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 Romania
the awakening giant of Europe |
Read our exclusive interview
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 SIDEX
Manager:
Mr. Nicolae,
General Manager of SIDEX
Contact:
Mr Nicolae Dumitru, General Director
1, Smârdan
6200 Galagti
Romania
Phone : 40 36 43 00 03
Fax : 40 36 46 40 10
telex : 51285
http://www.sidex.ro
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Activities
Integrated iron and steel works.
Strategy
 Interview with
Mr. Nicolae,
General Manager of SIDEX
Q: Mr. Nicolae, there is no doubt that your company, SIDEX. is one of the biggest companies of Romania, you are a leader in your sector, Could you give to our readers a brief historical background of your company, as well as your professional experience?
A: The erection of SIDEX iron and Steel Works began in 1961, This erection passed through three stages, each of these increasing the capacity of production: in 1972 - 2.5 million tons of crude steel, in 1980 - 5 million tons and in 1986, when the last equipment was commissioned, 10.5 million tons. The biggest level of production was achieved in 1989 and it was 7.9 million tons. SIDEX was built with the equipment supplied by severa1 foreign companies, including the American ones: Mannesmann-Demag. Davy-United, Wean United, Clecin, ASEA, Brown-Boveri, Paul-Wurth, Schloemann-Siemag, Siemens, and half of the equipment came from former Soviet Union. S1DEX is an integrated company; It starts the production process with coal and iron ore and finishes it by manufacturing about
12,000 types and sizes of flat products. As it is also written in our catalogue, we can produce steel sheets, strips and plates from 0.3 mm to 150 mm thickness, of all steel grades. We export our products to almost every country of the world and our annual export figure is around 550 - 600 million $. We are recognized on the foreign market for the quality of our steel products: heavy plates for ship building and drilling platforms, heavy plates for boilers and pressure vessels, sheets and plates for general applications and mechanical engineering, hot ro11ed strips for re-rolling, large diameter welded pipes for main pipe-lines for the supply of natural gas and oil.
About my professional experience, I was employed here in 1966 and I started as a department manager. From 1986 until 1990 I was the manager of the Blast Furnace Section and in 1990 I was appointed Deputy General Manager on production issues. Starting with l994 up to 1996, I was General Manager of the Economic Division. Since October 1996 and for the period Mr. Sandu is a Member of the Romamian Parliament, I have been the interim General Manager of SIDEX.
About, 25% of our production is exported into the European Union, about lO% to Latin America, 10 % to the other European countries, 5 % to the Near East and the Middle East, and the rest to the Far East. There are four trading houses, through which we export our products. Last year we have established with Balli a joint venture based in London, named SIDEX International. Through this company we arranged a credit line of 100 million $ with a group of Swiss banks. After 1990, when the Romanian industry reduced its activity and the COMECON group was dissolved, we had some problems with the sale of our products. The production has decreased to the point where we correlated it with the consumption. The lowest production was achieved in 1993, when we produced 3 million tons of crude stee1. Since 1993, on the basis of some studies made by foreign companies located in the European Union, we have established a restructuring and modernizing program for SlDEX. The implementation of this program started in 1994 and it has the following goals: in 2002 the production will be 5.5 million tons of steel, at a quality level comparable with that of the top companies in the European Union; we will shut down the extra capacities; until
2002 we will invest about 1.15 billion $ and we will have 25,000 employees, compared to the 42,500 we had in 1990 and the 36,000 we have now. These figures should not surprise you because what was characteristic for the companies built before 1989 was that they were able to insure themselves all they needed.
As you can see, SIDEX spreads over 1.600 hectares and, besides the basic sectors that produce pig-iron and steel, it has units for spare parts manufacture, maintenance services, transport on railroad and everything, up to the year 2002, these units which have different fields of activity will be separated from the main activity and part of them will be privatized. Until now we have invested 270 million $ in modernization, mainly in the area of the production of pig-iron and steel. A modernization program of 250 million $ is now in progress and it will be finalized this year. The amount was destined for the continuous casters and rolling mills areas. We are about six months behind the schedule established in 1994, but we hope that until 2002 we will have accomplished what we proposed to do. Regarding the American companies, we have concluded a contract concerning the modernization of the zinc coating plant with US Steel, another contract concerning the modernization of two continuous casters and we have started discussions with another American company, concerning the longitudinally welded pipes unit, for covering the pipes with plastics. This contract will be probably concluded in the following months and the American company wants even to buy this longitudinally welded pipes unit. All the modernization contracts are concluded with big companies, such as Mannessmann, Clecim, Ferrostaal, Kuttner.
