

Regular review of our portfolio will result in a well-founded and clear range of services

Regular review of our portfolio will result in a well-founded and clear range of services

Improvmentof knowledge,

competenc, networking,

financialmodels etc.

34

Our vision

Company

Supplier Trondheim

KnowledgeTokyo

Competitor/partner Berlin

CustomerRio

TechnologyHorten

InvestorSan Francisco/OsloIN

”We give local ideas global opportunities” – because an innovation system knows no boundaries

”We give local ideas global opportunities” – because an innovation system knows no boundaries

Customer needsCustomer needs

35

Local ideas and opportunities

Participants in programmes & initiatives(FORNY, Skattefunn, NCE, ARENA, sector program-mes...)

Global opportunities and

ideas

(Services from network abroad)

We will establish one business model for customer service across national borders

Officesabroad

Companies that make direct enquiries to our offices abroad

Regionaloffices(clientassessment)

HQ/PS provide strategic

governance

National coordination

Large-scale nationalinitiatives/projects

Global ideas get local opportunities!

Local ideas get global opportunities!

Business modelBusiness model

Common principles for own input when allocating money and hoursCommon principles for own input when allocating money and hours

36

…but Norway is lagging behind other European countries

0 %

1 %

2 %

3 %

4 %

5 %

0 % 5 % 10 % 15 % 20 % 25 %

EU25FranceGermany

Netherlands

Iceland

United Kingdom

Share of R&D investments financed from abroad (2003)

R&D-investments/GDP(2003)

Finland

Sweden

Norway

Denmark

Kilder: Eurostat

37

…and examples show that companies areinterested in Norwegian R&D…

Yahoo and Google have both set up R&D organisations in Trondheim the last few years – Yahoo as result of a take-over, Google as a greenfieldoperation

38

An An agreementagreement betweenbetween a a suppliersupplier (small or medium (small or medium sizedsized company) and a company) and a ””largerlarger”” customercustomer

PurposePurpose: to : to strenghtenstrenghten the the abilityability of small/medium of small/medium sizesizecompaniescompanies to to carrycarry out market out market orientedoriented researchresearch and and development, development, throughthrough coco--operationoperation withwith a a demandingdemandingcustomercustomer

FundingFunding conditionsconditions: normally 1/3 : normally 1/3 eacheach -- the the suppliersupplier, , the the customercustomer and INand IN

TheThe rolerole of the of the customercustomer: to be a : to be a demandingdemanding customercustomerwithwith good good referencesreferences and market and market channelschannels

Industrial Industrial ResearchResearch and Development and Development ContractsContracts ((IRDIRD--contractscontracts))

39

A profitable partnership

InnovativeNorwegiansupplier

IFU Contract

Technologyknowledge

Market Market knowledgeknowledgeMarket Market accessaccess

Offer:New products or solutions

Requirement:New solutions for a global market

Demandinginternationalcustomer

InnovationNew industryGlobal trade

40

BUSINESS-CONSEPT

From a GOOD idea to a GREAT ideaJ. Collins: “Good to great”

PRODUCT

Core-delivery

Added values

AlliancesLeadership

Capital

Knowledge Services

Technology

41

Why choose a Norwegian SME for product development

• Need for competencies in areas where Norway is leading (ICT, offshore, energy, engineering, aquaculture, etc.)

• Advanced industrial standards and modern plants

• Relatively low salaries for engineers

• Stable economic conditions

• IFU offers a strategic tool to direct and support product development (reduction of risk/cost in well tried scheme/established framework)

• Extended network in other areas

42

The client company gives access to markets

Client

Supplier

Market

Project

Commercialisation

Possi

ble co

mmercial

isatio

n

altern

ative

s

43

IFU value proposition

Norwegian technology supplier:

• Access to international market

• Reference client, improved distribution or similar.

