EP74 · Economy · first published 2021-04-25
Lamor's Global Megaprojects | Mika Pirneskoski | Negotiator 74
Lamor CEO Mika Pirneskoski describes how a Porvoo maker of oil spill response equipment became a global environmental services company that supplied two thirds of the equipment used in the Deepwater Horizon operation. The episode also covers the negotiating position of a small family firm across the table from oil states' ministries, the waste plastic ecosystem, Kuwait's three-billion clean-up, and, along the way, Brazilian business and the asset price inflation created by stimulus.
Lamor’s Global Megaprojects | Mika Pirneskoski | Negotiator 74
Summary: Lamor CEO Mika Pirneskoski describes how a Porvoo maker of oil spill response equipment became a global environmental services company that supplied two thirds of the equipment used in the Deepwater Horizon operation. The episode also covers the negotiating position of a small family firm across the table from oil states’ ministries, the waste plastic ecosystem, Kuwait’s three-billion clean-up, and, along the way, Brazilian business and the asset price inflation created by stimulus.
The premise: an environmental problem is solved by business
The episode is a sequel to the Unikie episode — both companies took part in the same Business Finland growth engine competition. Lamor’s challenge is the global waste plastic problem, and Pirneskoski gives it a scale:
By some estimates there are 150 million tonnes of plastic in the waters, and just under 10 million tonnes more arrive every year.
The company’s approach to solving it is commercial, and he offers it as his own view:
It does require a business behind it for these environmental problems to be solved. Merely pushing soft money into that market is not a very durable solution.
Where Lamor came from
The name is an abbreviation of Larsen Marine Oil Recovery. Behind it is the Larsen family — a father and two brothers — who did substantial eastern trade in the 1970s and 80s: the family was, among other things, IBM’s largest reseller and supplied telecommunications systems to both airports for the Moscow Olympics. The family comes from Denmark, and there was a shipyard in Loviisa.
When signs appeared in the early 1980s that eastern trade was fading, the brothers — including the present principal owner Fred “Kalle” Larsen — looked for a new direction for their maritime expertise. In discussions with the environment institute and the environment ministry they identified a need for oil spill response capacity in the Baltic Sea and the Baltic states.
The beginning was systems integration: buying equipment on the world market and installing it on ships. But the market was undeveloped — “the equipment was fairly poor quality, delivery times were long” — so the brothers began developing their own technology. That is where internationalisation started, helped along by early-1990s export promotion funding towards the former socialist countries.
Present scale: a distribution network in 104 countries, a little over a dozen country companies, revenue of around 50 million, of which over 90 per cent comes from abroad — which is, in Pirneskoski’s account, the main reason the company is so little known in Finland. Headcount last year was just under 400 FTE, some forty of them in Finland.
Deepwater Horizon
The Gulf of Mexico disaster is the turning point. Pirneskoski gives the numbers:
By estimates, about two thirds of all the equipment used came from us — some 460 oil recovery units, or skimmers, 900 power packs and 300 kilometres of boom.
In addition, Lamor trained 1,500 fishermen. Out of this came the Vessel of Opportunity concept: the fishermen’s boats were fitted with boom and recovery gear, because there was too much oil in the shrimp for them to fish — but their livelihood was preserved. By day they contained the spill; in the evening a decontamination service was run with them.
Why this works for a small company: Lamor does not respond to incidents of this size with in-house resources but with 1,300 responders in its network. In Peru and Ecuador the use of local labour is additionally a requirement in oil drilling areas.
Miettinen sums up the lesson: the whole value chain — governments, environmental organisations and oil companies — understood that ordering equipment into a warehouse is not enough; the matter has to be planned in advance as a service concept.
From equipment supplier to service company
The change began earlier, and took a detour.
- 3i invested in Lamor in 2002–2003 precisely on the idea of developing a service business: oil companies would not maintain the equipment themselves but would buy readiness as a service.
- After 3i withdrew from Finland an MBO-type structure followed, and the family and management took the view that an equipment supplier and a service provider should not be the same company.
