|
| |
|
 Romania
the awakening giant of Europe |
 Activities
Metering systems for flows, thermal agents and physical parameters of cold water, hot water and overheated steam supplied to industrial and domestic consumers by means of the technologics agent networks. GENERAL FLUID is the largest distruibutor of complete systems of plastic pipes and fittings in Romania made by Wavin (Holland).
Facts
Figures
 |
Strategy
 Interview with
Mr. Marin
of General Fluid
Question: Could you give to our readers a brief historical background of your company, as well as your professional experience?
Answer: We have started our activity in 1992. I have graduated the Politechnical University of Bucharest in 1985 and, because of my very good results, I was employed at the Fine Mechanic Institute of Bucharest. It was quite a performance for that time, it was very difficult to work directly in research after the graduation. I 1991, after the revolution, I decided to give up my job and I decided to start on my own shoulders with a good friend of mine, Mr. Vlad, which is now my partner. He is 10 years older than me but we know each other since 1980, he was very confident in me and I was very confident in him. We had a small fight in 1989 because it a very delicate moment, but we met again two years later and, definitely, we decided in 1992 to setup a company. We established M&W General Ltd., it was the first name, a limited company. M was from my name, W from his name and General because we decided to start a private activity but not on a special field. We just decided to do something together. It was both our opinions that the fluid measurement is definitely a very interesting market and I will try to explain you why. Before 1989 the price of water, steam and energy was nothing, had no connection with the real value. That’s why, practically, on the Romanian market nothing was measured, not even the technological fluid. It was very clear for us that it will come a moment when the price of the energy will increase and in that moment the measurements will be a very important problem, which will have to be solved somehow. Step by step we decided to involve our company in fluid measurements. That’s why we decided to create General Fluid, we kept General, to have some connection with the first company and Fluid because we decided to keep our activity in the fluid measurements area. We started our main activity in 1992 with 2 employees and after 2 years we had 25 employees. One of the most important years was 1995, when we really grown up. Now, we have
150 employees and our main activity remained fluid measurements. Of course, we started to have contacts with famous producers in the world, we decided finally that the German quality is the best. I’m confident in the German quality. We are cooperating with a famous German producer and we are trying to do here everything we are able to: to assemble mechanisms in the bodies, we are buying bodies separately, we have a test bench here and many other activities. The most important problem it was that in Romania, in 1993, it was impossible to sell a meter.
It was possible this way to sell a measurement service and I will explain why. When you are trying to measure a flow, the customer has a pipe, you transport water but you don’t know the average of the flow. You must choose a meter, it’s not enough to know the size of the pipe or how big is the flow because if you are putting your meter according to the size of the pipe you can have surprises. If the flow is too big you risk to destroy the flow meter and if the value of the flow is too small, because nobody knows how many cube meters they are transporting in the pipe, the accuracy of your measurement is not efficient, you have to reduce the diameter of the pipe, to put a proper meter there and after that you will measure with a good accuracy. Because of the network, and I’m talking about Bucharest, nobody knows how much is the real flow and that’s why nobody will buy a meter, everybody will buy a service. Let’s say you know the flow, but if you need to measure the flow with 0.1 % accuracy or 5 % accuracy, you need a different meter. There are some application when you need to know the flow very precisely and others when you don’t. if we are talking about the heat energy, you have to measure the flow but you have to measure also the temperature on the flow and on the return pipe. That’s why it’s a very interesting activity and I might say that our key of success was that if somebody would like to enter on this field it’s very difficult, he must have a lot of experts. Now we know very well who are the people in this field. That means that the entrance barriers of this field are very difficult to be passed. Let’s say you invest money in a test bench and you try to do the same. But to find people to use this kind of tools it’s a very difficult thing. For instance, we bought some tools to make a predetermination of the flow. If you say to me that you want to measure the water consumption I will give you a service, not a meter, which is a complete different problem. First of all you must choose the meter, already a difficult problem, you must know where to install the meter: on a straight pipe or after a vault. If you install it after a vault the result is crazy, has no connection with the reality. You must know also if you must put it vertical or horizontal. That means you need many other steps. My job is to insure you the accuracy that you need. You tell me that I have to measure this fluid with this accuracy and it’s my problem to make the project, to choose the meter, to buy it, to install it, to assure the service and the guarantee. Of course, we have split our activity in water meters, steam meters and so on.
Q: What marketing strategy does your company apply, given the fact that it competes on different segments?
A: Maybe it’s too much too talk about marketing strategy and I will try to explain you why. If I’m talking only about the Bucharest market, in Bucharest there are at this moment about 12 000 blocks of flats. 95 % of them are heated with a central heating network, which is state property. This network must make a real balance to measure the efficiency and so on. For a block of flats you need at least
3 heat meters: you have to measure the flow, the temperature of the flow and the return. But, to make a balance, you need another heat meter.
For the last 2 years we were involved in this project and with the whole investment, I don’t know how much, a few million $, we were able to realize only 5 000 measurement points. That means we need other 25 000. It’s clear then that only for this market we have to work another 5 or 6 years. it’s not only a matter of money, if somebody would say that he want to invest 50 million $ and to solve this problem in one year, it’s impossible. First of all you have to make the design of the real installation, the network of pipes and so on, some people must go and decide how it will be the new network of pipes. So, it’s also a matter of possibilities to do it, you need a lot of specialists and time. That’s why the market it’s huge around me and we are in a strange position. I’m afraid to make this marketing because I’m not able to cover. I have to be very careful about that because if I’m not able to cover the whole demand I risk to loose the people’s confidence. If we are talking about the Romanian market, there are 20 important towns and the International Bank for Reconstruction and Development developed already a program for water rehabilitation all over Romania. This year they allocated about 100 million $ only for this program. My company is also involved in the installation of polyethylene pipes. It’s a very good business and it represents in our activity around 20 %, but only because we didn’t push too much on it and we keep our main activity with the meters. We involved in this business because we have very good connections with the mangers of the water supplying companies. They need meters but they also need pipes.
|
Q: I would like to know what are the financial results of 1997, in term of turnover?
