#49 In Conversation with The Norwegian Ambassador & Innovation Norway

Speaker A: Talking Industry topical debate from the world of engineering, automation and uh, manufacturing. Brought to you by DFA Media Group. This episode is sponsored by Smart Machines and Factories, the leading portfolio for digital solutions in manufacturing. Www.smartmachinesandfactories.co.uk

Speaker B: hello and welcome to another talking industry podcast. My name is Aaron Blutstein and I'm Managing Editor for Smart Machines and Factories, Portal Plant and Works Engineering and Hydraulics and Pneumatics magazines. I'm joined today by Thor Huttrum, um, Norway's ambassador to the UK since August 2023 and Hild Huckleberg, Director, UK and Ireland at Innovation Norway. Ambassador and Hild, thanks for joining me for this talking industry podcast today. Um, could you both just give a brief introduction regarding your background so our listeners get um, a little bit of a feel of who you are. Ambassador, if you could go first.

Speaker C: Thank you. Thank you, uh, Arun, and thank you for the invitation to participate. Um, I'm the Innovation Ambassador in the uk. I've been here uh, for about six months. So uh, before that I was the uh, permanent Undersecretary in the Ministry of Foreign affairs in Oslo. I've been a Norwegian uh, diplomat for over 30 years. Been uh, posted to New York as an Ambassador there to the United Nations. I've been ambassador in Afghanistan, um, in Sri Lanka and have had all kinds of various leadership positions in the ministries. Uh, so um, basically an experienced Norwegian diplomat to, is happy to be in the United Kingdom, a friendly neighboring country.

Speaker B: Okay, thanks. Um, Hild.

Speaker A: Yes. My background is from the Trade Commission side so I was first Special Advisor to the US West Coast Silicon Valley and then arrived in London in 2006. I've been within NIH Norway helping Ah, smaller medium sized and larger companies expand into large, more mature markets. As um, ah, a background, I'm a mechanical engineer, so I worked a lot within the industrial and the digital space.

Speaker B: Okay, great. So you're well prepared for today. Um, great. Um, I'd like to begin by finding out a little bit more about the current state of business relations between the UK and Norway, particularly in terms terms of offshore manufacturing and engineering. Ambassador, could you answer perhaps this question?

Speaker C: Yes, I'll do that Aaron. But first I think to sort of, before I come to more specifically offshore manufacturing, a little bit overview of the economic relations between our two countries. You know, geographically we are very close to each other. I mean uh, it's only the North Sea between us and um, historically UK and Norway have always have had sort of close, uh, you know, both cultural ties but also Trade relations. And um, and I think it illustrates that quite clearly because UK is actually Norway's biggest or largest trading partner and the Norway's is only a population of 6 million. BE are actually UK's 11th largest trading partner which is not bad for a, for a small country. So that sort of tells something about the kind of economic commercial integration. Um and and of course uh, a lot of the export that that ah comes from Norway to the UK is oil and gas. And the I think we provide almost one third of uh, of all the energy need uh that UK has. Uh and of course it is also a big responsibility for us uh when it comes to energy security that uh, UK is dependent on Norwegian uh, energy. So uh, if you look at the big picture here, about over 80% of Norway's uh, sort of exports of goods are basically oil and gas. Um so oil and gas dominate the trade. Uh and um, you can say that uh, innovation or all kinds of trade promotion is basically directed towards the rest. A 20% rest and trade in services. And of course in true services uh, uh the UK has an upper hand. They are stronger there than, than than us. There is uk uh is in lead and have a larger service volume that they export to Norway and be export to the uk. So that's um, that's sort of the, the big, big picture. And of course you look at the offshore manufacturing that's you know to large extent part of those rests, you know the 20% uh because um, those manufacturing, manufacturing services are to large extent you know offshoots of the big energy element in our trade relationship. So I think that will give the listener a sort of feeling of the kind of relationship we have. And that's the kind of a relationship that developed over many, many years because we found oil and gas in the North Sea more or less, you know at the same time the sector developed on each side of the maritime border, uh we share the continental shelf. And also over years it's developed and kind of an integrated you know, partnership and a business segment you know around energy in the North Sea. And there of course you have uh, maritime services and of course in the manufacturing element related to building the Condi platform, the types and all the sort of the stuff you need to do exploration, uh, and also integration when it comes to companies. I mean look at Equinor UK uh is 40 years of age and then a substantial company in the UK as it is in Norway. So I think that sort of gives a rough picture of uh, our relationship and partnership.

