HYDRO-NAVAL GOES OFFSHORE
Gospodarka Morska 05.07.2012
Polish companies are usually perceived as reliable suppliers by their foreign partners. The sea industry in Poland is shaped by the highly specialised businesses. Hydro-Naval, a company manufacturing oil industry systems and deck equipment for sea vessels, announced recently that—thanks to their new manufacturing plant set in the the Słupsk Special Economic Zone—it can now double its capacity. They can also offer new products. The development plans have been presented by Szymon Sobków, the Hydro-Naval CEO.
Reading the news in the industry media, we can learn about the crisis in the sea economy. But Hydro-Naval is growing. What do you do to maintain the growth rate?
First, I need to disagree with the information about the slowdown in our business sector. The European Union disbanded two large shipyards in Poland – in Gdańsk and in Szczecin. But the market always fills the vacuum. A Korean shipyard, Hyundai Heavy Industry launches a new large ship every 6 weeks. Only in 2011 this shipyard added 110 various ships (in the past, the Szczecin Shipyard could boast a similar output). A typical ship was then built within 6 weeks. Hydro-Naval belongs to a group of Polish companies that work for the oil industry. We also make fishing and research vessels winches. Our products include almost all equipment used by the sea crews. We even sell to the Navy (our products go to the armament companies in Germany, Polish Navy and Indian Navy). You can maintain the growth rate, when you deliver reliably, honestly, on time. These virtues must be nurtured by everybody, no matter what their business is.
How was Hydro-Naval born?
With two partners, I launched a company in Ustka, in 1979. The start-up was not easy at all. We only had a 30m² workshop. We began with refurbishments of the fishing winches and the hydraulics for winch drives. Then we started manufacturing fishing winches for the Rapp Hydema A/S, and cable winches for the Gdynia Shipyard that were installed in the B-679 vessels built for open sea going fishing companies: Odra Świnoujście, Gryf Szczecin and Dalmor. Today we employ 120 staff. The manufacturing area now amounts to 9000m², and the staff facilities will serve 150. Our customers come from Norway, Germany, France, the Netherlands and the USA. 2000 fishing winches went to the Norwegians only.
Let’s compare the markets at the time when you started with the one you have now. How a similar starting company would operate in the beginning of this century?
It is hard to compare two completely different economy environments. At that time, a company providing a specialised systems could practically demand any price, as there was no competition in the market. In the beginning we were refurbishing the fishing winches. All existing fishing companies sent us their boats for refurbishment work with winches and the hydraulic systems. Later also came boats from the DDR. We worked on the fishing winches and the hydraulics. We had 6 employees back then but the company grew gradually. We built a double size manufacturing hall and sold the old property. We have built all our present resources with small steps.
What are the markets that you want to go to?
We are not selling much in Poland. New fishing boats are not being built, and the owners of those still operating do not have enough money to buy new fishing winches, fishing pump installations or other specialised equipment. Therefore we must look for the customers elsewhere. We have been on the Norwegian market for 20 years now but this was just a piece of luck, as we have never looked for contracts with this specific market in mind. We met the Rapp Hydema A/S, who were looking for cheap suppliers, and the Polish companies were very inexpensive those days. We got more and more orders and this way became their regular suppliers. With the complex system of business connections, our products are being sold worldwide from Norway. You can find them around the Globe, from the USA through Australia.
What could you offer except for the price?
Quality that was matching the European standards. After 20 years this has not changed. To sell to the oil rigs or gear to the navy, you must meet a number of very demanding requirements. We hold the ISO (DNV, ZSJZ) quality certificates, as well as AQAP (a NATO recognised standard). Our products have been certified by DNV, ABS, BV, PRS and other rating agents.
What are your flag products?
110 products were sent to test sites last year. This year the number went up to 130. For the offshore rigs we manufacture the remotely controlled Service and Access Baskets (SAB). These are installed on the rigs and vessels, where they are used for all sorts of repair and maintenance tasks. Recently we made a major step forward, and began building Hydrarackers. These are 120t, 55m high structures that guide the drill of the oil rig. These systems are expected to be delivered in one piece. Since they are too big for transport (they would neither go through our gates, nor over the bridges along the Słupsk-Gdynia road). We make the pieces in our plant and assemble them in Gdynia. Then, a 50m long road platform transports them to the ship. The customers are on the sea, so a sea transport is the most convenient.
