How have you managed to maintain the highest position among other Romanian shipyards?
Even before 1990 the city of Galati (Galatz) itself was the base of the shipbuilding industry- the school was here. Galati was, and still is, the training center for all shipyards in Romania. The only University for shipbuilding is in Galati, the horizontal industry is insured with professional schools in the shipbuilding field, the only research and project institute for ships is in Galati, and the entire coordination of shipping for the whole of the Romanian shipping industry was done from here even before 1990. We can say that all the management in all the shipyards and in the industry that helps horizontally the shipyards was qualified and worked in this shipyard before going to Constanta or others. Most of the Romanian shipyards are new. They have actually started with personnel who was send there from Shipyard Galati and who later became managers of the other yards.
Generally, here in this center in Galati were kept the persons who were considered at that time to be the best and this meant an advantage for us. Engineers in shipbuilding were sent abroad to be specialized and trained so that when they came back they insured the nucleus in Galati shipyard. The entire ship strategy was conceived and thought in Galati. This tradition obliges us - at least myself. I have been working here for 26 years and I am one of the engineers trained in Japan and Germany before 1990 and who brought into the country the experience and a part of the work mentality from the specialized countries in ship building of that time. I can say that I was affected in a positive way and this mentality affected our actions positively after 1990.
The performance of Galati Shipyard is the honest result of a special seriousness and of the faster understanding of the market mechanisms. This understanding allowed us to have a better ratio between the labor force and the production. As a proof, in 1990 we had 9,400 employees and now we have only 4,100 without social problems, without a decrease in production. This management of the shipyard had myself as director of the factory for hulks since 1984 and since January 1990 as General Director.
Can you tell us in a nutshell how was the transition period?
Honestly, even I do not realize how the years have passed by. In this extraordinary long transition and in a continuously changing economy and legislation, is not very easy to keep a high level of quality and responsibility in 11 years.
How was the privatization process and what has the Damen Group brought to you?
Privatization took place in March 1999. I prepared this privatization since 1994. When I say preparation I mean the preparation of the employees to understand, accept and finally make them want this privatization. This fight with the trade unions was very tough because it came after a very dark period in Romania - the period of the union leadership. Even though there was a management, in the first two or three years, the unions, without understanding their role in the society, imposed certain principles and directions which were not always the best ones. The passing from the union management to the performing management is indeed a very tough process. For me it meant almost four years of weekly dialogue with the unions. This was not because there were disputes, but because I felt the need to have them close to understand their needs. There was a fear of privatization because for the first more serious privatization that took place in Romania, the buyer imposed a certain quality or performance. He did not buy to insure a social protection for the entire community. There was this fear that slowly, very carefully and with a big ability I have succeeded to change.
When I say "I" I'm actually talking about a board of directors which we got only in 1994, changing on the process a lot directors, engineers and personnel. Since 1994 the board has not been changed at all. The pyramidal management from the communist systems has been changed with the horizontal management with direct responsibility. It is true that this was done based on some programs established by myself. It was a long process at a very high level, because it is much easier not to solve a problem because you do not have a limitation of competence and to raise it to be solved by the head of the pyramid. With the same amount of work of seven days a week, we have succeeded now for every leader to have, not only the freedom do decide on its direction, but also to take efficiency measures without my approval. This control exists now but it works more as a parent-children control.
Honestly, I believe that the privatization came at a very appropriate moment. When it was privatized the shipyard had no financial problems vis-a-vis the State or other companies. Before privatization we had a profit of approximately 6%-7% from our turnover (US$ 26-28 million per year). Our company was not something heavy on the shoulders of our buyer, i.e. that besides the price he had to pay and the guaranteed investments, he did not have to pay any debts to third parties.
Could you tell us how much they had to invest when they purchased Galati Shipyards and what kind of investments have they done since then?
