industry insights - summer 2014

in Industry Insights

summer 2014

fighting a fierce competition

vrancart s.a.

WE ARE PREPARED TO OFFER THE MOON

FEcnE

“state owned companies must act like the private ones”

ELEctrOcEntraLE BUcUrEȘtI s.a.

3

ehind all products we know, trust and use every single day, there is much more than the shiny brand that catch our eyes and insinuates in our minds. The quality of a certain products resides in the quality of its

components, and building this components is a significant part of global industry.You may not see them advertising their services and products on TV or in magazines, but these companies building parts and components managed to build their brand as strong as their more visible partners.From a company which builds only gears, being the preferred partner of industry leaders from various sectors, to the company which literally lock our cars, providing access, safety and vehicle immobilisation equipment for makers such as Dacia, Mercedes, Volvo and Porsche, some of the most important component manufacturers in the world made their products in Romania. Some of the inspiring stories from this issue of our magazine proves that servicing other businesses it's a business itself, and a fairly consistent and profitable one.

Dan EbErhateditor in [email protected]

The business to serve other businesses

b

industry insights / summer 2014 / editor's note

4

6 Highlights Relevant news from different industrial sectors

cover story

8 FECNE Prepared to offer the moon

companies

14 CONPET S.A. Ambitious Projects and

Regional Development

18 ElECTriCA S.A. Profile of a market leader

26 ElECTrOCENTrAlE BUCUrEȘTi S.A.

“State owned companies must act like the private ones”

31 PrOiECT ArAd You Must Identify Yourself with What You Do

34 CONNECT GrOUP Different clients, different strategies

38 HUF rOmANiA A look into the future of vehicle safety and access

42 iGW rOmANiA Where The Wheels Are Turning

46 mOB-iUS S.A. The right tools in the right hands

51 AlCHimEx Why crop protection is a necessity

contents“WE ARE

PREPARED TO OFFER

THE MOON, IF REQUESTED.

AT A COST”Luca Tosto, CEO – FECNE

8fence

34connect Group

5

industry insights / summer 2014

56 Guyomarc'h Transition Manager

60 VrANCArT S.A. Fighting a fierce competition

65 TiTAN S.A. The mighty titan

69 dANONE Involvement in the society is part of the company's DNA

74 SECUiANA The ultimate test: to please customers' tastes

78 CCir Pragmatic Services and Useful Information

“State owned companies must act like the private ones” Gabriel Ignat, General Manager of Electrocentrale Bucuresti S.A. (ELCEN)

26eLectrocentrALe BucureȘtI S.A.

65tItAn SA

46moB-IuS SA

42IGW romania

6

industry insights / summer 2014 / highlights

Stirom S.A. inAugurAted A new inStAllAtion for glASS meltingStirom SA commissioned on May 29, 2014, the glass melting facility no. 3, part of the "Improving energy consumption by investing in manufacturing of glass packaging in Stirom SA" investment project.Stirom is the largest glass recycler in Romania, shards recovered being used in manufacturing glass packaging.The new glass melting facility is the most modern in Europe. This

investment will contribute to the sustainable development STIROM SA, and to the decrease of the annual energy consumption (gas and electricity) by 25%.The project is financed at the rate of 60% of private equity funds and 40% of the EU structural funds.

BulgAriA SuSpendS work on South StreAm pipeline

AntiBiotice SA expAndS itS BuSineSS in SerBiA

Bulgaria suspends works on the South Stream project over the European Commission’s infringement proceedings, Bulgarian Prime Minister Plamen Oresharrski said on Sunday after a meeting with American Senators.

“We have received a request from the European Commission, after which I ordered to suspend the works. Further actions will be clear after additional consultations with Brussels,” he said.South Stream is one of Russia's major projects to reduce its reliance on Ukraine as a transit country after years of price disputes and the crisis over Crimea.Bulgaria depends almost entirely on Russian gas deliveries and has long backed South Stream as a way to guarantee security of its supplies, meaning that the country has objected to EU resistance to the deal.Work on South Stream, which is to pass through Serbia and the EU nations of Greece, Italy, Hungary, Slovenia and Austria, was due to begin in the summer.

Antibiotice SA continue to expand its presence in international markets. As of May 2014 ATB Pharma company in Serbia will represent Antibiotice SA in relation to local authorities and commercial partners in Serbia, Macedonia, Bosnia and Herzegovina.Considering the time required for product registration in order to sell in those markets, it is estimated that the first pharmaceuticals will be delivered from 2015. In the first stage were identified 20 drugs to treat infectious diseases and dermatological diseases, to be exported in these markets.

dAciA fActory produced 5 million cArS

Dacia plant in Pitesti marked, Tuesday, May 6, 2014, the production of 5 million vehicles. The car that came off the production lines is a Duster 4x4 Laureate version equipped with the 1.6 16V 105 hp, navy blue color. It will be delivered to a customer in Romania.Currently, Duster model represents 50% of total daily production at the Dacia plant.

7

conStruction And home deSign trAde fAir Brought 17,000 viSitorS to romexpoBetween April 10 to 13, ROMEXPO held five exhibitions whose subjects have complemented each other. Thus, for four days visitors stepped in for: CONSTRUCT EXPO (construction equipment), AMBIENT EXPO (home design), ROMTHERM (heating, cooling, air conditioning), FLOWERS & GARDEN (gardening) and ANTIQUE MARKET.From the impressive number construction machinery to small decorations for home and garden, the five events provided a complete view, in accordance with the market for innovations construction, interior and exterior design and landscaping.The five events brought together over 400 exhibitors on an area of 15,000 square meters, attracting 17,000 visitors over four days.

"In general, fairs and exhibitions are true and fair view of the real situation of the domains they represent and the five events that have just ended on ROMEXPO no made exception. From the signals we have from the exhibitors and visitors, things seem to move in a positive direction. Of course we would like to see the numbers from seven years ago, but more important is to make small, but safe steps in the right direction", said Mariana Suciu, General Manager of ROMEXPO S.A.

Privatization of Oltchim – postponed once againNo company submitted until the deadline (June 6) a binding offer for the acquisition Oltchim and judicial administrators of the chemical plant will resume the process of selling shares.

"At the deadline, the consortium of trustees found that was not submitted any binding offer to purchase the shares held by Oltchim from Oltchim SPV," according to a press release of the chemical plant. Economy Minister Constantin Nita said Tuesday that Oltchim will not be closed and there will be no buyer until Friday, June 6, the chemical will be sold at another time.

A merger of equals to create LafargeHolcim

Holcim and Lafarge announced in April their intention to combine the two companies through a merger of equals, unanimously approved by their respective Board of Directors and fully supported by the core shareholders of both companies.Commenting on this announcement, Rolf Soiron, current Chairman of Holcim, said: “This proposed merger is a once in a lifetime opportunity to deliver substantially better value to customers with more innovation, a wider range of products and solutions and more sustainability and enhanced returns to shareholders.” Bruno Lafont, Chairman and CEO of Lafarge, also commented: “I am confident that this merger of equals provides a unique opportunity to rapidly create the most advanced platform in our industry with outstanding synergies.” Lafarge and Holcim pro forma combined sales amount to c. CHF 39bn / EUR 32bn and Ebitda to c. CHF 8bn / EUR 6.5bn.LafargeHolcim would be listed on the SIX in Zurich and Euronext Paris. It would continue to be domiciled in Switzerland. The proposed combination is conditional upon, among other things, execution of definitive documentation, approval of the shareholders of Holcim and obtaining required regulatory and other customary authorizations. Completion is expected by the end of H1 2015 subject to obtaining regulatory approvals.

fairs & exhibitions

industry insights / summer 2014 / cover story

8

PREPARED TO OFFER THE MOON

FECNE

FECNE design and manufactures critical equipment such as high performance Heat Exchangers and Pressure vessels for different applications in the Oil&Gas, Petrochemical and Nuclear markets.

Pho

to: A

nton

io C

ioar

ek

9

Walking through the enormous production facility of FECNE and seeing the welders surrounded by sparks, the workers buzzing around on electrical bicycles, the machine tools shaping huge chunks of metal and the bridge cranes lifting fixtures weighting thousands of tons each, one unused with the scenery can feel really small. But not Walter and Luca Tosto – father and son running a family business with a turnover of €100 million.

More than a half a century ago, Walter Tosto's company started to produce tanks for wine fermentation in the small town of

Chieti Scalo, Italy. Since then, the company diversified its activity, becoming a world leader in the production of heavy wall static and heat transfer equipment for Oil&Gas, Petrochemical and Energy markets. In 2012, under the management of Luca, Walter's son, the company decided to pursue a geographical expansion and bought FECNE, a Romanian company specialized in the production of equipment for the Energy Sector.Why FECNE? “Because I fell in love with the place the very first time I've seen it, in 2002,” says Luca Tosto. “I was very young at that time and the huge, well equipped production capacity impressed me a lot. I've started to imagine how I would change the workshop, what kind of products could be made here, how would they fit into Walter Tosto's product range, transport routes, customers – everything,” adds Mr. Tosto.

10


Still, 10 years have passed until he saw his dream come true. And when did eventually happened, it was no walk in the park. “In February 2012, when we bought this workshop, the pillars supporting the ceiling were covered with several centimetres of ice. It was like entering an empty refrigerator,” recalls him. The production was frozen as well, after several changes in ownership. The huge bridge crane, powerful machine tools and welding stations were sitting still in the dark hall. „Good luck with this! – that's all my father had to say about my decision to invest in FECNE.”But the luck was not enough. Luca Tosto had to put on top of it 15 million Euros and long work hours to revive the factory. „And we have not finish today, we have to work hard in the next future.” The new owner started with the refurbishing of the building – installed a new heating system under the floor (90 km of tubes with hot water), large

windows were cut into the compact walls and skylights into the roof. Old machine tools worth repaired were refurbished (including the bridge cranes, rolling machines, etc.), while others went to scrap metal; in the meantime, new, cutting-edge technology was installed. But to be able to produce critical fixtures such as reactors for Oil&Gas industry, heat exchangers and condensers, one essential factor was still missing – the skilled workers. Luca Tosto started to recruit former employees of FECNE and other experienced workers and engineers. All products made by FECNE are designed by the Walter Tosto Engineering team, located in Bucharest since 2000.Being a family business, Walter Tosto has the privilege of not having a structured plan for return on investment. “Could be two years, could be seven – it all depends of the market conditions,” says Luca Tosto. “In 2013 we've registered €5 million in revenue, while for 2014 we expect

65%

EU countries

20% non-EU markets

15% domestic market

Exports madE by fEcnE:

“WE ARE PREPARED TO OFFER THE MOON, IF REQUESTED. AT A COST”Luca Tosto, CEO – FECNE

11

to grow at more than €7 million, in order to reach €20 million in short term.”With improved production capacity and a new, motivated team consisting of experienced workers and new recruits, FECNE was ready to honour the orders received, via Walter Tosto, from big players such as OMV-PETROM, GAZPROM, URALHIMMASH, NINGBO, ROMINSERV, ROMPETROL, PETROTEL LUKOIL, etc.

