Erik Heim, Managing Director of Nordic Aquafarm, has experienced the difficulties of being a pioneer in land-based farming in Norway. However, he does not let his emotions take control when things don’t go as expected.
We are visiting the city of Fredrikstad, just about an hour’s train-ride outside Oslo. Here in an industrial area, Fredrikstad Seafood is building Norway’s first land-based commercial salmon farm.
The project has been delayed due to different reasons. The latest is a dispute between Fredrikstad Seafood and the Danish contractor Graakjaer. Although the conflict is still ongoing, the work has restarted.
“That’s how it is with a contract, when it’s signed, the project should be completed,” explains Heim.
Salmon processing plant
But even with the delays in Fredrikstad, there is still enough work to keep the company occupied.
In Denmark, the company has three different land-based farming projects in three different phases.
“We have been involved from the start in Denmark. We have seen the projects in context. The advantage is that the design is similar in many ways, but we are working on a different species, so it is not completely comparable. But overall we are concerned with extreme detail focus, extreme discipline and competence in these projects,” he says.
Heim shows us the area where the salmon processing plant will be set up together with the rest of the farm in phase two.
The salmon processing plant will be finished at the same time as the rest of the farm.
“The salmon processing plant is smaller than most of the others in Norway, but it is a small and efficient one. We pump fish straight from the tanks in the plant to the processing plant. Then the fish goes out the door at the other end. We integrate it together and it becomes an effective process.”
The reason why the company is also setting up a salmon processing plant is that there are no similar projects nearby.
“When you are the first in Norway to go commercial, it requires something of you. It is easier for the others who come after us, now that the regulations are in place.”
“Is it tough to be a frontrunner?” we ask.
“It’s always tough to be a frontrunner,” he says and laughs.
The pressure of expectation
A few hundred meters away from the construction site is Fredrikstad Innovation Park, where the company has its offices.
Does Heim feel any pressure to succeed, especially in relation to stakeholders?
“Not really. The pressure we put on ourselves, and we are committed to realizing our own plans. We have a good relationship with all the stakeholders. As long as we maintain focus, there is no reason why any of them will be disappointed,” he says confidently.
The company received the first land-based permit in Norway in the autumn of 2016.
Eagerly, he explains about the pipelines that will deliver water from the local river Glomma through a treatment plant.
“We have stripped the entire building. The building will contain the entire water treatment of our intake water for phase one and phase two. In practice, this will be a major treatment plant,” he explains.
The plant will be finished by Christmas.
A little revenge
However, it is quite quiet on the construction site; most employees are out for lunch. Erik Heim introduces us to three of them. In total Fredrikstad Seafood has seven employees.
It is quite obvious that Heim is trying to build a team where members complement each other, with a strong focus on competence.
Roger Fredriksen has worked in fish farming since 1981. Most of his life he has lived in Northern-Norway, now he is living in Fredrikstad.
“It’s not hard to answer why I took the job. First and foremost because of the job itself. It is really exciting to be a part of this and have the opportunity to develop a new technology.”
This is actually the second time he has been involved in building a land-based plant. First time was in the 90s, when he and his father tried to set up a similar project. It only lasted five years.
“My father and I were so stupid and tried to build a land-based facility at Senja in Northern Norway, and we did not succeed. We survived for five years, but if you look in the history books for 1989-95, you’ll see a lot of the reasons why we did not succeed. The timing was not good, it was a completely unknown technology back then.”
Now he has a chance to see it done properly.
“Maybe it’s a small revenge,” he says.
“You were the true pioneers!”, shouts Heim.
Strategy
Together with Fredriksen’s solid background from sea pens, the company has also hired Irishman Cathal Dinneen. Dinneen is among the most experienced in the world for the production of salmon in RAS systems.
According to Heim, there is a conscious strategy to bring in the best of different worlds.
“The strategy is to combine long experience from land-based and sea pens, so we have both perspectives. It is very important,” he says.
Dineen moved to Fredrikstad eight months ago.
“We have everything here that the family needs, and I feel very happy in Fredrikstad. The town is great. The most difficult things are the language and the cost of everything,” he says.
But even living costs in Norway are small compared to the investments made by Nordic Aquafarms.
“Investments so far are around 32 million euros, but there are a lot of phase two investments already in progress,” says Heim.
To keep track of the finances, the company brought in Lars Henrik Haaland a year ago. Haaland, who has worked with Siemens and the oil industry, started on 1 October as Chief Financial Officer in Fredrikstad Seafood and Nordic Aquafarms.