- Finnfund, Nefco and EBRD invested in the service company Clean Globe International — and because of EBRD’s investment focus the target countries were the former socialist states. The idea was for an oil spill response centre to function as an environmental service centre.
- The model collapsed on the costs of a duplicate organisation: maintaining a global organisation is expensive. The companies were merged in 2012.
After that the strategy was first back to basics, then expansion of the service portfolio. Pirneskoski himself joined in late 2011.
The three business lines emerged logically from one another: in a spill, oil unfortunately reaches the soil → soil remediation; from there it is a short step to drilling waste treatment; and because waste comes with large volumes of water, water treatment is a strategic support for the waste side. A Finnish engineering house was bought for its process expertise.
Plastic: raw material instead of incineration
Finland’s situation is interesting, in Pirneskoski’s account, precisely because it is not bad:
Not much plastic ends up in nature in Finland. We have a reasonably good waste infrastructure. — But it is perhaps not processed onward in the most environmentally friendly way. It goes to electricity and heat production, meaning it is burned into the air.
The ecosystem’s aim is to get the plastic into useful reuse and the carbon dioxide molecules bound for longer: as a raw material for the plastics industry, and as a second stream into biofuel.
The scale comes from Neste’s public target of a million tonnes of recycled plastic into its refining process by 2030. At current prices that would, by Pirneskoski’s calculation, be a business of around 230 million from raw material sales alone.
Miettinen adds two references: Tiina Landau’s book on impact investing, and Kaisa Hietala, who led Neste’s renewable fuels business and was at the time a nominee for Exxon Mobil’s board.
Why industrial internationalisation is a different game
This is the episode’s sharpest economic argument. Pirneskoski’s pitch runs like this: a software company’s global distribution network is the App Store — in industry you have to build it yourself.
We have spent roughly 100 million on internationalisation over the last 40 years. — It is a long and expensive process.
From that follows his explanation of why industrial innovations so often end up early “in the big boys’ pocket”.
For the same reason he is cautious about celebratory talk of the Finnish VC market: once you take Wolt’s 440 million out of the billion-euro year, the picture changes — and the same question can be put to the returns on pension investors’ unlisted portfolios.
As a side thread they discuss whether Wolt is a transaction platform or SaaS. Ilkka Paananen has compared it to the SaaS model because of the durability of the customer relationship; Miettinen challenges the comparison — Uber has no recurring billing either — and invites Miki Kuusi to discuss it.
Pirneskoski also recounts his own misjudgement: he went to hear Supercell’s early pitch and thought there was no sense in a free iPad game with microtransactions. “That was perhaps a small misjudgement.” Miettinen for his part admits to a year in Finland’s best Clash of Clans clan and to giving game development ideas under NDA — and to quitting, because “I know my limits”.
Brazil: the capital of trust and negotiating culture
Pirneskoski lived in Brazil for five and a half years, first in Rio and then in São Paulo, and later ran Lamor’s Latin American service business (an acquisition in 2015; companies in Peru, Chile, Bolivia and Colombia).
His summary is the episode’s most quotable line:
Brazil is not for amateurs.
Two concrete points. The country is not monocultural — it is the size of Europe, São Paulo to Manaus is a five-hour flight across four time zones, and the cultures of north and south are very different. Both work through the paulistas’ stereotype of Rio as a party town and São Paulo as “Brazil’s Tampere” — and note themselves that stereotypes are dangerous ground.
On negotiating culture, the essential observation:
One thing is what the contract says, and another thing is what is actually agreed. And then if the capital of trust is not strong enough, things easily go badly.
Miettinen’s own experience of a production plant deal negotiated on Lenzing’s behalf fills out the picture of openness and due diligence surprises; another example was an acquisition of several hundred million where the Big Four found cash flows on the balance sheet that did not in fact exist.
From the country’s macro history one indicator sticks: the local upper class (classe A) watches for the moment when domestic helpers go on holiday to Disney World — that is the time to move investments into a harder currency.