Walter Tosto deliver its products in over 50 countries, all over the world. But today's most important clients are from the CSI countries. When asked about the particularities of the business relationships with this countries, Luca Tosto explains with a smile: “First, there are the cultural differences, including the language, which make things a little bit difficult. Then, they have piles of PROJECTS and money, which make things a little bit smoother.


But, because they have the founds, they are also used to request the impossible. And you have to be ready to give them the moon if that's what they ask for. And we are prepared to do it. At a price.”“Here, at FECNE, we want to replicate the type of infrastructure we have in Italy. There, we have a workshop in Chieti and one in the port of Ortona – for logistics purposes. In Romania, we have the

FECNE factory here, in Bucharest, and we'll build soonest a new workshop in Olteniøa for an obvious reason: logistics – working with such big items, we need to have direct access to the ships,” reveals Luca Tosto the company's development plans, and you can read in his eyes that he is proud of the legacy from his father and is determined to make his mark by developing the Walter Tosto company.

FECNE Welding School

At FECNE, Luca Tosto set up a welding school for youngsters. They are trained in different types of welding during a three-year course. A young apprentice earns little over 800 lei per month, while a graduate of the whole course can earn a monthly salary of 5.400 lei. Skilled students receive special training in Italy.In order to attract youngsters from all over the country, the company is also refurbishing a building which shall be transformed into dormitories.

FECNE MaSter courSeS

“Walter Tosto has a good experience in training on the job professional people, in fact we have signed an agreement with the Polithecnic University of Bucharest and the Faculty of Engineering in Italy, and we will start during 2014 to train 15 youngsters and we will employee all of them in the very next future.”

FECNE's equipMent includeS:- bridge crane which can lift 800 at once- bunker with nuclear accelerator, used for X-raying items as large as 700mm in thickness- 30m-long oven- plate bending roller up to 300 mm thk (2nd largest in the world, after the one of WT Italy)- complex CNC milling machine

14

industry insights / summer 2014 / companies

Ambitious Projects And regionAl develoPmentS.C. CONPET S.A. is the concessionaire of the National System of Transport of crude oil and derivatives (rich gas, condensate and liquid ethane) by pipeline.

ii CONPET ended the year 2013 with the best financial results in the last

five years. What were the main factors contributing to this success?

liviu Ilași: Two main factors contributed to the record turnover registered by CONPET

in 2013: higher income from transport activities and revenues from related activities.In 2013, compared with the previous year, we benefited, on the one hand, from the increase in transportation tariffs for crude oil from domestic production and, on the other hand, from the capitalization of some non-core activities.Moreover, in 2013 we've implemented a set of cost-cutting measures, with positive impact on the financial results of the company.Cost tracking and optimization was a priority for the management and, therefore, since January 2013, cost centres were restructured; costs are now allocated by area of responsibility, following the main activities of the company (transport of crude oil from domestic production and from import), and by the organizational structure (regionally and, within regional divisions, by sectors of activity). Through the reorganization of the cost centres by regional divisions and by sectors of activity, we aimed to increase

the accountability of the decision-makers at these levels.Cost-cutting measures targeted mainly the reduction of general administrative costs (raw materials, fuel consumption, protocol, advertising and sponsorship expenditures); some activities were restructured, the consequence being the lay off of some staff.

how is set the tariff for the transport crude oil and derivatives through the

National Pipeline Transport System? There are differentiated fares for the transportation of crude oil and derivatives through the two subsystems (Country Transport Subsystem and for the Import Transport Subsystem) of the National Pipeline Transport System. Shipping rates are approved by the National Agency for Mineral Resources.Transport tariffs are based on fixed and variable costs required to carry out the activity in a safe manner. Fixed costs include costs of materials, personnel costs, pipelines maintenance, electric power, gas and water expenditures, as well as the depreciation of fixed assets. Variable costs include expenses with the railway operators, petroleum royalties upgrades. The transport tariff includes costs calculated per tonne of product transported, plus the profit rate.

CONPET S.A.

15

What percentage of the CONPET's shares is traded on the Bucharest Stock Exchange

(BVB)?Of the total of 8,657,528 shares issued by CONPET S.A., 11.58% are available to be publicly traded in the BVB (1st Tier – the free-float of the company). The main shareholder, the Ministry of Economy, holds a stake of 58.71% in the company, and the remaining 29.70% of shares are held by Fondul Proprietatea.

Which are the main domestic and foreign customers of CONPET

Our main customers are OMV Petrom SA Bucharest, representing with a share of 85.5% of the total quantity transported, Petrotel Lukoil SA Ploiesti, with 14.35%, and Rompetrol Rafinare S.A. Constanta, with 0.15%.These are CONPET’s main, steady customers, however, over time, we have carried out contracts with foreign customers as well, such as NIS Gazprom Neft, for the transport of crude oil from Romania to the Pancevo refinery in Serbia.

What percentage of the crude oil transported by CONPET comes from domestic production and

how much from import?71%, or about 4 million tons of the crude oil transported

by CONPET, is from domestic production. Transport of imported oil accounts for 29%, which means that about 1.7 million tons passes through the Import Transport Subsystem.

What about different types of transport systems – pipes versus railway?

Of the total of about 5.7 million tons transported yearly by CONPET, roughly 1.3 million tons are transported in tank wagons, which means that the transport via railway represents 23%.

What do you take into consideration when you select the partners for rail transport?

The procedure for the award of contracts for the rail transport services comply with the principles of the legislation in force. Thus, within the limits set by law, a contract for the transportation of oil and rich gas by tank wagons is awarded to the tenderer which demonstrates its technical ability to provide the transport service and offers the lowest price.Our focus is to provide transportation in the best possible safety and quality conditions, so that the crude oil supply to the refineries be in accordance with contractual provisions.

What can you tell us about the agreements and opportunities to connect CONPET's pipes with

other oil transport systems?For CONPET, the concessionaire of the Crude Oil and Derivatives National Pipeline Transport System (rich gas, condensate and liquid ethane), is a priority for the coming years to identify and capitalize on large-scale projects that would connect our oil transport system to the pan-European one, this representing a good opportunity for growth and for higher profitability of the company.

Liviu Ilași

16


The most important project in this regard is the Constanta-Pitesti-Pancevo crude oil pipeline, a first step in interconnecting the national crude oil transport system with the regional systems, and in the offing, with the European one. Thus, in this moment, the main objective of the company is to be involved in the construction of the Constanta-Pitesti-Pancevo pipeline, an alternative route for the crude oil supply to Pancevo refinery, with possible extension to Bosanski Brod, Bosnia. We look forward to a consent expressed by the Board of Gazprom Neft, to be able to advance in this direction.Our company can play an important role in the construction and in the stage of normal operation of the pipeline which will link Constanta and Pancevo, by using the excess capacity of the existing crude oil transportation network (Constanta-Pitesti) and by providing technical and logistical support as well as specialized personnel.

it was a time when the theft from oil pipelines represented a real problem.

What is the situation now?

As the sole operator of the Crude Oil and Derivatives National Pipeline Transport System, CONPET SA always had to deal with crime, consisting of damage to pipelines, followed by massive theft of oil and significant pollution of the environment.

By late 1999, however, the attacks on the pipeline have taken an unprecedented scale. Since the security solution used at the time (pipelines were guarded by private security companies) proved to be unsatisfactory and the losses unbearable, CONPET turned itself towards State institutions. Following our approaches, the Romanian Gendarmerie has been in charge with the crude oil pipelines' security since

2002.I want to emphasize that the National Transportation System belongs to the public property of the State, the network is of national interest and of strategic importance. Moreover, in accordance with the Law 262/2001, S.C. CONPET S.A. has been declared “company of strategic interest”.The implementation of the military guard,

5.7million tons of crude oil are

transported yearly by CONPET S.A.

Călăreti pumping station - oil tank and skid

17

with CONPET's financial support as well, led to a rapid and significant reduction in the frequency of the attacks on pipelines. The dynamics of the crime phenomenon demonstrates an obvious correlation between the actions taken by the gendarmes and the decrease in the number of crimes.Romanian Gendarmerie is not only the sole public institution that can legally provide security services, but it is also the only law enforcement organization able to effectively combat the proliferation of this type of crime, which is very dangerous because the offenders are specialized and their actions are specific to the organized crime.

What measures are taken for the protection of the environment and to

ensure the transport safety?Through an extensive programme of repairs and investments, we have significantly reduced product loss and accidental pollution occurred as a result of technical damage caused by pipe corrosion. Also, for the operation, monitoring and maintenance, under optimal conditions, of the Crude Oil and Derivatives National Pipeline Transport System, our company has carried out improvement works to secure the infrastructure for water crossings.In order to prevent accidental pollution, sectors were provided with specific equipment and materials for rapid intervention, to minimize the environmental impact and to restore the soil to its original condition.CONPET has also contracted, for all operating areas, companies specialised in the greening of land and water courses, which have all permits and licenses required by law to conduct such ecological activities.CONPET monitors the entire Crude Oil and Derivatives National Pipeline Transport System with its own personnel, and since 2002 the pipes have been guarded by gendarmes. The result of these security measures is a decrease in the number of crimes and the reduction of environmental pollution.I'd like to mention that, in 2007, the company implemented an Integrated Management System for Quality-Environment-OHS, with operational procedures that define the pumping parameters, so that the transport be carried out safely, without environmental impact.

please give us a few details about the company's financial situation. What

expectations do you have for 2014?