I cannot hold my curiosity. What do you do for the Navies throughout the world?
We produce systems driving the submarine seeking sonar arrays, and the RAS systems that facilitate replenishment at sea – they pump fuel, water, and transfer other cargo. We also produce specialised winches.
Do you deliver to our Navy?
Certainly. It’s enough to visit the Navy shipyard in Gdynia. There are two warehouses with our systems for the Project 621 ship.
What sort of products are you planning for future?
Simply speaking, we will produce whatever there is demand for. Now I would rather think that these will not be products for the fishing industry. Too few boats are being launched to feed our company. We would rather focus on the oil industry systems.
Since October 2011 Hydro-Naval has been operating in the newly built, 9000m² lot, with 70,000m³ under the roof. The facility is located within the Słupsk Special Economic Zone, How will this affect your opportunities?
We moved, because we wanted to develop the company and sort out a number of organisational issues. Except for the area, the strongest assets of the new facility are the 17 gantry cranes lifting from 1t to 12.5t (two combined cranes lift 25t), and one of the few supervised welding line in Poland. Most of the errors usually committed while welding, are eliminated here. The welding tools setup is stored on the server, and the welding tool operator may not introduce any modifications. Furthermore, we spent 2,000,000 PLN for a shot blasting chamber and a painting and drying cabin. This was partially paid for with the EU funding. We are finishing transfer of the machinery now, and are planning new purchases. We are now sorting issues related to the move and increasing the output. The new capacity is already being used.
Many entrepreneurs are worried about cheap, Middle East competition. How can you compete with them?
Contrary to intuitions, specialised manufacturing is less expensive in Norway than it is in China. That is because the payroll makes only a fraction of the expense. Once you add the transport, training and technology supervision, you can find that the Chinese product is 40% more expensive. In the next few years, the technology applied in the Chinese plants will match the technologies used in Europe. Nonetheless, even the cost of transport would suffice to warrant long life of our industry without any threats coming from China. Importantly, the more complex systems are also more expensive. Quality control, special machinery and educated staff must be paid for.
Wishing you successful implementation of your plans.
RECOGNITION FOR HYDRO-NAVAL IN THE RANKINGS OF 2011: GAZELE BIZNESU (THE GAZELLES OF BUSINESS), GEOPARDY BIZNESU (THE CHEETAHS OF BUSINESS) AND THE EFFECTIVE COMPANY.
Recognition for Hydro-Naval in the rankings of 2011: Gazele Biznesu (The Gazelles of Business), Geopardy Biznesu (The Cheetahs of Business) and The Effective Company.
Participation in the ranking of “Puls Biznesu” (The Business Pulse) magazine, which evaluated the financial credibility and dynamics of the businesses, provided Hydro-Naval with a title of the Gazelle of Business of 2011. The Gazelle of Business apply to a business, which meets the following criteria:
- was established prior to 2008 and conducts its business activity continuously to this day;
- had sales revenues ranging between 3 and 200 million PLN during the base year 2008;
- has recorder sales revenue growth between 2008 and 2010;
- has not recorded a loss in 2008-2010;
- has enabled the analysis of its financial results since at least 2008.
Based on our data submitted to the National Court Register and for the purpose of the competition, the editors of the Magazine of Entrepreneurs “The European Company”, have estimated the between 2008 and 2010 Hydro-Naval operated effectively and dynamically, obtaining a high ratio of net profit to operation income. Among 50 000 companies, Wywiadownia Gospodarcza (Economic Inquiry Agency) Infocredit selected the companies, which had at least 1 million PLN of income, declared a net profit and a positive value of its capital between years 2008 and 2010. There were 24 243 such companies, with Hydro-Naval among them. The editors of the Magazine of Entrepreneurs “The European Company” recognized our success and honored us with the title of Geopard Biznesu 2011 (the Cheetah of Business 2011), the Effective Company 2011 and recognition in the competition among 50 000 of businesses.