A: For a Romanian company, the financial result is something very interesting and it’s very difficult for somebody from outside to understand why I’m telling this. Last year was a very strange and difficult one. In January 1997, the value of Dollar almost doubled. We lost almost 150 000 DM in a few days and I’ll explain why. We are working on Lei and my customers are paying me at the exchange rate value in the moment of the payment. I have Lei in my account and if I’m not able to buy DM and make the external payment to my suppliers I’m loosing, it’s my own risk, and it was a very short period then. But, the whole turnover in
1997 it was around 22 billion Lei which means around 3 million $. It’s not very impressive but I’m happy.
Q: No, it’s very good, I mean it’s a young company, it’s dynamic and it grew fast.
A: If we are talking about dynamic, in 1996 the whole turnover was only 2 million $. I’m really happy about my dynamic because, in Lei, I consider it three times. That’s good, because to keep the same turnover in Lei or to increase in such a moment when the Leu is falling, it’s already something special for a Romanian company. I’m very glad to double the amount in Lei even if the inflation is 100 %.
Q: What are the main aspects of your strategy and the best opportunities for the future for your company?
A: I had some interesting discussions with my German partners and it seems that they are interested to buy some shares, because they are already confident. They were not so confident when we started our activity. It’s very clear for me that when you are fighting for a market and when you are talking about 1 million $ it’s something.
When you try to increase your activity and you are talking about hundreds of millions you have to fight with somebody else, with big companies, not Romanian ones. If I’m talking about the meters, there are already present on the market famous companies. Me and my partner, we know very well which is our possibility, we are very proud of what we have done until now, but on the other hand we must be very careful about the real picture and what will happen here. It’s clear that we will have to be closer and closer with a strong company and maybe we can make a sort of agreement with the German producer, to explain him that he must be present here on this market. Anyway, we will have a good position, the installation will be my job, because the big companies will be interested in selling. Maybe we will increase our turnover 1.5 times or 2 times but not more because, even if until now the dynamic was impressive, from now on it will be more difficult.
Q: What about private investors?
A: It’s very difficult to tell what will be the future. I’m very confident in this job, I’m very sure that General Fluid will exist many, many years from now on, I’m sure that the turnover will increase. All of this because we are working in the infrastructure, what Romania needs right now. After that we might develop other activities. 10 years from now on I don’t have to look for the market.
Q: Our readers are interested in business opportunities. For your company, in which areas of your activity are you interested in attracting foreign investors?
A: I’m involved in a very interesting activity, I’m opening a new market and I will explain why. In a block of flats, nobody’s asking to measure the consumption in his flat because, for the time being, nobody’s measuring the consumption for the whole block of flats. After the block of flats will measure its consumption, the next step they will try to reduce this consumption. That means that they will try to measure in each flat and in each room, they will try to change the heat unit, they will try to put a thermostatic vault that they don’t have in this moment, they will change the windows, they will use thermo-isolation solutions. But all of these can be done only after the first step: the measurement of the real consumption. I have already a direct contact with an organization of the blocks of flats, because I’m installing the heat energy meter. In that moment I can offer another service. I have already offers for equipment for each flat, but it’s a matter of money. If they don’t have money I can install the heat allocation for nothing but they must sign a contract with me for this service and the equipment is mine. The equipment is electronic and it’s put on the heat exchanger and he can allocate for each room what percent from the whole consumption you want. In Germany, for instance, there are famous companies who are doing this. They are offering the equipment for nothing and they are signing a contract. This is another business, but you have to be powerful, you must have money. That’s why there are a lot of big companies who can be interested in offering this service. It’s a huge opportunity.
Q: As we say in the United States, contacts means often contracts. What will you do to encourage greater contacts?
A: It is a mistake from our side, but when you are too much involved in the daily activities, you forget about that and, in this moment, I’m not 100 % sure that they are confident in the Romanian market to develop such a business. This is a long term business and many companies are interested in a short term business. We are working with famous producers like Honigwell, Fisher Rosemont, but if you ask them why don’t you go there to produce there, they won’t care. Here, the average of the salary is about 100 or 200 $ a month for a good employee, after taxes. I would like to offer them 500 but it’s not possible. That’s why it’s an opportunity that must be used. We have the expertise to do here everything. In these 5 years I have visited around 10 factories in Holland and Germany and I was very impressed about the organization, but it’s nothing special, we can do everything here, it’s a matter of technology. When you have the ISO9001 system, it doesn’t matter if you are German or not. The main problem for us is that me, as manager, I have to convince my people to respect the rules.
Q: And how confident are you for the future of your country?
A: The proof that I’m confident is that I’m still here in Romania and that I’m trying to develop my business here. If I wouldn’t be confident I would make an offer to sell this company and I’m sure that there are a lot of companies who would be interested. There are a lot of difficulties now, but I think that it’s a no returning way. We won’t go as quickly as I would like but not only because of us. It’s a matter of mentality.
Q: As a final issue, what will be your final message to our readers?
A: They must understand that we have a very big advantage comparing to the other countries. We have a big market, 50 years before 1989 the people trained themselves, we have a good education. Of course, not everything is great here, I still have some problems, but my advantage is that I know how you are doing business, which is your style to do business and I’m like a connection between your style and the Romanian reality. It’s a very big opportunity. |
© 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 |
|
|
|
|
|
|
|
|
|
|
|