The privatization contract obliged the buyer to an investment of US$ 15 million. I would like to speak highly not only of the buyer but also of the group designated by the SOF to negotiate this privatization contract and which put on the first place not only the cash value but the investments' value. It was not like a sale at the market but they also gave money to buy the spare parts. This thing did not happen for other companies. I think the fact that I am a well-known person in Romania and also abroad in the shipping field, allowed me to impose a start point for this negotiations meaning investments more than the cash. I speak highly of the SOF part because they accepted my investment program and fought for this program to be approved also by the buyer. I am convinced that this happened against the cash. Finally, this privatization created the possibility for the shipyard to receive a new technological breath that did not get us in the position to impose the buyer structural and management restructures. In this moment, Damen Shipyard Galati has 100% Romanian management. The buyer only owns us and adapts the Romanian legislation to the English one for the financial and accounting department. There is one person who assists us in the technological way but he is not member of the board. | Can you give us some other figures about your company?
In 1999 our turnover was of almost US$ 38 million, representing an increase of approximately 30% as compared to year before the privatization, and this considering the circumstances in which the number of employees has decreased in 700. This year (2000) the turnover is about US$ 58 million dollars and we appreciate it will get up to US$ 70 million by the end of the year. This leads to an increase of 60% compared to the year before privatization. This is possible because Damen Group has the capability and has adopted a working strategy of having ships on stock. After they verify very well the market they launch a ship project they know that has a long life and will be very needed for a number of years. Under these circumstances, when I feel we will lack money in the future, they will give us three or four orders like this. The financial effort is theirs because they have to support 4 ships on the stock. All the ships that were initially on the stock have been sold and now it is empty. This policy made the group to have a continuously ascending trend since 1967. It was indeed a surprise for the world market that someone is building so many ships on the stock and has the market insured after that. Their sales department is very good and they have a visionary projecting department that feels the market and which tells them what are going to be the needs for the future.
Is everything that you produce sold to the Damen Group?
Not all, only 60% of our turnover is for Damen and 40% goes to other markets such as Norway, Greece, France, Taiwan, or China. We do not have any restrictions - we are completely free and we also have our own sales department. For instance, if there is a restriction for Nigeria and we cannot sell ships to that country, the contract will be signed via others and finally we will also export to Nigeria.
Do you build any kind of boats or are you are trying to specialize on a particular type of vessel?
As Damen Group has its strategy of building ships on stock, we had the ability of working on 8 prototypes at the same time in this shipyard. We are building from barges to drilling platforms. The maximum capacity for the petroleum tanks is of 65,000 tons because the Danube is not deep enough to allow bigger ships. Now we are building 3 tanks of 38,000 tons.
On top of all the contracts we have insured, we have just signed an agreement to construct 2 more tankers of 40,000 tons for a German company, so as you can see we continue increasing our production.
Are you increasing your production or there is only a certain quantity of boats that you can manufacture per year?
For us the number it is not so important. The important thing is the dead-weight tonnage. I can build ten barges of 2,000 tons or one tank of 20,000 tons. In this case the number is not important. For us important are the turnover and the quantity of steel to be produced in one year. The steel preparation in one year is our fist priority. At this moment we produce about 25,000 tons of steel per year - one tank has about 8,000 tons and a barge about 400 tons. In this case, these 25,000 tons will be this year 28,000, next year 32,000 tons and I suppose the maximum capacity we will reach will be 45,000 tons per year.
What plans do you have for the future?
I have a management contract with Damen Group for five years, if my health will allow me, and if I feel that I can still be performing to stay. They are also free to analyze if I am good and if they want me to stay. They have proposed me at the beginning an eight years contract, but I refused it and proposed the five years one. There are lots of things to be done and I do not think it is the time for me to think of retirement. The shipyard just now entered normality, and there is a lot to be done, both for the people and for the buyer to be satisfied that he invested in Romania. This could attract from the Netherlands other investors who will insure the horizontal industry which serves the shipbuilding. For this I consider there are still at least four or five years of working together and only after that we will think what more needs to be done. I want to raise my children and train them to work in relation with the shipyard. Probably Damen Group will very well receive both of them because they are young and they saw in myself a devoted behavior towards the one who insures my activity.
I can say that I have the satisfaction that together with the employees we got to a point where we do not consider the influence of the politics in the industry. This is one of the biggest defects of the Romanian economy. We are preoccupied only by what it is good for us to do.
3 years ago the execution of 1 ton of steel construction was done in 280 hours. Now we got down to 130 hours, the wage increase has probably contributed to this performance. This has allowed us to have only 4,100 employees now. I think that this year the yard will have a turnover that will allow us a profit of about US$ 10 million. For a Romanian company in a full transition period this profit is quite good. |