Q: So, this is the program before privatization'?
A: In order to be privatized. a company should be attractive. This is our task: to make the company attractive and competitive. We are not in charge of the privatization, it is the State Ownership Fund's job. I know that Fleming Bank has won a SOPs tender for the privatization of SIDEX. Because we produce 90% of the flat products necessary to Romania, we have a monopoly position.
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Q: According to Romania's Association Agreement to the European Union. European steel makers will get a more free access to the Romanian market, What will you do to fight this competition?
A: SIDEX is the only Romanian company which is an associated member of EUROFER. So, we are an associated member of the Association of Metal Producers in Europe and we have received a credit of 19.5 million $ from the European Community. It is true that we had an agreement with the Community, which expired in January, and the effects are that the export of scrap iron will be free and the custom duties for long products will be exempted. For our products. the custom duty is 12% and it will not be exempted until the year 2000. We are not affected by the export of scrap iron because we use a very small quantity and neither by the import of long products. We are correlating our activity with the other producers from the European Community in order to prevent the occurrence of problems of any kind.
Q: So, SIDEX has a very interesting situation regarding the management. The company is run by a small management company, SIDERMAN. Is this system working properly?
A: Yes. We did not invent this system and it is often used in other countries. The management company's staff has seven members and hence, all the necessary qualifications. They are specialized in law, in economics, in finances, in research and design, in metallurgy, in energetics, in electronics and computers. These people are specialized in every field and in this transition period this is the proper way to run our company.
Q: Mr. Nicolae, our readers are interested in new business opportunities. In which areas of your activity are you interested to attract investments or partners?
A: Regarding this, I should tell you that the United States has done an injustice to SIDEX. In 1992, the US took a legal action against 19 countries, Romania included, accused of dumping practices. During that period, SIDEX exported only 3,000 tons of flat products in the US and, according to the American law, this quantity was too small to justify such an action. As you know. the most powerful dictates the politics, therefore we have been involved in this anti-dumping suit together with the European Union, Japan and other countries. Our luck was that these 3.000 tones represented only heavy plates, so we could continue to export the other products. Because of this, our commercial relationships with America diminished. We took some legal actions in order to overcome this blockage situation and I think that we will succeed it in October.
Q: So, it took some years...
A: Whenever it is wished to block an action, one of the seven people who judges the case gets ill or something else happens with him and when they vote, it's three to three. It is not the American Administration who is against this practices, but the metal producers from America who are protecting their market. We are going to take an action together with the Community people, since we also took some measures against them and I think that an agreement regarding the reexamination of the dumping problems once in every five years will be concluded.
Q: The ecological aspect of the company is becoming more and more important. What is your company doing in order to improve these problems?
As a general fact, the city is 1ocated east of SIDEX and 90 % of the year the wind blows from North to South. We have also an Environment Agency in Romania, with which we elaborated a program in order to bring SIDEX at the European level. We have two areas where we should take measures. namely the coke-oven batteries and the blast furnaces. Out of 1,15 billion $ of the modernization program I have told you about, over 200 million $ are allocated for the environment protection. We do not deny that we have pollution, but its level is much lower than the Pittsburgh's area.
Q: Mr. Nicolae. you play a very important role in the Romanian economy. How confident are you for the future of Romania?
A: The Romanians have always found solutions to overcome the difficulties and I think the same will happen now. In my opinion, the recovery of the Romanian economy will be achieved through the agricultural sector development. Concerning SIDEX, I can say that I am optimistic, even if our tax system is excessive, Romania has certain advantages in comparison with other former socialist countries. We have a strategic position, some resources of oil and natural gas and the industry is powerful in comparison with our neighbors' and it is a young industry. Last but not least, the labor force is qualified and if it is put to work it can accomplish a lot of things.
Q: As a more persona1 issue, what has been your most satisfying personal achievement since you are being the General Manager of SIDEX or since you are working in SIDEX?
A: It's very hard for me to answer this question. As we are the flat products supplier of l,400 Romanian companies, I think it is very important that we have managed to survive until now and that we have managed to find foreign financing in order to continue the production.
Q: As a final issue, what will be your final message to our readers?
A: America should see Romania as an attractive country, should realize that our mechanical engineering industry and our iron and steel Industry are very strong. To say as the Czech people say, we are opened to a co-operation on equal terms. |
© World INvestment NEws, 1998.
This is the electronic edition of the special country report on Romania
published in FORBES
Magazine's enriched with complementary information,
such as full interviews, detailed company files and more.
June 1 st 1998 issue
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