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 Romania
the awakening giant of Europe |
 Activities
 Commercial motor vehicles and subassemblies:
chassis- trucks and trucks of 7 - 26 ton GVW
prime movers of 16 - 40 ton GCW
diesel engines of 120 - 410 HP with natural intake, turbocharging and intercooling, with 6 cylinders in line and 8 or 12 cylinders in V
3 : 4.5 - 5.5 : 7 ton front driven axles; simple and tandem rear axles of 4.5 - 8 - 10 and 13 ton carrying capacity
full forward control cabins: normal, medium and double (with bunks)
chassis frames for trucks and buses
rims
automotive components and spare parts
Complex machine-tools:
special equipments, semiautomatic machining lines
NC machining equipments
Tools, devices, verifiers
special chip removing tools
stamps
dies
complex devices
verifiers of high accuracy
Blanks
steel castings
castings of gray, alloy or nodular cast iron
aluminum castings
forgings
Besides the above- mentioned products, the Company carries out the following activities:
Design and Research in the field of:
motor vehicles
components and spare parts
technologies
complex machine-tools, mechanizations
tools, devices, verifiers
Service and technical assistance
Home and foreign trade
Parabolic reflectors for satellite reception
Strategy
 Interview with
Mr. Rugacs,
Director of ROMAN S.A.
Q: Mr. Rugacs, your company is very well known in your sector but could you give to our readers a brief historical background of your company, as well as your professional experience.
A: I want to begin by pointing out some historical milestones of our company. The company was established in 1921 and originally named ROMLOC - the Romanian Locomotive and Wagon Factory. In 1936 it merged with Astra Company and produced wagons and also canons and munitions. From 1954 the truck production has become the main activity. The first type of truck was of 4-ton payload, equipped with a 90 HP gasoline engine.
Our company underwent several evolution stages, each of them appearing in generations of new improved products. Thus, from 1962 the manufacturing of the second generation of gasoline engine trucks began The "Carpati" and "Bucegi" trucks of 3 and 5 ton payload, with 130 HP engine.
In 1971, the vehicles under MAN license started to be manufactured, equipped with Diesel engines and full forward cabins. To satisfy the mor and more diversify transport requirement, by the end of the eighties, the fourth generation of trucks appeared, from DAC class.
After '90, the vehicles produced by our company were equipped with imported power groups to meet the international transport regulations.
The company was set up as an integrated factory, to produce almost all the parts for trucks: cast and forged parts, engines and axles, chassis, cabins and wheels. This is the main part of the company. The most important think is that we have technical possibilities and a lot of knowledge in this sector. We have also a very developed sector were we make technological lines for other companies, molds for our needs, for export and for other companies and we also make special tools.
Starting with 1993, the company entered into a program of restructuring, which was accentuated in 1997, when the structure of the company was transformed into a divisional one and then into profit centers. . This was made in the idea of saving the trucks production, to align the costs and to separate the activities that can be by independent and which don’t affect the final product.
Speaking now about my professional experience, I have been working in this company since 1980, after I graduated the Technical University of Brasov. I have worked as an engineer at the prototype section, after that I was the chief of this section. I participated in the United States in some prototype projects, after that I became the chief of the assembling line. In 1992, when the company was reorganized, I was appointed director of the Truck Division and in March 1997 I was appointed general director.
Q: I would like to know what are the financial results of 1997.
A: We work to finalize them and they will be ready at the end of February. 1997 was a hard year, but from our preliminary analyses, the company is on profit. We have debts to the state, we managed to pay them for 1992 and 1993 and this year we must find solutions to liquidate the debts for the years 1994 - 1996. We don’t have debts for energy, gas, water, the daily expenses are paid, so the company can function in the normal limits. In the first semester of 1997 the bank interest was 130 -
140 % so our expenses for 1997 were of about 50 billion lei and most of this affected our buyers. At one point, a strange but predictable phenomenon happened.
I can give you an example. For the mixers, at the beginning of February, one client made an advance deposit of 15 %. During this month the bank interest grew and at the end of the month he said that he would not come to pick up his order.
The producer said that he will loose the money, but he answered that he’s not interested, because at a bank interest of 140 % he would gain more if he puts his money in the bank than if he would work with these mixers. The same thing happened with the dealers of spare parts. For one month they win between 3 and 5 %, but, by deposing the money in a bank, they win 10 or 11 %.
Q: But we can say that the turnover is around 100 million $?
A: Yes, about 100 million, considering the USD-ROL average exchange rate.
Q: What is precisely your place on the domestic market and who are your main competitors?
A: Last year we sold 1780 trucks. The figure is very small. From the APIA (Association of Producers and Importers of Automobiles) reports, only 8 % were imported. It’s clear that the Romanian companies couldn’t afford to buy trucks.
There is a study ordered by Navistar International and made by Planecon regarding our company and the number of trucks that we will sell on the market. This study shows a raising until the year 2002 and after that it going to be linear. For this year, the prognosis is for about 3000 trucks. We are speaking about the civil trucks, because we are not making only civil trucks.
Our weakness is the engine, because we didn’t have enough money to invest in the research. Even so, the 110 H. P. engine, designed by us, is manufactured and omologated in EURO 2 specifications. In the same time, some medium and heavy trucks with civil and military destination are manufacture and offered to our partners, powered with engines from well known companies such as Caterpillar, Navistar International, Renault etc.
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To return to the divisions of the company, the company functions on seven market-oriented profit and anytime we can transform these centers into seven independent companies. The idea was taken from the American producers of truck. We have trucks division with an assembling line, the cabin, the chassis and the pressing of the cabin elements. We also have an axle factory, an engine factory, a tool factory, service for machinery and so on. Anytime we can separate and sell one of these factories, but only those who are not affecting the final product. Now, every profit center has a logistical function and a technical function, they are managing their sales, the bookkeeping is independent but they don’t have a legal personality yet.