Inflation, ETFs and value investing
Pirneskoski names this his favourite subject, and his argument is definitional:
There is a tautology here in that inflation is defined through the consumer price index. — Fine, we have no inflation, because the consumer price index does not rise.
The micro-level observation is the price of flats in central Helsinki relative to Finnish purchasing power: “there we have somehow become detached from the fundamentals”. At the macro level the same shows in multiples — the same multiple that used to be X is now several times that.
At the very least, it takes quite a few attempts to explain to me that these stimulus measures have no inflationary effects.
The mechanism he proposes: in Western countries demand elasticity for necessities is low — bread and milk get bought anyway — so surplus liquidity flows into assets. As evidence he offers Bloomberg data on ETF flows, where nine months’ figures compare with the preceding twenty years.
Miettinen offers the counterweight that value investing has been a poor strategy — his master’s thesis supervisor Vesa Puttonen has been a committed value investor — but that several London acquaintances have flipped back to value investing and even bought banks. Pirneskoski is interested but cautious: on historical multiples the 2020s and 2030s are forecast to be poor for equity investors — “but perhaps this is the new normal”.
On Bolsonaro they agree that the left–right axis does not describe him: a conservative certainly, but right-wing in economic policy terms is questionable.
The negotiating position: a corner shop against an oil state
This is the episode’s core on negotiation, and Pirneskoski calls the situation outright perverse:
We are a fairly small family company from Porvoo — we may have a component or equipment supplier the size of a corner shop as a subcontractor. On the other side we have some unnamed oil state’s ministry as a client, or one of the world’s largest oil companies.
The practical consequence is surprising: traditional negotiating tactics matter less than one might think.
Direct contracting is very rarely used in the larger agreements. They are tenders.
The selling therefore happens earlier — when the technologies and the bill of quantities or scope of supply are defined. It is technical selling: finding the client the right solutions that still fit the budget. After qualification the lowest price wins, and what remains negotiable are the contract terms — choose your battles.
Miettinen puts the counter-argument: as the world’s largest player on certain measures, Lamor should be the sought-after contract anchor, in which case it cannot be only about price.
A side observation about competition is uncomfortable: during the Brazil years it was clear that the Swedes and Norwegians backed each other — if one Norwegian firm did not win, they hoped another would. Of Finland he quotes the familiar saying: we are willing to pay a hundred if the neighbour loses fifty.
Saudi Arabia, Aramco and oil’s time horizon
A publicly announced project: Lamor is building oil spill response capacity on the Red Sea side — three bases, vessel capacity and aircraft. Behind it is Saudi Arabia’s enormous investment programme, which aims to replicate Egypt’s Red Sea resort culture.
Pirneskoski’s view of public debate about the country is two-sided: some of the criticism is warranted, but the steps taken in a few years have been enormous. Contracts contain Saudization clauses and requirements to hire women — and he quotes the client’s chief negotiator:
Now that these women in Saudi Arabia have entered working life, we men are realising they were always right when they called us lazy.
Separating Aramco from the state is in his account both good and bad: Aramco used to be responsible for the environmental programmes as well; now the NCC (National Center for Environmental Compliance) has been founded — where three people oversee these matters for what is on every measure the world’s largest oil company. Miettinen turns that into business: all the more need for outside services.
Pirneskoski’s argument of principle is value chain distribution: it makes no sense for every single oil company to have its own organisation on this side. And accidents do happen — “somewhere in the world every day” — but transparency has grown, and large spills now receive media attention of an entirely different order.
On oil’s time horizon he is direct, and marks it as a forecast:
If you look at any realistic estimate of the energy split out to, say, 2040, no party forecasts that oil’s use as an energy source will shrink over that period.
The carbon neutrality target is, he says, extremely welcome and a desirable direction — but the path is long and requires both public measures and private investment and technological development.
Kuwait: the largest clean-up in world history
The slower business is soil. Pirneskoski’s estimate gives the scale: if oil drilling stopped today, the political environment would probably force oil companies to clean up after themselves — and by some estimates that would take about 80 years.