Speaker B: Mhm, mhm. How do you find that political and economic factors actually influence the partnership between the UK and Norway? Um, in offshore manufacturing? I mean, is it, how would, how would you uh, how would you judge that the partnership.

Speaker C: What do you mean? Or how do you, can you repeat, repeat that?

Speaker B: Well, the, the, the political and economic factors, how do they influence the, the Norwegian.

Speaker C: Yeah, in that sense, you know. Yeah, of course. I mean for us, uh, as any um, actor, uh, predictability is important. And of course there's been. The United Kingdom has making us. I made its own sovereign decision to leave the, the European Union. And um. And after that we were able to uh, to uh, to negotiate a uh, free Trade Agreement which works very well and safeguards our interest when it comes to trade and, and investments. There are some challenges but uh, but we've been able to work very closely with the, our British partners to find pragmatic and practical solutions to those problem. So that's where we are. I mean uh, this is the reality and it hasn't really affected our trade uh much as I can see from the figures.

Speaker B: Mhm. Uh, and um, what initiatives or policies are actually in place to support and promote um, offshore manufacturing partnerships between the UK and Norway?

Speaker C: I think the most important is of course the Free Trade Agreement which in a sense ensures the free trade and frictionless free trade and also investment. And if you look at um, the investments for figures, they're quite substantial. Of course the portfolio investments from sovereign wealth fund is massive. But also if you uh, look at FDIs, that's also quite substantial. And then we have all kinds of uh, schemes and policies and support programs uh to increase our export. It's seen from our. We would like to sort of develop the market even deeper and further. And here perhaps I would like in uh, Hilda to come in representing Innovation Norway uh, here in the uk. So Hilda, please fill in.

Speaker A: Yeah, yeah. So I can meet perhaps speak a bit about innovation or when how we are instruments for some of the activities that we do. Ah, of course in the UK but around the world and um, in, in terms of the UK we, we have been on the ground since 1957. So it's always been a, a long and very good relationship. Um, Innovation Norway uh, was established back in 2004 and um, it's crucial for the Norwegian government and the county authorities in Norway in driving value creation in terms of business development, green growth and export opportunities. So we serve as a gateway for Norwegian companies um, that wanted to access for instance the UK and Ireland. And we provide capital, we provide expertise, networks, uh we try to foster growth ambitions, uh, both individually and within networks. And of course there is a strong um, relationship between similar organizations in the UK And I would say that within the space of the uh, green um, transition, but also the digital transition is in um, the core of our focus. And um, we also try to put on a lot of the promotional activities. So last year for instance, together with the embassy, we had a large trade organization to the UK which would have uh, a great turnout for both countries, I believe.

Speaker B: Okay, um, how do you um, how do UK companies get involved with innovation? Um, Norway? How does it actually, how does it actually work?

Speaker A: So one of the things that we do, we try to be active in the UK markets, uh, bringing companies together that could be through conferences, it could be through um, actively, um, try to match companies. We also have inward investment arm. So it means that companies wanted to go to Norway, take interest in what we do back home. We will also be able to introduce those company um, uh, to uh, key players in Norway.

Speaker B: And are there any particular technologies which you find that UK companies are going to Norway and say oh, this is uh, how we can. There is some synergy here. We can, we can work together. Is there anything which stands out to you, which you think? Ah yeah, that's definitely something which is developing.

Speaker A: I guess like Torres said previously, the long relationship we had through the oil and gas and the successful developments that we've seen over the years, that's kind of m. That's been um, already uh, a very good relationship between Norwegian and uh, UK companies. Um, what we see now there is a lot within the climate tech, it's a lot within the broader energy transition. But I also would say that um, UK have done m really well within the digital space. So we take a keen interest in things and initiatives the UK put on. And I think that it's important for the energy transition. But it goes across a lot of sectors.

Speaker B: Okay, cool. I mean what are the, you know, some of the main challenges or obstacles faced by businesses engaged in offshore manufacturing, for example, between the UK and Norway?