In 2013, turnover increased by 4% compared to 2012, while the gross profit grew by roughly 3%. For 2014, we aim to achieve a turnover higher by about 3% than in 2013, and an operational profitability rate of 7% vs. 8% in 2013.The decrease of the profitability rate in 2014, compared with 2013, is caused by the changes in the tax code, applicable from January 1, 2014, which affects the company's financial results. The new tax on special constructions and a greater volume of repair and maintenance works compared to previous years, imposed by the need to ensure the safety of the Crude Oil and Derivatives National Pipeline Transport System, will have a negative impact on company's profitability this year.

What can you tell us about CONPET's developments plans?

One of the main objectives for the next period is to find alternatives to the decrease of the volume of activity; therefore, we focus on long-term investments and projects, targeting growth of the company and improved efficiency. CONPET's management aims to develop some ambitious projects, here being included the implementation of the “Leak Detection and Location System”, “Modernization of the Cathodic Protection System”, and to improve company's performance by implementing the “Energy Management System,” in accordance with the requirements of SR EN ISO 50001:2011.All these areas of development need to be addressed in order to maximize CONPET's profit, to the benefit of our employees and stockholders.

Conpet's main office building

18


The first electric power distribution and supply company after 1990 was named RENEL (Regia

Autonomã de Electricitate). The company had a monopoly in electricity production, transmission, distribution and supply in Romania and had an installed production capacity of approximately 20,000 MW. In 1998 RENEL was restructured and divided into three companies: CONEL, Nuclearelectrica and RAAN

(Regia Autonomã pentru Activitãøi Nucleare).Since 1998, the company that took over all the generation, transmission, distribution and supply facilities of the former RENEL was CONEL Compania Naøionalã de Electricitate. The company had three subsidiaries, Termoelectrica specialised in generation of thermal and electric power from fossil fuels, Hidroelectrica specialised in generation of electric power from renewable sources especially hydro

power plants and S.C. Electrica S.A. specialised in the supply and distribution of electric power. In 2001, Electrica Group was established comprising 8 distribution and supply subsidiaries, covering the following areas: Transilvania Nord, Transilvania Sud, Muntenia Nord, Muntenia Sud, Moldova, Oltenia, Dobrogea and Banat.In 2005 S.C. Electrica S.A. privatised four of its subsidiaries namely Moldova, Oltenia, Dobrogea and Banat by selling 51% shares in each.

S.C. Electrica S.A. is a Romanian company, 100% state-owned and the parent-company of Electrica Group, specialised in electric power distribution, supply and services.

In 2000, Electrica was established as a stand-alone company post restructuring of CONEL. CONEL had been created in 1998 as a holding company concentrating all the players in power generation, transmission, distribution and supply in Romania.

ElEctrica S.a. PROFILE OF A MARKET LEADER

19

The S.C. Electrica S.A. Oltenia branch was sold to the Czech company CEZ Group, while the S.C. Electrica S.A. Moldova branch was sold to the German company E.ON. The S.C. Electrica S.A. Banat and Dobrogea were sold to the Italian company Enel. In 2008, Enel also bought a 64.4% stake in S.C. Electrica S.A. Muntenia Sud, the largest of S.C. Electrica S.A. subsidiaries. In 2005 and 2007, Electrica initiated the transfer by operation of law to Fondul Proprietatea stakes of 22%

in each of: Electrica Distributie Transilvania Nord, Electrica Distributie Transilvania Sud, Electrica Distributie Muntenia Nord and Electrica Furnizare.In 2005, Electrica Serv was created as a standalone company from the energy services divisions of the Electrica Group.In 2007, all the Electricity companies in Romania unbundled of the distribution and supply businesses, in accordance with the legal requirements.

Electrica Furnizare was set-up in 2011 following the merger of the three supply companies. In 2012, Electrica Serv was spun off into 6 energy services companies. Electrica Group's mission is to increase efficiency in the field of electricity, especially in areas where the group is the current distribution operator, through high quality services at reasonable prices, both as a participant on the free energy market and as a provider of complementary services.

Power transformer 110/20 kV in cristian – 18 (25) MVa

20


The company has around 438 electric power stations, 25,600 power transformers and a network of approximately 116,500 km of power lines.Electrica supplies electricity all over Romania to 3.6 million customers.The energy market was fully liberalised for non-household customers at the end of 2012 and will gradually liberalise for household customers by the end of 2017.After the privatisations, S.C. Electrica S.A. owned minority shareholdings into the following companies: Enel Distribuøie Dobrogea, Enel Distribuøie Banat, Enel Distribuøie Muntenia, Enel Energie SA, Enel Energie Muntenia SA, E.ON Moldova, E.ON Energie România, as well as Electrica Soluziona, Bursa Românã de Mãrfuri and Hidro Tarnita. Since april 2014, these shareholdings were

spun-off to another 100% state-owned company.Currently, the Electrica Group has three distribution companies

– Electrica Distributie Muntenia Nord, Electrica Distributie Transilvania Sud and Electrica Distributie Transilvania Nord, one

Electrica Group is

the leading player on the

electricity supply market

in Romania (regulated and

competitive) with a market

share of 22%

Distribution Market – Players

ioan rOȘca – General Manager, S.c. ElEctrica S.a

22


Electrica Group is the leading player on the energy services market in the area where Electrica is the current distribution operator, with a market share of 65%

in accordance with Government Decision no. 85/2013, S.c. FDEE Electrica S.a., leading player on the electric power distribution and supply market in romania and the major player in the energetic services sector in romania will be privatised through an initial Public Offer (iPO) for the sale of newly-issued shares amounting to 105% of the existing share capital, under the coordination of the Ministry of Economy in romania, through the Office of State Ownership and Privatisation in industry, and with the admission of the company’s shares on regulated markets operated by the Bucharest Stock Exchange.

electrical power supply company, Electrica Furnizare and 6 services subsidiaries: Electrica Serv and 5 other energy services companies that are currently under restructuring and/or liquidation. Electrica Group is the leading player on the electricity distribution market in Romania with a market share of 38%.The three distribution companies owned by Electrica are: Electrica Distribuøie Transilvania Nord that serves six counties located in North Western Romania namely Bihor, Bistriøa-Nãsãud, Cluj, Maramureš, Satu Mare and Sãlaj

which covers an area 1.16 million users and 34,160 km2; Electrica Distribuøie Transilvania Sud covers an area of six counties located in central Romania namely Alba, Brašov, Covasna, Harghita, Mureš and Sibiu counties which covers an area 1.06 million users and 34,100 km2; Electrica Distribuøie Muntenia Nord which covers an area of six counties located in northern part of Muntenia namely Brãila, Buzãu, Dâmboviøa, Galaøi, Prahova and Vrancea counties which covers an area of 1.2 million users and 34,000 km2.

S.c. ElEctrica S.a headquarters

24

industry insights / summer 2014 / advertorial

The Argus 4 AMr sysTeMArgus AMR System represents a unification of different communication channels and technologies used in previous AMR systems developed by AEM. Thus, it responds to customer requirements regarding the use of a single, centralized system, capable of collecting data from both single phase residential electricity meters, as well as from three phase electricity meters used in commercial and industrial environments.

FeaturesThe system supports multiple com mu ni cation channels, including:• GSM/GPRS: very good coverage, no ca

bling costs; can be expensive, especially for CSD communication

• Fiber optics, Ethernet: can provide very high speeds, where available

• Current loop: used in residential areas, espe cially in tower blocks

• Band A PLC: • Uses the existing infrastructure as a co

mmunication channel, keeping com munication costs down • Communication speeds can reach 2.4 kb/s • Using the CIASE protocol allows the Data Concentrator to au to

matically detect the PLC interfaces in the system• Turtle TS2 PLC

Argus 4 allows bidirectional communication between the system ope rators and the meters installed in the system, either directly, in the case of meters read via GSM/GPRS, or indirectly, through a Data Concentrator, in the case of PLC or current loop communication. The meters are read manually (on demand), as well as automatically, based on a configurable schedule. The scalable architecture of the central system, responsible for reading meters, ensures fast response times, even under heavy load.

There are multiple types of data read from meters, including: billing data (self readings), historical values (load profiles), instrumentation values (currents, voltages and power factors), current indexes (active and reactive energy, imported and exported) and events (power failures, low battery, clock resynchronization, reversed phases). All the data is validated and stored in a centralized database. There are several parameters that can be remotely configured by Argus 4, including the billing schedule stored by the metering equipment.

Data is redundantly stored in the various elements of the system: the meter itself, the communication interface (in the case of PLC communication), the Data Concentrator, as well as in the central system. This ensures that, in the case of lack of communication, no data is lost.

Starting from the stored data, multiple types of reports can be gene rated:• Synthetic and analytic balance reports: useful for detecting technical

losses and thefts on MV to LV substations• Load and voltage profiles• Consumption analysis• Event and power failure reports• Short term consumption prognosis• Other reports, based on customer needs

In order to fulfil all customer requirements, various types of smart meters are used, each suited to a different role within the system.

Enerlux M W:Multitariff, single phase electricity meter, capable of measuring both active energy (|A+| + |A| or |A+| and |A|), as well as reactive energy (Q+ and Q). The meter has an internal realtime clock (RTC) which is operational even during power losses thanks to its internal auxiliary power supply.

The meter is capable of generating and storing self readings and events. Its current loop interface (EN 6205621) can be connec ted to several types of communication interfaces (band A PLC, Turtle TS2 PLC) or it can be used for direct reading by a Data Concentrator, in case of short distances.

