2016 Annual Work Conference Successfully Held

On January 27, 2016, CSE 2016 Annual Work Conference was grandly held in Qingqing World Conference Hotel. General manager Li Wenkun made a wonderful work report, summarized the work in 2015 and deployed the work in 2016.

       Looking back to 2015, the global economy was on its way to a downturn, with international oil prices continuing to decline. The offshore engineering industry slid into a harsh "winter". However, with the joint efforts and close cooperation of all teams and groups, CSE has achieved good results in both market and project operations. We won several bids for new projects and have secured enough workload for 2016. We kept a satisfying record of smooth operation and plan implementation in 2015. And all the projects under construction were completed ahead of schedule with also no compromises made on quality or safety. However, there are still a lot of potentials to be tapped in terms of organization building, internal management, cost control, and innovation. The efforts in the building of execution, cohesion, strength, and competitiveness capabilities are yet to be made.

Overall Work Plan for 2016

       The market outlook for this year is bleak. All the yards are experiencing a dwindling workload and the oil companies, as well as EPC contractors, are cutting budgets. Now is the winter times of the offshore industry and the uncertainties of the market gain the upper hand. It is a huge challenge for us to get through.

I. Bidding Projects in a Pioneering Spirit to Secure the Workload for This Year and Next

       We are anticipating unprecedented market pressure in 2016 and the upcoming 2017. For this reason, we must be innovative in the expansion of business fields and introduction of product types. Our target market shall be determined and close follow-up shall be provided for key projects. Meanwhile, our focus can be adjusted to the domestic market and a more cooperative posture shall be adopted when working with CNOOC. All the work of the Company shall be market-oriented and the bidding efforts shall be considered as the top priority. Full support is required to help the Market Department to win more bids.

 II. Strengthening Cost Control and Lowering Project Costs and Fixed Costs

       To manage through the situation where the revenues are declining, we must take comprehensive measures to reduce costs. We should carry out comprehensive budget management by assigning cost-saving targets to departments, strengthening monitoring of budget performance, and linking cost-saving targets to the performance-related incentives of department heads. Each department is a cost center with great cost control potential. The person in charge of each department is required to come up with a detailed cost control scheme and an implementation plan to ensure that cost awareness is implanted into the minds of all employees and embodied in every step of their daily routine.

 III. Delivering Sound Performance in Projects to Ensure the Smooth Operation of the Company

       The project staff and cost controllers are required to familiarize themselves with contracts so as to perform better in cost control. Rational organization of production is needed to better connect all production chains in a purpose to improve production efficiency. Also, actions shall be taken to raise the quality awareness among employees and quality management level for the purpose of increasing the first time yield. New technologies and new processes shall be fully and rationally implemented in new projects. We must properly control and reduce the cost of welding consumables, especially the imported types. The Equipment Department shall create equipment cost awareness amongst its members, prioritize preventive maintenance, enhance the technical strength of maintenance, improve the maintenance quality, thus providing a sound equipment guarantee for production.

       Non-production departments should improve their sense of service, deliver reliable production services to the owner companies, and provide satisfactory safety, human resources and logistical support for production. All employees should march in lockstep to strive for the safe, on-schedule, and successful completion of the projects under construction at the lowest cost and with the best quality.

 IV. Building the Sense of Crisis to Weather a Difficult Time in Solidarity

       At present, uncertainties are looming over the offshore construction market. The possibility of us surviving this difficult time depends on the market opportunities, the leadership of the board of directors, and the last but not least, the joint efforts of all our employees. It's like the situation when it takes a concerted effort of all crew members for a ship to get to the final destination amidst raging waves. Each of our employees is an asset to the Company, just like a vital crew member to a ship. We hope that we can manage our "ship" with love and care. Every one of us should regard our superiors, colleagues, and subordinates as our partners on the same "ship", cooperate with each other and work hard to complete our own tasks. Only by doing so can the company prosper and thrive.

Therefore, I would like to bring up the big-picture mentality again and the requirements of "execution, cohesion, strength, and competitiveness", and hope that all employees could prioritize the interests of the Company and fully support the endeavors in market and production fields. The management shall set good examples by proactively engaging in business, shouldering responsibility, and contributing to the building of our organization. Talent training shall be arranged while bold moves can be made to assign younger employees major tasks and sift the real talents from them. The contract responsibility system shall be implemented in the yards to keep talented technical workers with us. It is necessary to continuously improve the level in the management of safety, quality and technology, improve the execution, cohesion and strength of the team, so as to improve the competitiveness of the Company.

At present, we are also seeking to upgrade and transform our products to better gear ourselves up for the current economic downturn and grasp better opportunities when the market recovers in the future. I am open to all suggestions and comments regarding the development of the Company and I wish we can gather all the strength we need for another great leap forward.

       The market has reached a point of extreme gravity in 2015. Nevertheless, CSE continued to maintain good business performance with the unremitting efforts of all employees. It's another tough year ahead of us. But I believe this too shall pass. As long as we keep up the relentless efforts in market exploring, improvement of fundamental management, cost control, and further safety and quality enhancement, the Company, with concerted supports, will be able to tide over this difficult time regardless of how hard it will be.


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