Speaker A: I think that if you look at the offshore wind sector, which is really important to us, um, I think it's been evident in the recent auction that there is um, currently there is um, uh, challenge when it comes to cost of financing and also uh, the input factors and how the prices have um, increased. Um, I think also that the feedback that we get from the industry is um, that the government's not offering the contracts that provide the necessary incentives for the industrial expansions. Currently that is Something we discuss a lot with the industry. Um, of course it's a bit of a slowdown currently, but it, but it's also, you know, it's been uh, really a rapid um, uh growth in, in the recent um, times. So, so I think it's what we're trying to do now is, is how do we uh, still maintain the momentum, especially when it comes to the innovative projects and to push things forward so that we don't lose out on the. On eat. So that's really important.

Speaker B: Um, have you seen a change over the last year, um, especially with the. Or year and a half, I should say really over the um, the oil, the um, you know, gas. Oil and gas prices. And have you seen there's more of a, um, a uh, closer bond with the UK over the last year and a half because of the situation in um, around the world with regards to energy?

Speaker C: I could perhaps chip in if you.

Speaker B: Yeah, yeah.

Speaker C: You know, I, I felt that. And of course it was a, A very difficult situation for all of us when the energy prices, uh, you know, exploded uh, because of the uh, the uh, Russian invasion of Ukraine and um, and uh, the reduction uh, of piped energy to Europe. Uh, uh, and of course that increased the prices of the remaining uh, gas that was provided by Norway. And of course there was a lot of discussion about how are we going to allocate that gas. And Norwegian view was that there is no other alternative than using the price mechanism because you cannot really allocate uh, scarce resources to bureaucratic decisions. And of course we had that debate with. In my view the debate was probably more difficult vis a vis the EU than the UK and, and uh, and I, I thought that we came through that uh, that that sort of difficult situation and now prices are coming down to, to a more normal level. So of course it was a, you know, difficult for us, you know, because we did not appreciate those high prices. We, we, we think long term we would like to, you know, have happy customers, you know, forever.

Speaker B: And.

Speaker C: But how do you allocate? I mean if you, if you force Norway to, to have lower prices, what will the minority share owners of these companies say about that? You know, uh, you know, you end up with, you know, you know, legal cases, court cases and stuff like that. So, so. But I'm thankful for the, the conversation and the discussion we had with the UK during those, those difficult times.

Speaker B: Okay, great. I mean, have you found that cultural differences or language barriers has impacted on the collaboration between the UK and um, Norway, especially regarding offshore manufacturing?

Speaker C: Well, I Can take the general part of it. I mean, I feel that there are, um, almost minimal or very small sort of language and cultural differences, uh, which actually create problems. Um, English has become the second language in Norway. Uh, it goes very deep down. You know, children learn English when very young age. Uh, so it's um.

Speaker A: Uh.

Speaker C: And it's also English as a company language for very, very many Norwegian companies. Um, I would say also the cultural differences are there, but they are moderate. We, we always been very close to you for the last, uh, 1300 years. It's been across. Across the North Sea and we have learned a lot from each other. So, um. And there are, uh, you know, 1% of the Norwegian population is living in the United Kingdom and we have a considerable, uh, British diaspora in Norway. And so those cultural differences we are able to overcome. And we share the same sense of humor to a large extent as well.

Speaker B: So.

Speaker C: So great. Another.

Speaker B: Any. Any noticeable. Any notable success stories or case studies that you can highlight the benefits of UK Norwegian collaboration?

Speaker C: I can perhaps start and Hilde can fill in. I mean there's. There's. There's a couple of there which I'm, you know, fairly proud of, which I, I think is worth mentioning. The first I would like to mention is the. The large Dogger bank, uh sort of largest offshore wind farm in the UK which is uh. Which is in Yorkshire and where you now is close to finish the first phase.

Speaker A: And uh.

Speaker C: Uh. When it's all finished, it will be, you know, an extremely large uh.

Speaker A: Uh.