Cst 0410:Multitariff, three phase electricity meter, ca pable of measuring:• active (A+, A, A++ A) and reactive

energy (Q1,2,3,4; imported and exported, inductive and capacitive, as well as total),

• voltages, currents, power factors for each phase,• maximum demands,• several energy quality parameters (time while Un exceeds Un±10%,

time while fn exceeds fn±1%)

The meter can be installed in direct or indirect connection, making it ideal for industrial environments. It can generate and store self readings (containing 46 energy registers), load profiles (up to 8 programmable registers, configurable acquisition interval), events (35 different types). It is equipped with several communication channels, including an optical port, current loop, RS 232 or RS 485 port (through which a GSM/GPRS modem can be attached).

Cst 0420:Multitariff, three phase meter, capable of mea suring active and reactive energy (both import and export), voltages, currents and power factors for each phase. Thanks to its modular construction, se veral types of communication interfaces can be plugged in; these include: band A PLC modem, Turtle TS2 PLC interface.

SummaryBy combining various communication channels, and through the use of smart meters, AEM is capable of offering a complete, customizable

and scalable solution for automated meter reading. This ensures a futureproof investment for utility companies.

aem

About the Author: Alexandru Budisan is a project manager at AEM, involved in developing new AMR systems.

About the compAny: AEM is a manufacturer of metering devices for: electricity (mainly smart meters), gas(smart and mechanical meters), water and heat energy, as well as AMR systems for the management of electricity and gas and traffic information systems. The products are designed and manufactured entirely at AEM, using modern equipment and technologies. www.aem.ro

26


“State owned companieS muSt act like the private oneS”Electrocentrale Bucuresti S.A. (ELCEN), the largest heat producer in Romania, with 40% share at national level, providing 7% of the electricity produced in the country, enters a new sign: the sign of changes. As of 31st of March, the state owned company supplying heat to Bucharest and Constanta has a new general manager: Gabriel Ignat. Ignat has set some ambitious goals and a challenging mandate: to lead the company through a spin-off and, then, through a merger process. All these in less than one year, in a continuous changing market context. Gabriel Ignat, ELCEN’s new General Manager, speaks about the changes that the company undergoes.

He is 33 years old and he spent the last nine years in the energy field, he comes from the private sector and is not part of any political

party. However, Gabriel Ignat was nominated by the Minister Delegate for Energy, Rãzvan Nicolescu, to manage ELCEN in probably the stormiest period in the company’s history. ”I think they needed someone from the private sector with a technical background, a minimum knowledge in the energy sector being essential, and proved managerial skills in order to impose a new working method increasing the company’s efficiency”, said the new general manager of Electrocentrale Bucuresti S.A..

iiHow is a “state-owned” company seen through the eyes of a man who came

from the private sector?Gabriel Ignat: “No matter who the shareholder

is – the state, another company, a private individual or a group – the objective should be the same: profit”, says Gabriel Ignat. But for this to become a habit, „we need to change mentalities. And to change the way a company acts, especially one with a high number of employees and an average age over 45 years, you need fresh blood”, added the manager. As for his new position, Gabriel Ignat says that it is one that firstly requires internal and external communication skills. Internally, the employees were used to execute orders without discussing, the stimulation of a two-way communication being necessary – upwards and downwards - as “it is impossible for one man to make all decisions and have all ideas”. At the same time, as the new manager says, „ELCEN is not a solitary runner; it acts on a market where other players are also present,

ELECTROCENTRALE BUCUREȘTI S.A.

27

whether they are partners or competitors. If there is no communication or the communication is poor, the results will be bad decisions, a strategy that ignores the realities of the market and the particularities of the field where we operate. The manager of a company who does not communicate efficiently is like the captain of a boat adrift who lost contact with the residence harbour, with the passengers and with the other boats sailing on the same seas.”„It is obvious”, says Ignat, „that we assist to a revolution in the energy sector, the market has changed at a fast pace. Unfortunately, I believe that the state owned companies lack the vision and I am not necessarily referring to ELCEN. They were accustomed to a certain inertia,

reacting late and, sometimes, too late. From this point of view, I can only say that the market is changing and the state owned companies must act like the private companies, i.e. to adapt to the market.”In order for ELCEN to become a more flexible company, with greater responsiveness, the actions of the electricity and heat producer will be transferred from the Department for Energy’s portfolio within the Romanian Government to the local authorities’ portfolio. The first step will be ELCEN split in three companies: S.C. Electrocentrale Bucurešti S.A., S.C. Electrocentrale Constanøa S.A. and S.C. Electrocentrale Titan S.A. Electrocentrale Constanøa is CTE Palas, while Electrocentrale Bucurešti S.A. will keep Grozãvešti,

Gabriel Ignat, General Manager of Electrocentrale Bucuresti S.A. (ELCEN)

Pho

to: A

nton

io C

ioar

ek

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Sud, Vest and Progresu power plants, and Electrocentrale Titan will manage Titan and Fântânele. The next step for ELCEN will be the merger with RADET Bucharest, the company managing the transport and distribution of heat to the population of Bucharest, subordinated to the Municipality of Bucharest. „I can only say that the merger will be beneficial for both companies. From an operational perspective, having both the distribution and the production under the same umbrella means having all the necessary tools available for making the activity more efficient”, explains Ignat. The new company resulted after the merger would have a higher capital and the necessary means to find and direct the investments towards the critical points. At present, given the fact that the heat produced by ELCEN goes almost exclusively to RADET, the relation between the two companies is very tight. However, they are two different companies acting differently. The integration of the production, transport and distribution in the same company would lead to the internalisation of problems that could be solved quicker and easier.

iiWill ELCEN's profitability be affected? „On one hand, the executive management

and the Board of Directors must take into consideration certain aspects: it̀ s about ELCEN s̀ main business satisfying one basic human need: heat. In such case, the profitability must be also seen in the light of the social impact”, thinks Gabriel Ignat. „On the other hand, we have a regulated price for Gcal and ANRE tries to keep it as low as possible in order not to affect the population, however the high price of natural gas, with increasing perspectives for this year, in my opinion, puts too much pressure on the producers which ultimately has an impact on profitability”, adds the general manager. In order for the new company to operate more efficiently, first of all, investments are necessary, points out Ignat. An example to follow is CHPP Vest operating in a combined cycle (gas turbine, recovery boiler and steam turbine), producing both heat and electricity, being the most efficient installation of ELCEN’s equipment. „In terms of investments, at national level, the district heating is 3-5 years late behind the moment the financing should have been secured and the retrofit programs implemented. Looking at the current legislation and the existing cogeneration bonus, I find it very hard to imagine that we will easily find investors and banks to invest in this field”, says the manager.

“The manager of a company who does not communicate efficiently is like the captain of a boat adrift who lost the contact with the residence harbour, with the passengers and with the other boats sailing on the same seas”Gabriel Ignat in the Turbine Hall of Grozavesti Thermo-Electric Power Plant

29Currently, the cogeneration bonus, a mechanism designed for sustaining the investments in efficient heat and electricity generating capacities, is expected to be granted until 2023. Given that it is unlikely for an investment in the energy sector to be totally recovered in just nine years, one solution could be to extend the cogeneration bonus award period, on the model of other European countries, believes Ignat. The bonus award scheme should be reconsidered in order to really stimulate the activity’s efficiency. The aim should be to reduce the production cost and not to subsidize a high cost, says the manager. The installation costs of a power plant reach approximately 900.000 - 1.000.000 EUR/MW,

Exploitation of

energy resources

„In terms of energy and energy security, the exploitation of any type of new resources will gain ground. For example, in the context of the current geopolitical situation, the idea of exploiting shale gas. Over time, the humanity went through key moments when we had to make certain decisions. Now, we have to make decisions at a macro level – by referendum or by any other method – they will be made. But when you are facing a storm, you must choose the lesser evil. The society will have to choose between an energy security in conditions of reduced costs and risks associated with the dependence on another state and the possibility to increase the cost of fuel.” Gabriel Ignat - CEO ELCEN

Turbine Hall, Grozavesti Thermo-

Electric Power Plant

30


for a power plant with efficient technology. It would be preferable to install several small or medium units than one single large unit, because in the first case, there is more flexibility in operation finally leading to the optimization of production costs. For example, Bucuresti-Vest Power Plant, operates in combined cycle of 185 MW, (130 MW gas turbine, 55 MW steam turbine).

Another solution to attract investors would be, according to Gabriel Ignat, to give the cogeneration bonus also for the installation of second-hand units, as, during the last 3-5 years, the technology did not evolve in such a way so as to fundamentally change the degree of efficiency of the heat and electricity generating installations. An essential factor that will influence the production cost is the imminent liberalization of the natural gas market given the fact that the Gcal price, regulated by ANRE, will remain the current one for the next period. The expenses made with the fuel represent, in ELCEN’s case, approximately 80% of the total heat and electricity production costs. This increase could be compensated, at least partially, by retrofitting, a high degree of automation, and, after the merger with RADET, by optimizing the distribution costs. ELCEN-RADET merger is expected to take place until the beginning of the cold season of this year, and the reorganization of the new company is expected to be completed until the next summer. The next step will be to implement the new strategy for the company’s development and efficiency, under the new shareholder – The Municipality of Bucharest – and in the conditions of performance management. Electrocentrale Bucuresti S.A. (ELCEN) is administered by the Department for Energy within the Romanian Government and RADET is under the Municipality of Bucharest. The company indirectly supplies heat to the end customers, through RADET. In 2013, ELCEN had a turnover of 380 million Euros (approximately 1,7 billion Lei).

„I believe that in the future, maybe in the next 20-30 years, the cheapest energy will be the electricity – the sole supply source for all the equipments that we use in our everyday life. The electricity can be obtained from many sources, including renewable sources and can be transported cheaper than the gas, gasoline or diesel.”

Control room of the Grozavesti Thermo-


Gabriel Ignat in front of the

cooling tower of the Grozavesti Thermo-


31

You Must IdentIfY Yourself wIth what You doBusinessman, politician and the interface between the two, Mr. George Seculici is a man true to his passion: architecture. President of the Chamber of Commerce and Industry of Arad, Mr. Seculici is also the General Manager of a major design studio: Proiect Arad.

iiThis year marks the 35 years since you've been working with Proiect Arad

SA. Haven't you ever felt the need to try something else, something new?

