Local Infrastructure

In the past the business area has been operated as on a geographical basis with a significant degree of autonomy devolved to the regions. While this approach has anchored strong ownership to local business opportunities, it has not ensured optimal utilisation of specialist expertise and capacity and adequate realisation of economies of scale and competitiveness. To address this situation, from 2012 we will establish a more overarching management system based on market segments involving clearer product responsibility, while responsibility for ongoing production will continue to be located locally in the departments.

 

 

The business area’s deliveries target five main market segments:

 

Infratek’s operations within the distribution grid sector are located in Norway and Sweden. Services cover distribution grids and some technical installations at transformer stations. The work involves construction, maintenance and repairs, as well as contingency services. Customers include grid operators and contractors, and other enterprises needing to connect to or change existing electrical infrastructures.

 

Infratek delivers services to constructors and owners of infrastructure for tramways and railways. The services include supplies within foundations, tracks and points, signal, safety and telecommunication installations, power supplies, automatic ticket machines and IT systems.

 

Street lighting services include the planning, construction and maintenance of existing and new street lighting facilities. Infratek also provides lighting services for roads, sports facilities and building facades. Customers include road contractors and owners, as well as public and private entities.

 

Fibre-optics/telecoms services include the construction and maintenance of technical installations for fibre-optic networks and associated customer access networks. Customers include owners of telecoms and computing infrastructure, as well as service providers and equipment suppliers.

 

Infratek undertakes the construction of district heating networks, the connection of new customer distribution installations, as well as maintenance, troubleshooting and contingency services for existing facilities. Customers include energy companies, manufacturing plants with their own heat production facilities, and end-users of district heating systems. During 2011 Infratek strengthened its position as a supplier within the construction of district heating in Eastern Norway. In addition to several important project deliveries to Hafslund Varme, Infratek has also delivered to Akershus Energi Varme and entered into an agreement with Statkraft Varme for the construction of district heating in Ås municipality at the Norwegian University of Life Sciences (UMB).

 

In overall terms Local Infrastructure posted satisfactory results in 2011. After a very demanding start to the year, in particular within the division Distribution Grid Norway, sales and profitability picked up during the second half of the year. Local measures were implemented to align capacity with the market, and as part of the Best Practice organisational project a number of measures were identified and implemented in order to boost competitiveness and profitability. The trend of rising productivity in Sweden was thus maintained. We have also managed to check the downward trend in Norway.

 

At NOK 1,989 million (NOK 1,858 million), deliveries within building, operation and maintenance of local infrastructure contributed 68.8 per cent (67.9 per cent) of the Group’s sales and were achieved by 1,120 staff (1,253).

 

 

The bulk of the business area’s customers are signalling that they are in the early stages of a lengthy reinvestment period, although the scope of such investments could be impacted by the uncertain global economic climate over the short term. Society’s expectations with regard to uptime for critical infrastructure are continuing to rise, leading to a corresponding increase in the quality demanded of the technical installations. Climate change and demand for the establishment of a more renewable energy system are also resulting in a need for new generating facilities (primarily wind and heat) and associated infrastructure. This is also leading to an increased focus on public transport and in particular railways/tramways. Exciting technical developments are taking place in the area of electricity distribution, with the introduction of smart-grid technology, and in the area of street lighting, with new and more energy-efficient solutions. Together, these factors are opening up interesting possibilities in the majority of Local Infrastructure’s market segments.

 

With an increased need for expertise and capacity to cater for the expected growth, and generational shifts underway in many of the technical environments, the spin-off of operative businesses and market utilisation will become increasingly relevant. This is presenting a number of new opportunities for Infratek through business transfers or acquisitions. Such opportunities are more often than not politically motivated and require a good insight into local processes and a degree of patience to achieve desired positions.

 

Based on the framework conditions and the size of the national markets, Sweden remains the most promising market. Major uncertainty attaches to the distribution market in Norway due to the introduction of the Competence Regulation, which will enter into full force from 1 July 2013. This regulation requires a certain amount of expertise and capacity to be directly controlled by the grid companies. This will lock up sorely needed capacity and flexibility in an expanding market. Local Infrastructure currently has no representation in Finland, despite the country’s promising and well-functioning market. Infratek will consider the acquisition of operations in Finland if suitable candidates in urban locations should present themselves.

 

During 2011 we drew up a new, overarching strategy for Local Infrastructure for the period 2012–2015. The main elements of the strategy comprise a continuing concentration on the major distribution companies in the Nordic region and a heightened focus on the railways market and on “multi-utility” services in the major conurbations of Stockholm, Oslo, Gothenburg and Öresund including Malmö. In this context “multi-utility” is deemed to denote the market segments of lighting, fibre/telecoms, advanced metering systems and district heating.

 

In 2012 Infratek will prioritise further development of existing business through the exchange of experiences and operation of efficient systems in order to implement Best Practice across the entire business area. The company will use its size, geographic presence and market expertise to leverage competitive advantages in the local markets.

 

The new strategy will be implemented in stages. In 2012 the largest changes will take place within the railways segment, including as a result of the contract entered into with the Swedish Transport Administration concerning operation and maintenance of railway lines north of Stockholm and the acquisition of the company WKTS AB. During 2012 important negotiations will also be held with Fortum, which is putting its entire portfolio in Norway, Sweden and Finland out to public tender. Infratek will also endeavour to maintain its strong position in this area in the coming period.

 

Lighting up Oslo Infratek is responsible for operation and maintenance of public street and road lighting in Oslo. In 2011 we were awarded a contract by the City of Oslo. The work started on 1 June 2011 and the contract has a term of two years, with an option for a further 1 + 1 years. The contract involves the operation and maintenance of around 60,000 lighting points in the Norwegian capital.