Speaker C: Uh, sort uh, of wind, uh. Uh, wind farm and where Equinor is the uh, Norwegian company. Equinor is the operator. Uh, so that is in sort of uh. Important landmark, uh, uh, highway in Scotland, which is actually uh. The first floating offshore wind uh park, uh in the uk uh, and in the future for Norway because we have. Our continental shelf is somewhat deeper than yours. So we will be more dependent on floating offshore wind farms in the future. We are somewhat more expensive, uh, but hopefully through technological development we were able to produce those floating wind wind parks, uh, cheaper in the future, which means that we can have them further out from. From uh. From the coastline, uh so you can see them and they don't necessarily interfere with uh, with coastal shipping. So that's a sort of another, you know, highlight. I would also like to sort of um. Uh, sort of uh. Shed light on. On uh, you know, the DNV, the Norwegian Veritas operations in the UK that's uh. You have DMV. Norway is actually, uh. Which is a certification company.

Speaker B: Yep.

Speaker C: It's actually certified about 70% of all offshore wind turbines that are used in the uk. And I, you know that sort of illustrates the kind of um, you know, the uh, integration in the energy economy uh between us. Hilla please, uh add the hill that you have uh, you have more successful switch explorers.

Speaker A: I could just confirm what you say to them. M. I think what is really, I'm really delighted to see that there is um, a really strong interest towards the UK at the moment. I think now since the beginning of this year we've had either individual or a group of M companies uh coming to the uk. Um, within the, especially within the um, energy transition site there have been events, it's been um, meetings, it's been a lot of activity going on um, already and I know there's a lot more to come. So I think it just proved that we are at a point where uh, I think the different industry uh, players they understand the opportunity and the need to collaborate and cooperate. So I would say that it seems to be very promising and like Tolle mentioned it's uh, very close um, in terms of two hours flight. So for Norwegian industry players the UK is like extended home market I would say.

Speaker B: Yeah. Leads me to my, my next question I suppose is I've uh, got to ask um, I mean how does the, the UK's departure from the, from the EU actually impact um, the relationship between Norway and the UK?

Speaker C: But let, let me just start by the you know, because Norway is not a member of the eu.

Speaker B: Yeah, absolutely.

Speaker C: The, the British people through you know a referendum made a sovereign decision that they would like to opt out of eu. We would never ever think about you know, having any sort of critical views about that because we have done the same. You know there were two referendums in Norway and it ended in uh, no, uh, join the eu. Both. Uh, so we respect uh, you know, any decision that British people make and we uh, and we've been very happy with the uh, the Free Trade Agreement, uh, the fact that UK is now not a part of the, the internal market and we are a part of the internal market, uh creates some challenges on when it comes to uh, mobility and movement of skilled personnel. I think we've been uh, uh, been able to deal with them as we've been moving along. Uh, uh, the British, uh, our British friends are very much aware and they are leaning forward to try to find practical solutions. Uh and as long as we can have that sort of pragmatic approach ahead, I think we're going to Overcome the sort of the practical challenges that come out of the fact uh, that we are a part of the internal market and you are not.

Speaker B: So it's not really a huge barrier. It's more of um, uh looking at the opportunities and finding solutions to any potential issues is not really a barrier as such.

Speaker C: From our perspective value chains where we both are involved, we will be able to overcome the practical problems. You know, so I think that's seem you know and we are hyper pragmatic people and the Brits are hyper pragmatic people and they are. Together we will find solutions.

Speaker B: That's a, it's very good. Um, and what uh, what opportunities therefore do you see for, for further growth and development um between the UK and Norway? Um, I suppose Hilda and the ambassador.

Speaker C: But either you start.

Speaker A: Yeah, so of course we have to credit the UK being a world leader in option wind. It's just amazing what you've done driving growth and job creation. Um, and I think you know in terms of Norway I think that like it would have mentioned previously the uh, renewable mega project like Dog bank, um, it's a testament really to what can be achieved through a successful joint venture this between SSE Renewables Equinor and Vortegrund. But it's also um, about those key partners collaborating with authorities, suppliers and the local communities and it's just massive in terms of size and, and that for me it's, it's just um, one example how we not only innovate and um, and also uh, take on uh world leading projects but it's also um, saying something about them, the kind of key focus for us to get it to try to accelerate both the pace and the scale of the energy transition bringing those uh, project live. So I think there is that uh, uh just a showcase for players globally and also I think it's uh, now all what we discuss with the industry is how to try to earn the cost and how to operate smarter. So that uh, is just what's needed to achieve the ambitious goals in terms of um, getting to net zero. And I think for Norway what we can offer we have a lot of experience and we invest obviously a lot of um, funding as well into what we call the frontier technologies. Um and we do a lot with uh, both early stage companies, the more established and the really well established companies to bring them together to, to form the very effective innovative disruptive ecosystems. And that is what we wanted to extend towards the UK as well and to plug into the similar type of networks here. And that's what we basically, we work on ah, every single day.