• Feedback from demanding client, access to knowledge

• Funding/Reduced cost

”Locomotive”/International corporation:

• Access to technology, resources, knowledge, new product/service/process

• Reduced risk/cost due to IN grant and support

Innovation Norway (IN)/Norway:

• Successful and robust Norwegian technology companies

44

Shared commercialisation

Client

Supplier

Market 1

Project

CommercialisationMarket 2

Commercialisation

45

Supplierca. 60 – 70%

Client

Public financing max 35 %

The contribution from Innovation Norway is a cash grant to the Norwegian company (supplier company).

Financial model

46

IFU grant in practical terms

• IN can grant funds up to 35% of the project costs

• IN may use a rate lower than 35%, if one or more of the following conditions are met:

• The project is related to a mere upgrading of existing products (less innovation, less grant)

• The Norwegian supplier company has received IFU support for other projects

• SkatteFUNN is available

• The potential profit is high

• IN is flexible in terms of implementation

• The local IN office in Norway is responsible for evaluating and approving IFU applications

47

IFU financial framework (project funding)

• A funding plan has to be set up based on the total cost of the project as defined

• IN can provide a grant of up to 35% of IFU project costs (25% if Norwegian company is not an SME)

• The participating companies cover the rest according to their contract

• The IN grant is paid out to the Norwegian company at the end of the project

• IN’s payments may be staggered if necessary

48

Which processes can be included in a project?

• Technical development work up to prototype, process or system solution stage

• Can include smaller test series

• Testing, certification and documentation for product/service/solution

• Market research and preliminary presentations to client for feedback (Subject to evaluation - Focus on pilot client/customer testing)

• Some project administration (Subject to strict evaluation)

49

IFU financial framework (project cost base)

• Man-hours included in cost base: • Supplier company’s and client company’s own time contribution

• Formula: 0,1 % of annual salary

• Direct costs to be included :• Costs related to the purchase of necessary items, raw

materials, components, instruments and equipment by the Norwegian supplier company

• Purchase of services and consultancy work, including purchase of research findings, technical know-how, design, sub-contracting, etc. by the Norwegian supplier company

• Direct costs associated with market research and preliminary presentations to potential clients for feedback, as well as administration as specified and accepted in application

50

IFU application top tips

In the application evaluation the following is key:

• Commitment from the client to take significant part in the project by spending time (man-hours)

• The size and the market reference effect or market access of the client

• The level of innovation of the project is significant

• Eureka status will be viewed favourably

• Available IFU funds may impact probability of EUREKA approval

51

IFU terms and conditions

• The largest part of value adding must be provided by Norwegian supplier

• The Norwegian supplier must retain intellectual property for the product/service developed

• The funding shall act as a trigger for getting the project underway

52

Efficient Ballast WaterEfficient Ballast WaterEfficient Ballast Watertreatment and reducedtreatment and reducedtreatment and reduced

corrosion.corrosion.corrosion.

Example

53

ScanWind ASA

• Spinnoff from Kvaerner 2000

• Customer: NVE and Enova SF

• Energy producer: Nord-Trøndelag E-verk

• 3MW direct driven wind mill

First wind mill without gearbox

Cooperation with Siemens AG

• Project total cost 63 MNOK

OFU 2+10 MNOK

54

Eksportutvalget for Fisk, Bjørn-Erik Stabel, Stål HeggelundBocuse’ dOr, Eyvind Hellstrøm , Det norske kokkelandslaget

Øyvind Seipajervi, Bugøynes Kongekrabbe ASKjell Grønn, IN Paris, Truls Herland, IN Vadsø, Roger Pedersen IN Alta

Petter Ustad, Svein Hallbjørn Steien, IN HK

Norwegian King Crab and Norwegian White Halibut

for

Bocuse d’Or 2007

Photo: S.H. Steien

55

Vision: A profitable seafood business!

Strategy:

• Build connections between Norwegian producers and the supermarkets

Goal:

• Increase value per kilo

56

Optimise the whole value

chain to market needs

Consolidate quality in

existing production

Innovation towards new

species and products

Support competence

development and networking

Todays challenges and our priorities

57

58Photo: Jon Arne Grøttum

Thank you for your attention!