Looking back, I must say that I have a pleasant feeling of gratitude and satisfaction, seeing all the professional achievements throughout this period, achievements you can obtain only when

Proiect ArAd


32


completely identify yourself with what you do. Over the years, I have been often involved in other types of activities, especially those of public interest, and I have rarely limited myself to architecture. Architecture remained, however, the closest to my heart.Proiect Arad is one of the most prestigious design companies in Western Romania, a company founded in December 1957, following the decision of the People's Council of Arad, called "The Direction of Systematization, Architecture, Design and Construction – Banat-Timišoara, Arad branch". Over time, the company was known by several names: “Design Institute of Arad County”, “The County Arad Design Center” or “S.C. Proiect Arad S.A.”Starting with 2013, the company was divided in two, Arad Proiect S.A. Project and Proiect Real Estate. The reason for this division was purely economic, and sought a more effective management of each bussiness segment.Proiect Arad's portfolio included projects for most of Arad's districts, as well as for other cities in the county. Some of the most representative socio-cultural buildings in the county, including the public open-air swimming pool, at that time ranked as the largest in Western Romania and one of the largest in Europe. This project represents an impressive business card of our company, as well as for thee Municipality of Arad.After 1990, the company has designed some of the most representative industrial, cultural, residential, agricultural, infrastructure and urban planning objectives in the county. Through its work, Proiect Arad put its mark on Arad’s architectural landscape, at the same time contributing to the sustainable development of the region. The company continued its tradition, always aiming for excellence and constantly extending its field of activity, by improving and diversifying the services provided.

iiProiect Arad has been involved in various architectural projects,

desiging different types of buildings, from the industrial and civil ones to churches. Which were the most difficult clients: the civil servants, private entrepreneurs or the church representatives?We have never called our clients "difficult". I have realized the relevance of the construction for each client, as well as the project’s

Proiect Arad headquarters

Public building in Arad

ANL residential project

Orthodox cathedral in Arad

33

importance to me and my company. As G. M. Cantacuzino said, "Architecture represents the culture and civilization of the period in which you live.” Of course, in time, expertise and experience helped me to successfully overcome the potentially delicate moments, thus contributing to the client’s satisfaction, but also to the fulfilment of some projects that made history in terms of architecture.Which was the most difficult project and why?With an experience of over 50 years, the company had undoubtedly numerous difficult projects to accomplish, not just one. I am talking about the complex ones, those in the field of urban planning, infrastructure, industrial and cultural projects, civil buildings, art works and more.

iiWhich of the projects remained the closest to your soul?

Each and every project born from my work and ideas is close to my soul. These are the kind of projects in which you put a piece of yourself, of your thoughts, of your very own visions. Each project gives me a great satisfaction every time I simply look at it.

iiIs there any project you regret it wasn’t materialized?

Definitely. Block J in Arad Station Square was never finished, being a project that has been thoroughly studied in terms of architecture and urban planning.

iiFor five months, you have been a member of the Government, occupying

the position of Deputy Prime Minister. Why for such a short time?I must admit that I've been involved for a rather long period of my life in politics. For 15 years, I was one of the leaders of an important political party in the country, but especially in Arad. The short period you are referring to is the result of the way the Government operates, and this reshuffle is part of its proper operation. My place is actually at Arad; here I truly feel at home.

iiWhat does Romanian economy look like from an official position in the

Government? What about your position as President of the Chambers of Commerce?In 2005, from the official position in the Government, economy seemed full of promises. Economy was blooming back then, and our country had serious opportunities to succeed. Today, as the President of the Chamber of Commerce, Industry and Agriculture Arad, in the context of an economic crisis, it is difficult for me to tell what the real situation of the Romanian economy. I maintain, however, a positive attitude and I do try to help each company to access useful information and to provide the necessary connections to develop the respective business; this is our institution’s main target as well.

Expo Arad

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Connect Group supplies the best Electronic Manufacturing Services to a broad range of markets, supporting its customers in the design and production of cables and cable-harnesses, PCB assembly and testing, and final product assembly and test. The Belgian company is one of the largest employers from the Western Romania, while its factory in Oradea is the largest in the group. Mr. Flor Peersman, COO of Connect Group, revealed us the strategy behind company's success.

iiThe phrase “technology as a service” flies over the internet, being used as

a marketing tool to promote various IT services, especially software, maintenance and know-how; however, Connect Group uses the word “service” for hardware solutions. What can you tell us about the TiaS (Technology is a Service) concept –

and slogan – that defines the Company's strategy?

Flor Peersman: I am glad you ask me this question as the first one, as the definition or

maybe the interpretation is completely wrong. TiaS indeed stands for Technology is a Service, but within our Group's strategy it means something else than a service on hardware solutions.Being a sub-contractor over the last 25 years, we did build up a huge portfolio on experience and expertise.Back in 1987, we started as a sub-contractor, building products based on customers' requirements, and often even with client's materials.The first step on our roadmap was to build logistic competence, thus being able to purchase components based on customers' requirements and specifications, and to deliver the products within very short notice.The second step was the establishment of an Engineering division, offering our customers a support in the industrialisation of their product and services. Nowadays we reached the stage where we are able to develop new products starting from just an idea. In the coming years we will extend this activity. Besides that, we will focus more and more

ConneCt Group

Different clients, Different strategies

PCB Division

35

Flor Peersman - COO Connect Group

on power electronics, sensor technology, data management and visualisation. This leads to our strategic decision to offer a complete package of products and services to the market, under the name of TiaS. Based on the evolution of the Group we can offer our customers complete solutions, from the very beginning of engineering, production, assembling and testing stages, providing product management through the entire life cycle of the said product. In this way, the “life” of a product shall be extended, which will bring the cost of ownership down.

iiConnect Group tailor its products to customers' needs. If the products

made by the Group were clothes, would they be custom made, made to measure, or off the shelf type of products?Each and all of the above. We use many different logistic approaches offering our customers a way of working that suits their needs. This is indeed the combination of almost all existing Logistical methodologies. It is very challenging for our colleagues from the Logistics Department, but for our customers, it is easy to choose from a variety of services, as we can offer them a “à la carte" support.

iiHow do you select your customers, and how do you convince them to

choose Connect Group?

We have a dedicated and focused market approach on 5 segments. Railway, Semicon, Healthcare, Agriculture and Professional. The combination of our track record over the last 25 years (customers are calling us) and the focussed market approach via our Sales crew (trained and specialised in their market segments) is the key to success.

iiConnect Group has a centralized design, engineering and R&D team?

Where (if) pops-up the input from manufacturing facilities?The ongoing and continuous challenge for the Operational organisation is to give an efficient answer to the customer’s expectations, trying to exceed them by avoiding potential internal delays. Communication and a military discipline, with an evangelic respect of processes and procedures are key in the exchange of knowledge and experience.

iiHow difficult is it to design a circuit board, for example? Please tell us a

bit more about the design process and the importance of customers' input/feedback.All starts with a good understanding of the customer’s ideas and expectations. With the support of our TiaS team , customer’s ideas will be transformed into a prototype. Not only we will offer some improvements on the level of component selection, we even suggest to the developers potential functional changes. We guarantee full DFX (Design for Excellence (X = Manufacturability, Testability, Cost-Effectiveness).The delivery of a working prototype proves we understood our customers' needs.

iiConnect Groups provides technological solutions for different

industries – from Railway and Energy to Healthcare. What particularities have these industries and which is the link between them?Different markets require different expertises. The link between them is the wide base of competences build up during many years. However, the reason why we are chosen among other providers in most of the cases is the fact that we installed Certified Manufacturing Facilities with trained and specialized operators for each and every specific field.

iiWhich was the most demanding project in which Connect Group has

been involved?Recently we had to redesign to cost a for the

36


railway market. For the Group, this project was challenging at all levels. We used this opportunity to push our organisation to a higher level, by enabling new manufacturing processes, logistic flows and supplier selection criteria. At the end of this project, the final customer was so impressed by our work flow and the way in which this project was managed, that he honoured us with an impressive order, the very first one obtained by the Group in this specific market segment.

iiNot that we are complaining, but... why did you chose to invest and build

production facilities in Eastern Europe instead of an Asian country, for example? And what distinct advantages did you found in Romania?As you will find in all our communications and strategic mailings, proximity and flexibility is the key to success. The combination having a strong technical group of colleagues with a competent group of operators in a low cost country was very important, but also the time of delivery is key to our success – shipping from overseas sometimes simply takes too long.

iiWhat was the biggest challenge you've encountered in Romania?

Dealing with the administration and customs was biggest challenge during the start up of our company. On the other hand, for the management, is was a blessing we could find so quick well trained, enthusiast and flexible workers, supporting us through this challenging period.

iiThe factory near Oradea is the largest one in the Connect Group.

Connectronics Romania employs about 0.5% of city's total population – was it difficult to recruit the right staff?Our factory is the largest one not only form the Group: since many years we are honoured by the local Government as being the largest employer within Oradea.As said earlier, finding good people was not the biggest challenge. We started the company with 8 people, of which 7 are still in our team.Octavian Malan, our Operations Manager for the EMS division and Adrian Pop, the Production Manager for the CWS, were from day one in charge and responsible for

PCB Division

37

By this way, I would like to thank you for giving me and the Connect Group the opportunity putting our Romanian colleagues in the spotlights.Flor Peersman

the growth in Oradea. A close cooperation with local authorities and Universities is the key to engage good and competent people. Internal training projects within the Group, where our Romanian colleagues can increase their competences by exchanging experiences with their Belgian, Dutch, German and Czech colleagues, enable them to support the projected growth of themselves and the Romanian subsidiary.

iiSome of the companies opt for local management for their overseas

operations, while others deploy their own staff; What is the situation in Connect Group – in Romania, for example, the General Services Manager is a local – Mr. Ioan Călin Veșa.From the beginning, it has been the goal and mission underlined by the Belgian Board to install a local Management with full authority on all business processes. This mission has been fulfilled by training, support and mostly by the motivation based on mutual trust and

fair cooperation.Our local Management is working with mutual and yearly agreed K.P.I.’s. During the regular follow-up sessions and European Operational Meetings with the other Operational Managers, we

succeeded to accomplish Group’s objectives and targets.

iiSales force, engineering, corporate culture – all of the above are

important, but which of them is on top of the others, in your opinion?From my personal point of view, here the corporate culture is number one. If the understanding is O.K., if people are happy to work for their Board, if the work place is a nice and clean environment, if our Romanian colleagues have the possibility to be involved on different activities in Belgium, believe me, the sky is the limit. All requests to increase output, optimize the throughput, ride over difficult economical periods, support other sites on engineering level are done with a smile if the “temperature among people” is O.K.Cable Division

38


A look into the future of vehicle sAfety And AccessHuf Romania is a branch of Huf Group, manufacturer of Car Access, Security and Immobilization components. Huf Hülsbeck & Fürst was founded in 1908 in Velbert, Germany, by Ernst Hülsbeck and August Fürst, as a family business. The company delivered its first products for the automotive industry in 1920s, to Mercedes. In 1988, Huf produces the first key with remote function on the German market, for Mercedes-Benz. In 1999, Huf develops the first "passive entry/passive go" system. Today, Huf Group has more than 7,000 employees in 19 countries around the world.