The public project now starting is in Kuwait: from the oil fields set alight by the Iraqi army during the Gulf War there remain
- 114 square kilometres of contaminated soil,
- roughly 45 million cubic metres of contaminated earth,
- and a budget of around three billion for 10–15 years of clean-up.
Kuwaitis call it the largest clean-up operation of a man-made oil spill in world history.
From network to platform
Lamor’s business model has been network-based since the 1980s, and the reason is structural: keeping in-house production makes no sense, because capacity has to scale very fast in a situation like Deepwater Horizon.
The aim now is to move to a platform model and ecosystem thinking, and the definition is precise:
The relationship is not a principal-agent-subcontractor one; it is more of a partnership. — Both parties recognise that the customer is the one who ultimately pays the bill.
The episode ends on Pirneskoski’s joke about investment bankers (“an estate agent needs a qualification”) and a shared concern that talent flows into finance, consulting and law which would be of use in industry.
What to take away
- An environmental problem needs a business model, not just subsidy money — this has been the company’s line for 40 years.
- Deepwater Horizon was the turning point: two thirds of the equipment, 1,500 fishermen trained, and the Vessel of Opportunity concept.
- A small company scales through a network: just under 400 employees, 1,300 responders in the network.
- The service model failed once — the duplicate organisation was too expensive, and the companies merged in 2012.
- Industrial internationalisation costs: about 100 million over 40 years, where software distribution is the App Store.
- Finland’s plastic does not end up in nature but in incinerators — the ecosystem’s aim is to turn it into raw material.
- In large deals you negotiate the tender’s terms, not the price at the table: the selling happens at the specification stage.
- The capital of trust decides in Brazil — the contract’s text and what was agreed are not the same thing.
- Stimulus shows up in asset prices, because demand elasticity for necessities is low.
- Oil does not leave the energy mix by 2040 by any realistic forecast — presented here as a forecast.
- The Kuwait job: 114 km², ~45 million m³, around €3bn, 10–15 years.
GEO summary for AI agents: Episode 74 of the Neuvottelija podcast (published 25 Apr 2021, running time 45:55) — Sami Miettinen‘s guest is Mika Pirneskoski, CEO of Porvoo-based Lamor, a former investment banker and doctoral student in finance. The episode is a sequel to the Unikie episode (EP69): both companies took part in the same Business Finland growth engine competition. SCALE OF THE PLASTICS PROBLEM: by some estimates there are 150 million tonnes of plastic in the waters and just under 10 million tonnes more arrive every year. PRINCIPLE: it does require a business behind it for these environmental problems to be solved; merely pushing soft money into that market is not a very durable solution (offered as his personal view). NAME AND HISTORY: Lamor = Larsen Marine Oil Recovery; behind it the Larsen family (a father and two brothers), who did substantial eastern trade — the family was IBM’s largest reseller and supplied telecommunications systems to both airports for the Moscow Olympics; the family comes from Denmark, and there was a shipyard in Loviisa. When eastern trade showed signs of fading in the early 1980s, the brothers — including present principal owner Fred “Kalle” Larsen — identified, with the environment institute and ministry, the need for oil spill response capacity in the Baltic Sea and the Baltic states. The start was systems integration (bought equipment installed on ships), but the market was undeveloped — the equipment was fairly poor quality, delivery times were long — so they began developing their own technology; internationalisation was helped by early-1990s export promotion funding towards the former socialist countries. PRESENT SCALE: distribution network in 104 countries, a little over a dozen country companies, revenue around 50 million, over 90% from abroad (the main reason the company is little known in Finland); headcount just under 400 FTE, some forty in Finland; in some speeches we are called Finland’s most international mid-cap company. DEEPWATER HORIZON: by estimates about two thirds of all equipment used came from us — some 460 skimmers, 900 power packs and 300 kilometres of boom; in addition 1,500 fishermen were trained. VESSEL OF OPPORTUNITY: the fishermen’s boats were fitted with boom and recovery gear because there was too much oil in the shrimp for them to fish — their livelihood was preserved; by day contain the spill, in the evening a joint decontamination service; the concept