When the smoke cleared and the deal was done, Soil Machine Dynamics (SMD) had a new name - SMD Hydrovision - new assets, new personnel, and a new lease on life in an increasingly harried and hectic ROV manufacturing industry.

SMD Hydrovision will be based at the existing SMD Newcastle facility, and will offer what it says is the largest range of products in the subsea market, from Curvetech components to work-class ROVs, trenching plows, and tractor systems.

The acquisition excludes Hydrovision's sister company, Seaeye Marine, whose ownership is retained by the existing shareholders through Seaeye Holdings Limited. Still under the leadership of Chris Tarmey, Seaeye will now focus on its core business of electric-powered ROVs.

SMD has quite a history in the ROV business, and we went straight to the top to find out how these recent events will affect the future of this industry giant.

UW: As Soil Machine Dynamics moves into a new era following the acquisition of Hydrovision, give us a brief company history.
JR: SMD was formed by my father, Alan Reece, out of research work done at Newcastle University. It really got going with the construction of a complete underwater pipeline plow for Brown and Root in 1983. This was followed by our first submarine cable plow for BT Marine in 1984, and that type of machine still forms the core of our product range today.
In the intervening 20 years, the product range was expanded - first of all by completing the cable plow system by building our own control system, then by building deck equipment, and then by adding more subsea vehicles, in particular, tractors and swimming ROVs.
The pace of new product development increased rapidly between 1996 and 2001, when every single product was completely redesigned and revamped. New types of equipment such as very high powered ROVs, pipeline trenching equipment, novel cable laying drums, and deep-trenching jetting cable plows were produced.
This development program coincided with the boom in telecoms and a lot of new equipment was supplied in this time. With the demise of telecoms, we have had to look to other markets. But we are still coming up with new subsea machinery - for example, the novel Mayflower power cable-lay tractor.

UW: SMD seems to have survived the wild ride of the subsea cable boom, then bust, that transpired over the last four to five years. What went wrong with this market segment?
JR: The boom and bust of the subsea cable industry, in my opinion, is simply a reflection of the same cycle in the global telecoms market. This seems to be a classic bubble, partly driven by the "dot-com" boom, with the resultant wildly optimistic forecast of demand drawing in a lot of new telecoms players (Global Crossing, for example).
Why such bubbles occur seems to be anyone's guess, but the cable industry, with huge over-capacity, owners in Chapter 11 with all their costs written off, and their land-based customers also struggling, has got a long way to go before any kind of recovery can occur.

UW: What is next for the subsea cable industry, and the contractors that serve it?
JR: I think it will be quite some time before this industry revives, so the next phase is survival and probably consolidation, with cable maintenance the only obvious candidate for any stability, cable installation limited to small scale niche or "fill-in" cables, and the (very) occasional big project such as SEAMEWE4.

UW: Will the subsea cable industry ever reach a stable plateau, or is it destined to forever be a cyclic and fickle industry?
JR: Until the start of the boom in telecoms in 1998 this was a stable industry, dominated by the big PTTs like AT&T, who introduced new cables in a fairly steady way. With the incredible pace of development of fiber optic technology, and the boom and bust we have just gone through, we may never get back to that kind of environment. However, if a significant amount of consolidation continues to happen then there seems no reason why more stability can't be achieved... one day.

UW: When did SMD first sense trouble in the subsea cable industry, and what was your strategy for making it through the rough times? How does the Hydrovision acquisition play into the strategy?
JR: First of all we never believed that the industry levels of 1999 and 2000 could be maintained, but the writing was really on the wall soon after the start of the decline of the NASDAQ in March 2000. However, this really only sank in over the next 12 months, with serious concerns by Suboptic in May 2001. Even so, brand new ships were still being delivered in late 2002. So we knew our business would shrink from 2000 levels, although, nobody could forecast quite how much.
However, we have always done business in a volatile market so we are set up to be flexible in our organization, always looking for new opportunities and keeping capital expenditure to a minimum. The fact that we have continued to trade profitably through the disappearance of the telecoms market suggests, I think, that this has worked relatively well.
The acquisition of Hydrovision brings a range of non-telecoms equipment alongside SMD's product range and therefore helps to broaden our appeal to this new market.

UW: Why was Hydrovision's sister company, Seaeye Marine, not included in the acquisition?
JR: Quite simply, Seaeye was not for sale. Seaeye is a completely separate company at the opposite side of the UK to Hydrovision and therefore there is no particular logic for both companies being sold at the same time. In any case, the Hydrovision work-class ROVs are a better fit with the SMD range of larger hydraulic machines. The Curvetech thruster brand also helps us offer non-vehicle solutions to clients.

UW: Will you still sell and service the existing Hydrovision ROVs?
JR: Yes. We aim to continue to support existing Hydrovision equipment and customers and will sell the complete existing range of Hydrovision products.
Hydrovision is now integrated into the SMD organization, with the help of some Hydrovision staff. The combined range of products now starts with the Curvetech range of thrusters and hydraulic components, which can be incorporated into almost any subsea vehicle. SMD have been using Curvetech thrusters since we embarked on our own ROV development program in 1994; SMD, in fact, has a long association with Hydrovision.
We can now offer swimming ROVs, from 75hp small work-class systems through 150hp bigger work-class systems, all the way up to 1,200hp ROVs such as the GMS Excalibur, and the new Mayflower lay and burial tractor. The latter is just finishing its first big task on the North Hoyle offshore wind farm. This gives us the widest range of subsea products in the world.

UW: What is next for SMD Hydrovision? New ROV designs?
JR: We are always looking for new equipment business, so this will obviously include any ROVs. We aim to start with some Curvetech developments and move on from there to the ROVs. Without giving too much away, we are going to put some of our best resources into this, with the aim of using our much greater engineering capability to completely revamp the Curvetech and Hydrovision range.
At the same time, we are currently building the best and biggest pipeline plow in the world and pursuing some other avenues, including a tidal turbine project.

UW: Will SMD be getting into the AUV game? What are your thoughts on the future of commercial autonomous vehicles?
JR: AUVs seem to be limited by technical barriers, in particular power source and through-water data transmission. If the investment was justified, it may be possible to overcome the former, but possibly not the latter. Without some break-throughs on these two fronts it seems that they will have an important but limited role in the subsea world. Whether serious investment in this technology is worthwhile may also be questionable. In any case, having just absorbed a tethered ROV company, we will be focusing on that, for the time being at least.