Speaker B: Yeah, I mean, I suppose it's, I mean from Norway's point of view this also moves into the sustainability, environmental responsibility. Um, I mean how important is that for, for, for Norway, but also the relationship between the UK and Norway and any kind of synergy between the two.

Speaker A: Mhm.

Speaker C: I think Hilda is probably more.

Speaker A: Yeah, absolutely. So, so it's really important to, to innovation Norway in everything that we do. And just to give a bit of context, um, ah, on an annual basis we provide Approximately uh, around 7 billion uh, Norwegian kroner to the development and innovation within the industry and commerce. And actually um, if you look at all the projects that we do and finance, um, close to 70% of those uh, financial resources that we deploy, they are spent on um, projects that have a potentially positive environmental impact. So I would say Norway, that's always been a core at what we've done and we started really early on. Um, so that has taken us to that level today which we are really proud of and that would just continue in the years to come.

Speaker B: Fantastic. Um, unfortunately time is starting to run out so I'd just like to ask one more question to the ambassador and that's really. How do you see Norwegian and UK relations developing over the next five years or so?

Speaker C: I think that uh, like uh, economic history clearly illustrates what will happen, you know, in the, in the near, near future or at least uh, you know, in the next five, 10 years will be reflected by the, you know, the fact, you know, the base that we are having today. And I see that there's a lot of potential, uh, and here I'm sort of just taking a little bit further from where Hilda was, uh, looking at opportunities. And I see that there are two sort of very important uh, trends that will not trends, uh, but things that need to happen in the time ahead, uh, as a part of the energy transition. As carbon taxes uh, are increasing, there will eventually be a business model for hydrogen. Uh, there will be a uh, business model for large scale business model for carbon capture and storage. And here we have common interest. We uh, we uh, we both have oil and gas. We have a continental shelf where you can store an enormous amount of, uh, safely store enormous amount of uh, carbon dioxide, uh, that can be helpful for the whole industrial machine in Europe and uh, actually you know, store carbon dioxide where we previously took out gas, uh, and they have been safe down there for 300 million years. And I'm sure that we can uh, safely store the carbon dioxide there for the next three 400 million years, uh, and help, you know, in the sort of long energy transition that we are, that we are facing. And also hydrogen, although you get energy loss when you use, uh, hydrocarbons to make hydrogen. But in, in, uh, in the medium term, you know, we'll come to a threshold where it might be profitable because of the carbon taxes. And again, combined with carbon captured and storage, you know, there can be a launch potential for both the UK and Norway here in the, in the future. So. And there are many other, you know, business models around this. So I'm, I'm quite optimistic about our relationship. Uh, it's been a, um, seen from our perspective, you look at the way that Norwegian, uh, maritime business developed from the mid 19th century was actually because of the, the change of corn laws in the UK in the 1840s, which allowed kabatage, which sort of laid the foundation for Norwegian, you know, shipping industry, which is still, you know, one of the most competitive, you know, industries in the world. And UK is still our largest maritime partner, you know, maritime business partner. So nothing really changes. To cite, you know, the wonderful film the Elephant man is actually from Tennyson. So, you know, things will move ahead, uh, more or less as it is, but the integration might even be deeper and more profound, um, and that will be profitable both for the UK and Norway.

Speaker B: Fantastic. Thanks. Thanks, Ambassador and Hild, thanks so much for your time and good luck with all your projects.

Speaker C: Thank you. Aril, it's been great speaking to you.

Speaker A: Thank you. Thank you. Talking industry topical debate from the world of engineering, automation and manufacturing

Speaker B: brought to

Speaker A: you by DFA Media Group. This episode is sponsored by Smart Machines and Factories, the leading portfolio for digital solutions in manufacturing. Www.smartmachinesandfactories.co.uk.