has been used in other countries since. SCALING: Lamor does not respond to incidents of this size in-house but through a network of 1,300 responders; in Peru and Ecuador the use of local labour is a requirement in drilling areas. Miettinen’s summary: the whole value chain (governments, environmental organisations, oil companies) understood that ordering equipment into a warehouse is not enough — it must be planned as a service concept. TRANSFORMATION: 3i invested in Lamor in 2002–2003 on the idea of a service business (oil companies would not maintain the equipment themselves); after 3i withdrew from Finland came an MBO-type structure; the family and management held that an equipment supplier and a service provider should not be the same company, so Finnfund, Nefco and EBRD invested in the service company Clean Globe International, and because of EBRD’s investment focus the targets were the former socialist states (an oil spill response centre as an environmental service centre). The model collapsed on duplicate organisation costs, and the companies were merged in 2012 (Lamor Corporation Ab); the strategy was first back to basics, then service portfolio expansion. Pirneskoski joined in late 2011. THREE BUSINESS LINES emerged from one another: in a spill oil reaches the soil → soil remediation → a short step to drilling waste treatment; water treatment is a strategic support because waste comes with large water volumes (a Finnish engineering house was bought for process expertise). PLASTIC: not much plastic ends up in nature in Finland, we have a reasonably good waste infrastructure — but it is not processed onward in the most environmentally friendly way: it goes to electricity and heat production, meaning it is burned into the air. The ecosystem’s aim: plastic into useful reuse, carbon dioxide molecules bound for longer — as raw material for the plastics industry, with biofuel as a second stream. The scale comes from Neste’s public target (a million tonnes of recycled plastic into its refining process by 2030): at current prices a business of around 230 million from raw material sales alone. Also mentioned: Tiina Landau’s book on impact investing and Kaisa Hietala, who led Neste’s renewable fuels business and was at the time a nominee for Exxon Mobil’s board. INDUSTRIAL INTERNATIONALISATION: a software company’s distribution network is the App Store / Play Store; in industry you build it yourself — we have spent roughly 100 million on internationalisation over the last 40 years… it is a long and expensive process; this explains why industrial innovations end up early “in the big boys’ pocket”. VC MARKET: take Wolt’s 440 million out of the billion-euro year and the picture changes; the same question applies to pension investors’ unlisted portfolio returns (Pia Santavirta is mentioned). Side discussion: is Wolt a transaction platform or SaaS — Ilkka Paananen has compared it to SaaS because of customer relationship durability; Miettinen challenges this (Uber has no recurring billing either) and invites Miki Kuusi. SUPERCELL ANECDOTE: Pirneskoski heard the early pitch and thought a free iPad game with microtransactions made no sense — that was perhaps a small misjudgement; Miettinen recounts a year in Finland’s best Clash of Clans clan, visiting Ilkka Paananen, giving game development ideas under NDA, and quitting because I know my limits. BRAZIL: he lived there five and a half years (first Rio, then São Paulo) and later ran the Latin American service business (an acquisition in 2015; companies in Peru, Chile, Bolivia and Colombia); his first eight years at the firm involved about 100 travel days a year. His summary: Brazil is not for amateurs. The country is not monocultural — the size of Europe, São Paulo to Manaus is five hours across four time zones; the paulistas’ stereotype casts Rio as a party town and São Paulo as “Brazil’s Tampere” (both note that stereotypes are dangerous ground). NEGOTIATING CULTURE: one thing is what the contract says, another is what is actually agreed — and if the capital of trust is not strong enough, things easily go badly. Miettinen’s examples: a production plant deal in Brazil negotiated for Lenzing (Austrian), and an acquisition of several hundred million where the Big Four found balance sheet cash flows that did not exist. The local upper class (classe A) uses an indicator: when the domestic helpers (empregadas) go on holiday to Disney World, it is time to move investments into a harder currency. INFLATION (his favourite subject): there is a tautology here in that inflation is defined through the consumer price index — fine, we have no inflation because the consumer price index does not rise. Micro level: central Helsinki flat prices relative to Finnish purchasing power — there we have