Now we can follow two ways to remain one single company or to divide into several companies, in which case the truck company will control the other resoluteness through shares packages.
We search methods for a better payment of the employees, correlated with the production and the costs.
Q: You were speaking about the domestic market, but what about the foreign market? Do you export abroad and on which markets?
A: Our export part is small. For 10 - 15 years, we had a very good export on the Chinese market, where we had two assembling lines. In 1991 - 1992 we stopped this deal because trade negotiations failed, but at the present, it seems possible to find solutions to resume the export.
We were very interested on the Asian market because our main competitors there are only the Japanese producers. A part of our Western partners began to understand this and they are talking to us for building together a truck that can be a serious competitor for the Japanese, as price and quality. Today, even Volvo can't enter the Asian market because of their high prices.
Q: When you are talking about partners you are talking about Caterpillar and the others that you mentioned before?
A: Yes, including Caterpillar. I’m an engineer and I can say that I haven't forgotten to be an engineer. Regarding the engines, the best engine is Caterpillar. The big problem with Cater-Pillar is that they have a typical pattern that you cannot get out of it. They are not producers of trucks and we must find a solution to buy the entire kit. For example, Renault gives you the entire kit. But, we are talking now with Caterpillar about this and they express their interest.
Q: In your opinion, how much will your company need to improve its products and technologies?
A: From the technological point of view we don’t need very special things. We need some corrections, some modernization of tools and so on. The most important thing is that the companies that are buying must be helped, by leasing for example.
If this doesn’t happen we will be in the same situation like some motor cars producers and importers who have brought technologies and have made feasibility programs without thinking about the power of buying on the Romanian market. If you look how many cars they sold last year, you will see the absorption capacity of the market. We don’t have any trucks left in our stock, but you will find carson stock. So, first of all, we need the leasing.
Q: Was it your idea or the idea of your partners?
A: It came from the fact that I saw and I read how they work somewhere else and. 85% of the truck sales are on leasing.
Q: Do you think leasing is the solution for your company?
A: Yes. In Romania it's enough and safe to invest in a leasing company. The National Union of Transports is asking since 1996 when will we sell on leasing, but we cannot do that. First, a leasing company must be created either a subsidiary of a foreign company or an independent one. The insurance companies are interested. We now what we need to do, we took some leasing programs from the US, we know what producers have to offer, so all we need is some financing to create this company.
Q: Our readers are interested in new business opportunities. In which area of your activity are you interested to attract foreign investors?
A: The business opportunities we offer and we are interested in are: the leasing company, that I've told you before, the association with an engine producer and the modernization of the trucks.
We see the association with an engine producer as a joint venture business, to produce engines with an integration degree of 50 or 60%. The trucks equipped with these engines will be sell on the Romanian market and on some other markets that can be penetrated, like those in Latin America, Asia and so on.
About modernization, your readers must know that the 124,000 trucks existing in Romania cannot be changed at once. That is why we have offered updating kits and the response of the market was positive.
Q: As we say in the United States, contacts mean often contracts. What will you do to encourage more contacts?
A: First of all, we managed to prove that when we made a deal, we kept it. We didn’t became expansive, we were retained and we preferred to say the things straight and even if, at the beginning, some of our partners became upset, after two or three months they understood that it was for good and for the well being of the business. It’s very easy to make overstatements to make the partner feel confortable.
Q: According to your Privatization Minister, Mr. Ionescu, one of the main objectives is to obtain the international recognition from the international community. What is your company doing in order to participate on this?
A: I think we are a little bit in advance in this respect, because some of our customers travel in Europe and therefore they need trucks meeting the European norms. As a matter of fact ROMAN's response to the international market requirements shows our desire to be integrated in the international community.
Q: OK, but I was talking also about the image of Romania abroad.
A: The Romanian image was created by Romanians. Sometime, even if we are younger, we surprise ourselves thinking in a communist way. The generation has to change and than the Romanian image will change. I can give you an example: in 1988 - 1989 I was in the United States and beside the political statements, I was surprised to see that the Romanians who had defected were declaring that all that was left in Romania was bad. The things are not like this. For instance the Romanian school was and it still is a very good one.
Q: I would like to know how confident are you for the future of your country?
A: If I wouldn’t believe in the future of this country maybe I had already left by now. I didn’t leave this company either, for several reasons: first, if you leave when it’s hard you look like a coward; second I believe this is to moment to do something by acting not by speaking.
In my way I’m a fighter, but once or twice I had the feeling that I was put in the corner because everybody was against this company and everybody said that it’s not possible to do anything.
I promise to restructure the company even if would cost the jobs of
3000 people. I meant it and I did it. I also suggested to compare this company to a similar one at the end of this year. The preliminary results of 1997 show that I was right.
We are trying to change the image of the company by producing and not promising to make more than we can.
When we are building the future of ROMAN we are building the future of Romania.
Q: When we had the interview with Minister Ionescu, he referred to your company and he thought that it was a very interesting example.
A: I didn’t have the pleasure to discuss with Mr. Ionescu. I don’t know him in person. I have a good feeling about the top team's interest in our company. We need all the help we can get for our restructuring projects.
Q: As a more personal issue, what has been your most satisfying personal achievement since you are being general director of ROMAN?
A: The fact that I managed to change the image of the company. I would have preferred personal technical achievements.
Q: As a final issue, what will be your final message to our readers?
A: Keeping in mind that your readers want to make money, there is a big opportunity of making money here, in Romania, and the business opportunities we offer are among the best.
Now is the moment for the investors to go for them. |
© 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
Developed by AgenciaE.Tv |
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