In Romania, Huf plant from Arad manufactures mechanical and electronic keys, door handles and steering column locks for Renault/Dacia, MAN, Volvo,

Porsche, Kia, BMW and Mitsubishi, in a factory with 300 employees. In addition, the company set up in 2011, in Timišoara, a research and development centre for automotive software.

iiWhat does it mean, for you personally, to lead a local branch of one of the

most important manufacturers in the field? Please tell us a few words about your career and the circumstances under which you became General Manager of Huf Romania.

ioan Posa: For me personally, this responsibility is a daily challenge. It started

with the setup of the company in Romania, period in which I was confronted with the most diverse tasks: paper work at the Trade Registry,

authorizing first bank payments to companies that were preparing the location, setting up the IT infrastructure, connecting the location to electricity, gas, and water suppliers, the recruitment of the first employees, installing the first workstations.

Huf Romania

the neW Factory

39I graduated Mechanical Engineering and I got also trained in the electrical field during high school. In 1999, I joined a multinational company in the automotive industry, being the first engineer hired by the respective company. In a few years, I passed several stages becoming a member of the management team. For 6 years, I was exposed to different ways of dealing with work and interpersonal relations, being impacted by British and then German leadership models.At the beginning of 2006, I got the first contact with Huf Group, during the interview for the General Manager position. There were two things that convinced me to accept this challenge: first, the fact that Huf Group wanted to hire a Romanian as a General Manager, being ready to fully trust that person, while most foreign companies hired expatriates as General Managers. The second thing that influenced my decision was the presence at that interview of a Romanian which was working at headquarters. Later, I found that we were both students in Timišoara at the same time.

iiLast year you inaugurated a new Huf factory in Arad. How high were the

investments and why was it necessary to move into a new house?

Huf Group wants to have a plant closer to every car manufacturer. In line with this strategy, there are Huf plants located on four continents: Asia, Europe, North America and South America.In this context, Huf operates in buildings which are adequate to the manufacturing process. The plan to build a new factory exists since 2008, when the land was purchased and due to the financial crisis was delayed for a few years. The investment in the new building was over 4 million Euros and specific process technology investment will be done once we win new contracts.

iiIn the middle of an economic crisis, Huf Romania’s turnover increased

between 2009 and 2010, for about 6 times and since then has been quite flat, at around 20 million Euros. Which were the factors that influenced that steep growth? Are the products made in Romania delivered directly to the clients, or there are also intra-group transactions?Huf Romania followed a different development path comparing to most foreign companies. From the beginning, the emphasis was on the development of quality management system, in compliance with automotive

part oF huF'S StaFF and arad'S Mayor

40


industry standards. The objective was to be able to deliver directly to original equipment manufacturer (OEM). The transfer of products from other Huf factories was fairly small compared to the new projects implemented in Romania. In 2009, three new projects were implemented into serial production for customers: Porsche, Hyundai and Dacia. The trend continued in the following years.

iiHuf Group is present on almost all continents. What are the criteria

according to which the production is allocated to the various companies/countries (quantity and range of products)?Huf Group provides a product portfolio that is synthesized with an acronym: CASIM (Car Access, Security and Immobilization). Plants develop skills for different systems according to the market requirements. An important element in the decision is determined by the ability to serve the customer in the best possible way (proximity, communication, reaction capacity). Manufacturing processes of certain

products require large investments. In this case, we need a certain amount of sales in order to justify the investment and to be able to allocate the production to a particular plant.

iiHuf Group specialises in access, safety and vehicle immobilization

systems; how did the company's products evolve over time?It started in 1920 with a door lock for Daimler. In 1935, a new technology was used by Huf for the first time: die-casting of zinc alloy; in 1976, plastic injection; in 1986, handles made of moulded plastic and painted; in 1988, first remote key; in 1999, passive entry systems and mechatronic systems in 2004. So you see, products developed over the time according customer requirements. During the first 60 years the company concentrated on mechanical products, keys, locks, latches, door handles, emblems, decorative parts for cars. In the early 1980ies electronics entered products which is why today it becomes more and more important. The company even started to sell software in combination with their hardware telematics products.

iiIf we were to look back at the company’s history of over a century,

what do you consider to be the biggest leaps in technology and in what period did they occur?Die-casting of zamak (Zinc Alloy), plastic moulding, painting of plastic parts, utilisation of electronic components, RF communication, infrared communication and NFC (Near Field Communication).

iiHow important is the software component in a car key, for instance?

Did software development lead to a simplification of the key profile or it is still important in the vehicle security equation?In recent years, software becomes increasingly important in the automotive industry. More and more traditional mechanical components gain electronic subcomponents, which contain, of course, software (this way appeared the so-called mechatronic components). The increasing degree of complexity led to the introduction of electronic subcomponents, so as to enhance the traditional mechanical operation and not necessarily to be replaced. As far as the key is concerned, the complexity of the mechanical profile of the blade evolved (today we have three-dimensional profile keys), in parallel with introduction of electronic parts.

41

iiCurrently, keyless entry systems are present only at top models or premium

brands. How much time do you think will take until we'll see these systems in a Logan, for example?Premium automakers and many of the medium range models already offer Keyless Go system as standard configuration. The next step will be to standardize Keyless Entry system in the above mentioned range and probably with the next generations, the systems in question will be offered as an option by the producers of low cost models.

iiHuf operates a software research and development centre in Romania;

what are the applications developed by this office and how does the collaboration with parent company and other similar centres works?The Software Development Centre in Timišoara covers, independently or in collaboration with other similar offices, the entire Huf product portfolio: from electronic and mechatronic products used in the car access segment (Keyless Entry and Go, automatic closing and opening of the doors and trunk etc.) to the radio communication products (remote keys, tire pressure sensors in wheels).

iiWhy have you chosen Timișoara for the R&D Centre?

Romania in general and Timišoara in particular has been established as a pole of Automotive Software. Highly trained academics has provided alumni with a knowledge base which, combined with

the specific engineering thinking of the Romanians, has generated "the ideal employee” for such activity.

iiWhat is the relation between Huf Romania and universities from Arad

and Timișoara?Huf Romania carries out various collaboration projects with Universitatea Politehnicã Timišoara, especially in the practical training area: internships, support for degree and dissertation works, but also lab practice. We are considering the possibility to sponsor a lab for programming courses, but also the collaboration on research topics (e.g.: PhD thesis).

iiDo you provide scholarships or running any programs that might help some of

the most talented students?All the students we collaborate with are Huf employees and, besides the monthly salary, they do benefit from many other facilities.

iiHow does the existence of R&D Centre in Timișoara influence the product

range manufactured by Huf in Romania?Today, the Arad and Timišoara product portfolio are disjoint, the main influence being the increase of Huf Romania’s importance within the Group, and, more recently, start of the mechanical design within the factory in Arad.

iiWhat development plans do you have for the factory in Arad? What

predictions do you have for the evolution of the turnover and the number of employees?In the next 5 years, depending on the evolution of the market, the turnover is expected to double and the number of employees to reach 500.

iiDoors that unlock themselves when you approach the car, trunks with

motion sensors, remote controls... What would be the next major innovation that will affect, in a significant manner, the way we enter our personal car?The automotive industry is in an accelerated innovation process (it is estimated that the industry has evolved in the last 10 years more than it had in the previous 100 years) and thus being quite difficult to anticipate "the future". One certain thing is that the mobile phone is becoming an increasingly important component of the daily life and we will see it soon as a component of our interaction with the car.

SoFtWare developMent oFFice in tiMiSoara

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The Belgian IGW Group, formerly known as Watteeuw, produces gears in Iasi for companies like Rolls Royce, Atlas Copco, Bombardier and Siemens.