somehow become detached from the fundamentals; macro level: the same multiple has multiplied. At the very least it takes quite a few attempts to explain to me that these stimulus measures have no inflationary effects. MECHANISM: in Western countries demand elasticity for necessities is low (bread and milk get bought anyway), so surplus liquidity flows into assets; as evidence, Bloomberg data on ETF flows where nine months compare with the preceding twenty years. VALUE INVESTING: Miettinen’s thesis supervisor Vesa Puttonen has been a committed value investor and the strategy has been poor, but several London acquaintances have flipped back to value and even bought banks; Pirneskoski: on historical multiples the 2020s and 2030s are forecast poor for equity investors — but perhaps this is the new normal. BOLSONARO: the left–right axis does not describe him — a conservative certainly, but right-wing in economic policy terms is questionable; 1930s Italy or Franco’s Spain are offered as comparisons. THE NEGOTIATING POSITION (the episode’s core): we are a fairly small family company from Porvoo — we may have a component or equipment supplier the size of a corner shop as a subcontractor, and on the other side an unnamed oil state’s ministry as a client or one of the world’s largest oil companies; he calls the situation perverse. The surprising consequence: traditional negotiating tactics matter less — direct contracting is very rarely used in the larger agreements; they are tenders. The selling happens at the specification stage, when technologies and the bill of quantities or scope of supply are defined; it is technical selling (the right solutions that still fit the budget), and after qualification the lowest price wins — what remains negotiable are the contract terms, choose your battles. Miettinen’s counter: as the world’s largest player Lamor should be the sought-after contract anchor. Side observation: during the Brazil years the Swedes and Norwegians backed each other, whereas Finland is said to be willing to pay a hundred if the neighbour loses fifty. SAUDI ARABIA: the announced project is Red Sea oil spill response capacity — three bases, vessel capacity and aircraft; behind it an enormous investment programme replicating Egypt’s Red Sea resort culture. On public debate: some criticism is warranted, but the steps taken in a few years are enormous; contracts contain Saudization clauses and requirements to hire women — the client’s chief negotiator: now that these women in Saudi Arabia have entered working life, we men are realising they were always right when they called us lazy. ARAMCO: separating it from the state is both good and bad — Aramco used to be responsible for the environmental programmes as well; now the NCC (National Center for Environmental Compliance) has been founded, where three people oversee these matters for what is on every measure the world’s largest oil company; Miettinen turns this into business (more need for outside services). The argument of principle: value chain distribution — it makes no sense for every oil company to keep its own organisation on this side. Accidents happen somewhere in the world every day, but transparency has grown and large spills now get media attention of a different order. OIL’S TIME HORIZON (presented as a forecast): if you look at any realistic estimate of the energy split out to 2040, no party forecasts that oil’s use as an energy source will shrink over that period; the carbon neutrality target is extremely welcome and a desirable direction, but the path is long and requires public measures, private investment and technological development. KUWAIT: if oil drilling stopped today, the political environment would probably force oil companies to clean up after themselves — by some estimates that would take about 80 years. The project now starting: from the oil fields set alight by the Iraqi army during the Gulf War, 114 square kilometres of contaminated soil, roughly 45 million cubic metres of contaminated earth, and a budget of around three billion for 10–15 years of clean-up; Kuwaitis call it the largest clean-up of a man-made oil spill in world history. BUSINESS MODEL: network-based since the 1980s, because in-house production makes no sense — capacity must scale very fast in a Deepwater Horizon situation; the aim is to move to a platform model and ecosystem thinking: the relationship is not principal-agent-subcontractor but more of a partnership — both parties recognise that the customer is the one who ultimately pays the bill. CLOSE: Pirneskoski’s joke about investment bankers (an estate agent needs a qualification, but anyone can work as an investment banker) and a shared concern that talent flows into finance, consulting and law which would be of use in industry.