“I do not know much about fish, but have learned a lot in the past year,” he says.
But Heim adds quickly. “Large offshore constructions have parallels to what we are doing. These are big, complex projects we are talking about here.”
Competence
Heim underlines the importance of competence.
“Land-based farming seems to hold a lot of fascination for a lot of people. Many think that they’ll try it, but we also meet people with a lot of money but no competence. My message is: To make this an acceptable risk, you start with a competence. You must have respect and the humility to recognise that land-based production is complex, and it involves risks that must be managed and prevented.”
He has learned a lot himself since he started the project.
“The more you work with things, the more you understand that you have to learn. As I dive deeper into the layers, I relate more and more to understanding the whole, including what goes on in biology. It is continuous learning.”
But why did Heim, born in the United States, raised in Oslo, chose Fredrikstad as a destination for his project?
“The world is full of coincidences. The reason why the site is interesting is the water resources with both freshwater and seawater. We have favorable network agreements, Orkla has its own license online, so we get very favorable electricity costs. We are on the border of the EU and there is very good infrastructure in the area. It is the sum of many factors. On top of everything, we had an investor-friendly situation in Fredrikstad. It is also interesting to build within aquaculture in a region in Norway that has not had any significant presence of that industry before.”
But according to Heim, Fredrikstad is in not the end-station.
“We have ambitions not to stop here in Fredrikstad. There is much focus on the future, and now that things have been delayed, we have had even more time to think about the future.”
Setting the standard
Several companies have in recent years tried to succeed with land-based production, but few have made it. Heim has a theory why this has been the case.
“One of the most significant barriers has been funding. It has been very demanding to finance. I have contact with many projects internationally. One in five has managed to build in the last 3-4 years. It takes a long time, due to financing. It requires you to bring your own muscles on the ownership side; we have been lucky. It is the biggest obstacle. We see many projects with big plans, but many do not have the skills or capital to succeed. Therefore, we have been keen to put both in place. We invested early in expertise. We were out early and quality-assured the entire production project, long before we go into production. It’s an investment from us before we go into production,” he says.
“But do you want to set the standard for those who come after?”
“We focus on what we do, so others must focus on what they can do. We want to set the standard for ourselves and we have clear goals in terms of competence, quality and risk management. If others want to perceive that it is the standard, they will find out,” he says.
“The most important thing is to show to our own shareholders what we can do. It is the shareholders and customers who are the ones we are concerned with. But once we’re there we hope that other projects succeed, which are important to demonstrate the profitability of land-based. The potential is obvious, but it is a learning curve, as it was in marine-pen aquaculture. There has been a learning curve where errors have been made, errors that we can solve.”
Then he adds, “The time may determine whether we set a standard or not.”
Size counts
Just getting bigger is central to the philosophy of Erik Heim.
“Those who really need to establish themselves as significant players in the industry must start escalating as soon as they have got the basic production in place and removed challenges. It is the size that counts to get good profitability in production. Our philosophy is that we depend on others to succeed as well. One must prove the profitability and quality, the quality is already proven in some plants. Many facilities are too small, 300-400 tonnes, and it’s almost impossible to get profitability. You have to get a greater critical mass to prove profitability.”
He believes growth in land-based production will not go beyond farming in the sea.
“I mean that if you look at global demand for seafood for the next 30-40 years, then there is a need for huge growth globally. This growth will not be solved along the Norwegian coast alone. There is a need for a general increase in production and a sustainable increase in production globally. Then I think Norway as a major seafood nation with capital and technology and research knowledge should think about where we want to be in 15-20 years. Then I think that this should be one of several trains we should join.”
He emphasizes that not everything has to be salmon.
“This is not limited to salmon. Everyone in Norway is concerned with the salmon. We think bigger than that. We produce another species in Denmark. Will Norway join the trip or sit on the sidelines? Norway has more to learn from being involved. We are already doing a lot of development around land-based smolt plants. We are in a fantastic competitive position to build capital, technology and knowledge about this type of production. Norwegian producers should feel safe, then demand will rise.”
But even though the phase one in Fredrikstad has not gone according to plan, Heim claims that he was prepared for it.
“In such projects, you know it is continuous problem-solving. You have to be good at it; if you are not, you are in the wrong type of work.”
Letting emotion take control of him was never an option.
“You can not sit down and get angry when delays occur; one has to turn around to fix things. Obviously, it’s frustrating, but the day you sit down and get annoyed, then it’s game over. You must not give up, just move on,” he concludes.