IGW RomânIa

Where The Wheels Are Turning

Vertically integrated production, including heat treatment to ensure ultimate durability

43

In 1949, 19-year ‘young’ Alphonse Watteeuw opened a one-person workshop in the elderly house to start producing gears for

local companies. With the support of his father - Mr. Henri Watteeuw, a reputable and respected teacher and author of many technical papers in Mechanics – the young entrepreneur succeeded to build up his business step by step. By 1964, the wheels were turning for the small family business located in Bruges, Belgium: the first contract with an international client – the Swedish compressors producer Atlas Copco – was concluded . In 1992, Watteeuw was acquired by BMT Group and, since then, the growth rate of the company found an accelerated pace. Whilst in the very beginning all clients were local companies that needed a small amount of special transmission components, it didn’t take long before the great international groups were knocking on IGW’s door for their customized transmission solutions. This interest from Western internationals fuelled a growth strategy that created a solid base for further expansion. It was the start of a steady geographical expansion: new factories were opened in Brno, Czech Republic and Iasi, Romania.In 1998, IGW took over a part of the factory of synthetic fibres Terom in Iaši. “The Belgian company has chosen Iaši,” says Mr. Gigi Boghiu, General Manager of IGW Romania, “because besides economic considerations, there already was a strong industrial tradition here. Initially, they wanted to invest in IMAMUS Iaši, but because of various reasons they had to refocus and they decided to take over the mechanics department of Terom.” But synthetic fibres had very little in common with the production of gears. Qualified staff was needed, and some of it was recruited right from the initial acquisition target – IMAMUS.“Another reason for which IGW invested in Iaši was the Polytechnic

Institute; 90% of our engineers have graduated from this technical university.” And the cooperation between IGW Romania and local schools does not stop here. “I encourage the operators to go to college and, depending on their skills and vacancies, I try to promote them as engineers,” takes Mr. Boghiu pride of his HR policy. “In addition to this, all operators attend to development and refresher courses held by

teachers from the Ion Neculce High School – they need to stay up to date with the newest technologies and to understand also our customers’ demands. Nor could it be otherwise, when they are working for the main supplier of transmission components for several market leaders in the machinery, power generation, compressors, and transport industries,” adds Mr. Boghiu.Back in 1993, the IGW Group decided

“The Belgian company has chosen Iasi because besides economic considerations, there already was a strong industrial tradition here.” GiGi Boghiu - General Manager IGW Romania

preciSion engineering; grinding doWn the laSt MicronS

44


to enter the railway industry, one the fastest growing market segments currently. A decision in line with their constant focus on diversification. This way the group became active in an array of niche markets in the most demanding industries in the world.And after the West came the East. The flourishing of the Asian markets began when Western companies started to outsource some of their manufacturing capabilities to these regions. This didn’t only offer changes for economic growth in the Asian countries, but also caused the need for better and newer

logistical support. The locomotive effect of rapid economic growth of those countries caused the need for transmission solutions, resulting in increasing exports to those areas, and in turn an increase in investment and production. This was of course an opportunity on which IGW had to build. Globalization is happening and we need to make good use of the opportunities with which it presents us and minimize its risks, across both hemispheres. In 2006 a site was opened in Suzhou, near Shanghai, China. It started as a distribution center, allowing customers in the area

to benefit from shorter lead times and local customer service. Today it also serves as a fully operational manufacturing and assembly plant, specialized in providing its clients with products and services catered to the specific requirements of the Asian market. The last couple of years this process repeated in Zanesville, Ohio, USA, a location which is fully operational as of January 2014. The Shale Revolution within the Oil and Gas industry has shifted investments in the energy market in the United States, an opportunity being seized to the fullest.

Today, IGW’s strategy comprises of providing transmission solutions to - at least - two global market leaders from each industrial sector. Thus, among IGW customers we can count Siemens and Bombardier in the railway industry, Atlas Copco and Ingersoll Rand for gears for compressors, Rolls Royce and Wärtsilä for the marine industry.With a global and centralized Sales & Marketing team, each company in the IGW Group can calibrate its

“I encourage the operators

to go to college and,

depending on their

skills and vacancies,

I try to promote them

as engineers.”GiGi Boghiu

Producing even the biggest gears for the most demanding applications

Constant quality assurance guarantees consistent product features

45

production and streamline costs. IGW Romania manufactures gears, mostly in larger, repetitive lot sizes, the plant in Belgium is specialised in the production of one-off and heavily customized solutions (for the largest machinery and applications), while the Czech factory is specialised in the design and assembly of complete transmissions. IGW produces highly specialized gears, requiring a high-precision finishing.IGW has been producing gears for over 60 years, and the company managed to stick to its original profile, unlike many others; it adapted its production to the market needs and, by remaining committed to the principle of manufacturing highly specialized products which are difficult to compete with, it has established itself as a market leader. It has built its reputation for its commitment to excellence and innovation, providing high quality, specialist transmission solutions in a variety of sectors. The next

challenge? “To always keep our staff engaged, to convince them to try new things, whether every attempt will be successful or failures will occur from time to time; otherwise we will not be able to make progress, and progress is essential for the survival of the company,” concludes Mr. Boghiu.

This way IGW will continue to utilize its strong combination of enduring principles and proven strategy to create solid growth platforms to keep moving forward in the international environment with increasing demand for customized transmission solutions.

Combining highly motivated personnel with state of the art technology

46


The righT Tools in The righT handsSet-up in 1833 and being part of the French industrial group MOB since 1998, IUS S.A. - Brasov ("IUS") is the sole manufacturer of professional hand tools in Romania.Mr. Bogdan Ureche, General Manager of Mobius S.A., guided us through the history and the company, its strategy and plans for the future.

iiIUS's history could be traced back to 1833; how important is the tradition

for the clients of the company?

Bogdan Ureche: Tradition means reputation, a trusted brand, and products

and services which shall satisfy customers' expectations for uncompromising quality. All this leads to long-term, successful partnerships. In its 181 years of activity, IUS manufactured a wide range of different products. About 80 years ago, the company started to manufacture hand tools, a product range that would define the profile of this unique company in Romania in the following decades. You could say that the craftsmanship of the artisans which manufactured hand tools in Brașov since 1930s has been transmitted from generation to generation, until today. IUS can be named, without any hesitation, a traditional brand for hand tools in Romania. The renowned quality of our products, fair prices and continuous innovation recommends us as one of the leading producers of tools for professionals. Unfortunately, in the past 10 years the Romanian business environment, and especially in the industrial sector, has gone through changes that ultimately led to a drop of the value of the Romanian brands. Brand image (and value) suffers major changes when

user's perception is altered by various factors, such as: the invasion of imported products, low purchasing power, flows in the procurement by tender system, favouring lowest possible price instead of the best price/quality ratio.Despite this negative factors, the professionals using IUS tools are well aware of the quality of our products and we are confident that we can maintain our market leader position.

iiAnd for the employees?Being part of a team that manufactures

renowned products and that continues the tradition of many generations of craftsmen is definitely a good enough reason to be proud. And I know that all our employees, as well as the management team, have the ambition to surpass the success of the predecessors, to leave their mark on IUS products through innovation and new technologies, and to increase the value of the brand.We are all aware of our responsibility and we don't want to be the generation (or generations) that might disrupt the tradition of 180 years because of a sick economy, huge number of companies going out of business, and a corrupt system.

iiHow much the hand tools changed in the last hundred years? But their

manufacturing technology?Hand tools categorization is based on several

MOBIUS S.A.

48


criteria: for example, by type of action (cutting, striking, grabbing, screwing, etc.), or by usage (mechanics, metalworking, electricity, construction, etc.) Obviously, the evolution of tools must keep pace with newly emerging materials (construction and plumbing), the evolution of the shape of locking fasteners (new profiles emerged: the hex, torx, pozidrive, etc.), tools and special devices for last-generation machinery and equipment, tools for safety devices.Studies on the shape and ergonomics are constantly conducted and new materials are used in order to increase comfort in use and operational safety, increasing life cycle of tools; we are constantly following the evolution of domestic and international manufacturing standards (STAS, DIN, ISO, etc.). Manufacturing technology involves, essentially, the same operations, but using new alloy steels, high-performance molds, controlled heat treatment, CNC machining and latest technology in surface coating.Higher productivity through work flow optimisation, increased quality control, ongoing staff training, investments in research and development, are the main factors that leads to high quality products, and we are able to meet the needs of the most demanding professionals.

iiWhat makes a tool „professional”, as opposed to „for hobbyists”? Besides

price, of course.When we say hobbyist, we usually think to someone who puts soul and passion in what he or she does, so don't see why would they use low-quality products. But it seems like the idea that one don't really need quality tools somehow entered people's mind and stuck there.Clearly professional tools are used extensively every day, and users expects that the quality and parameters of their tools remains the same after each use. The materials and technology involved in the manufacturing process, craftsmanship and compliance with national and international standards are key factors in establishing whether a tool can be designated "for professionals", or not. We use to say that "a handyman is recognized by his tools and by the way he takes care of them". Professional tools draw respect, and their users are proud.Who are the main customers of IUS – handymen, small entrepreneurs, medium and large companies?

Production site in Brasov, Romania

Cold forging

Merchandising

49

On the domestic market, there is a distribution network at the national level, through specific business partners and dealers and through local DIY stores; we have direct business relation with medium and large companies, and we attend various tenders. Our product portfolio addresses virtually all industrial sectors: aeronautical, shipping, mining, railway, processing of raw materials, civil and industrial construction, maintenance and other services.

iiWhat factors are considered when for the production of new types of tools?

The need for new types of tools appears as a result of market development, including the emergence of new fasteners and fastening modes. The development of machine tools also leads to new, specific projects, such as the manufacturing of special tools, adapted for industrial robots. But it's the environment in which the tools are to be used that determine their evolution. For example, last year we developed production of tools made from materials that reduce, when in use, the possibility of creating sparks. These tools are to be used within high risk environments, involving flammable or explosive substances (oil & gas, petrochemical industries, etc.).Of course, the profit margin, the market size and the portfolio of other international manufacturers are also considered before a new SKU enters production.

iiHow important is customers' feed-back?

Any positive or negative feedback is carefully analysed by our quality managers and contributes to the continous and substantial improvement of our products. We really are a customer-oriented company. We're always focussed on three values: success based on exceeding expectations of both domestic and international clients; integrity through compliance with professional ethics; profit should arise by providing added value to our products and services.

iiWhat has changed in IUS after the acquisition of a majority stake by the

French company MOB?Adaptation of production capacities were adapted, in the context of manufacturing products bearing the MOB brand; production flows and staff costs optimisation; a new factory was built and a new logistic centre, including a new warehouse, were commissioned in 2008. (Actually, the old factory was right

New range of sockets and accesories

FUSION BOX 2014

FUSION BOX 2014 - A new concept of combining several types of toolkits

50


in the middle of the city, and we needed to relocate production facilities in an area were we would not disturb the inhabitants).MOB partnerships with customers from all over Europe have led to the development of a new segment of our business: manufacture of tools under customer's own brand.

iiWhat percentage of your sales is provided by intra-group orders and

what part of the Company's turnover is the fruit of own sales team?About 35% of our production is commissioned by the Group, while other customers represent 65%.

iiIn the same context, what part of the production is intended for export

and what percentage goes on the internal market?Considering that all intra-group deliveries means export, on top of which we add 15% representing other customers from abroad, remains 50% for domestic market.

iiWhat is the most popular range of products?

Domestically: car body repair tools, but also tool kits for locksmiths, electricians, auto mechanics. For the group: construction tools, pliers, wrenches, and hammers.

iiHow do you decide under which brand to produce certain tools?

It depends on profitability, production volume, length of the contract, brand awareness, the availability of technical and production capacity, and, last but not least, according to the Group's development plans on different markets.

iiIn recent years there have been massive investments in new

facilities – new factory, and a logistic and an administrative centre were built; as a result, IUS is now in the position to provide various services – painting, forging, electroplating etc. How important is this new business segment? We have invested about 12 million Euros in the new facilities, all of them from own or Group founds. If in the beginning they were strictly used for own production, little by little we started to develop the provision of services to various clients. It is still to early to evaluate the impact over the financial results of IUS, but we'll monitor the development of this new segment. We expect to recover the costs in the coming years, as we continue to develop and improve our products and services.

The combination of MOB and IUS names resulted in a mathematical-resonant name – the Mobius. You have not taken into account the incorporation of the symbol in the logo? Or it was too obvious?For the company's logo, there are already too many items that claim primacy: IUS's logo, the gear from the MOB logo, the MOB name, and last but not least, Brasov. A logo must be legible and easy to use on any material, whether it is affixed to the product or advertising material. The symbol of Mobius might have created some confusion at a smaller size, being less visible. Maybe in the future we will find an application and we will exploit the notoriety of this symbol. If not in the logo, it could be in some advertising material.

Sales force - promotion

51

Alchimex was established in 1998, when several experienced specialists founded the first Romanian privately-owned company in the field of plant protection. The result of this initiative was a small capacity plant, which began producing in the same year fungicides and insecticides powders. Since then, things have rapidly evolved, Alchimex soon becoming the largest Romanian manufacturer in the industry. We've talked about the usefulness of pesticides and fertilizers treatments, but also about the measures taken to reduce the associated risks, with Mr. Claudiu Crângus, General Manager of Alchimex.,

WHY CROP PROTECTION IS A NECESSITY

Alchimex


52


The topic of products for plant protection can arise controversy. And if consumers

tend to reject everything that means chemical treatment of agricultural crops, the producers consider their reaction as being exaggerated.“We are faced with the way in which media address the issue of the use of pesticides. Actually, the term «pesticides» already has a negative impact on the public, due to the bad publicity that equates the words «pesticide» and «poison», without explaining in detail the advantages of their use, on one hand, and the potential risks, on the other hand,” says Mr. Claudiu Crânguš, General Manager of Alchimex.Earth must feed more and more people. In 2013, the world's population was about 7 billion and, according to demographic studies, by 2050 it will exceed the 9 billion mark. Amid increased demand for new dwellings, soil erosion and climatic changes, areas available for crops are dwindling. “Under these circumstances, the use of pesticides should be considered, even by their the fiercest opponents, a necessary evil,” says Mr. Crânguš, who considers that the impact of these substances over the human body is lower than that of certain drugs and other

chemical substances which can be found in food. “Like drugs, pesticides currently used only have, at most, an acceptable risk for humans and environment, in most cases being used only small quantities – tens of grams or millilitres of substance per hectar. Consequently, residues of such substances in food or fodder are virtually negligible,” says Mr Crânguš.“Organic farming remains a desideratum,” said Mr. Crânguš, “because this type of crops could feed less than 10% of the world population and, anyway,

the price of organic food would be prohibitive to most people.”Mr. Crânguš believes that due to advances made in the research and development of new plant protection products and fertilizers, their impact on people and the environment can be considered of acceptable risks. Alchimex has a physicochemical laboratory fitted with equipment and facilities up to the highest standards in the industry. Here all the raw materials are

tested before being put into production, and all recipes and mass product substances are checked for conformity. “Our team of chemists has represented every year Alchimex's laboratory at the studies organised by the “Collaborative International Pesticides Analytical Council (CIPAC)” - the international governing body of analytical methods in the field of chemistry of pesticides. The successes were remarkable, resulting in ranking on the top places, while competing with the best laboratories in the world,” says Mr. Crânguš.

As a result of the research and development activity, Alchimex has registered over 65 products, adapted to the requirements of modern farming and local specifics. “Each new product meant the implementation of an idea shaped by biological criteria in a production process which is industrially applicable and economically efficient, going through several stages, including biological testing, lab testing and small scale production,” says Mr. Crânguš. Currently, Alchimex produces 23 products, five of which being manufactured according to patented processes, Alchimex being the patent holder.In 2012, Alchimex set-up a new laboratory for soil analysis,

1998Alchimex is established. Commissions its first production facility for fungicides and insecticides powders.

2000Two facilities for the formulation of liquid products become operational.

2002Alchimex starts to produce fungicides and insecticides as concentrated suspensions.

2009Production capacity for concentrated suspensions is doubled.

2011As a result of an investment of EUR 2,5 million, a new production facility for granulated sulfonylurea herbicides is put into operation, the largest in Eastern Europe; Sumitomo Corporation becomes the majority shareholder.

2012A new laboratory for soil analysis.

2013Total investments sums up to EUR 5.5 million.

12professionals work in the

R&D department of Alchimex

53

After a series of discussions and negotiations with DuPont, Alchimex eventually got the rights to use two of DuPont's active ingredients in products manufactured under the Alchimex brand. This represents an unprecedented decision in the history of over 200 years of DuPont.The project was financed entirely by Alchimex, following an unsuccessful attempt to obtain European funds within the framework of a support programme for consolidation and modernization of the productive sector, in order to increase economic competitiveness of Romanian companies.

Production facility for herbicides (concentrate suspension)

Physicochemical laboratory

equipment for dry grounding of granulated sulfonylurea herbicides


equipped with cutting-edge Japanese equipment. “We are able to determine the most important parameters characterizing the soil quality and to emphasize its nutritional deficiencies. Following the analysis, we provide reports that interpret the results. Thus, farmers receive recommendations on what type of fertilizer should be used and dosage recommendation. In this way, beside costs optimisation, we avoid situations in which the inappropriate use of fertilizers can damage the soil,” says Mr. Crânguš.Alchimex products comply with the manufacturing standards and European regulations in the industry.

“From the very beginning, we aimed to develop a wide range of products adapted to modern requirements of plant protection, in conjunction with the various agricultural regions of Romania. We focused on our own research activity and on a good cooperation with many renowned companies in the industry, thus managing to build a product portfolio with significant market share in Romania.”Since 2004, Alchimex has implemented an integrated management system for quality – environment – occupational health and safety, in accordance with all European directives and regulations

governing the manufacture and marketing of the plant protection products. Approval of plant protection products and fertilizers is quite expensive, and the cost may be as high as several million Euros.Up until now, Alchimex has production facilities for all types of formulations and biological classes, being able to produce over 2,000 tons per year. Products are manufactured in collaboration with renowned companies such as Nufarm, Makhteshim Agan, Bayer, Dow, DuPont, Syngenta, Nippon Soda, Nissan and others.“Farmers appreciate our products for their quality, performance and, last but not least, for their competitive prices.”

Alchimex is part of the Alcedo Group, the largest national distributor of plant protection products. In November 2011, 90% of Alcedo shares were taken over by the prestigious Sumitomo Corporation of Japan.

Alchimex is the only Romanian manufacturer in the TOP 10 producers of plant protection substances, ranking 6th, ON THE DOMESTIC MARKET.

manufacturing equipment for granulated sulfonylurea herbicides

55

According to the research conducted by Kleffmann, Alcedo is the best known brand and preferred supplier of 16% from the Romanian farmers, with a portfolio of over 3,500 customers and 13% market share. Alcedo provides customers with a complete range of products required for setting up and maintenance of crops, providing complete technology packages, which include, along with plant protection products, seeds and fertilizers. The turnover for the whole group was around 120 million Euros in 2013.

In the battle with the competition, Alchimex relies on the quality of its products, packaging, marketing and price. “We managed to gain the confidence of farmers, and thus the demand for Alchimex products is steadily increasing,” says Mr. Crânguš. “But our most important asset is the human component. We have created a favourable framework for personal and professional development,

while encouraging performance, contribution to innovation and supporting the implementation of new ideas.”Alchimex's turnover increased every year, reaching €12.5 million in 2013, up from € 10.4 million in 2012. Alchimex holds a market share of approx. 8%.“Our performances from recent years have been materialized in a series of partnerships that we have concluded with prestigious multinational companies, such as Nufarm (Australia), Makhteshim Agan (Israel) or SumiAgro (Romania), for which Alchimex has been designated toll manufacturer, producing for and on behalf of these companies a range of quality products for both domestic and foreign markets, including but not limited to EU countries.”“We will continue to develop our product portfolio, focusing on the research and development activity, which will be oriented, as always, towards the development

of new products, adapted to the particularities of various agricultural areas in Romania; another priority is to optimize the efficiency/cost ratio, while complying with good farming and phytosanitary practices, and minimizing the impact over humans and environment. Our goal is to be close to the farmers and to help them in their efforts to adapt themselves to the competitive conditions of the EU markets.”„Anticipating a favourable evolution of pesticide market in Romania and based on the interest expressed by some of our partners to expand our cooperation, Alchimex intends to put into operation a new production facility for granular fungicides, with a capacity of about 1,000 tons/year, which will require an investment of 6 million Euros,” says Mr. Crânguš.“We will continue to invest in modern production facilities and human resources, providing all means for professional development to our staff. We are aware that this is the only way to honour Alchimex's motto: the perfect agrochemical formula.”

The most popular Alchimex products

Rival – best known brand of sulfonylurea herbicides for cerealsAstral – best selling herbicide for corn cropsMicrofert U – the most widely used foliar fertilizer by the Romanian farmers Topsin – a fungicide ranking high in farmers' preferencesFaster – the most widely used pyrethroid insecticideNuprid Max – holds the supremacy in the category of seed dressing products for wheat and barley.

aSSeMBly line For liquid FungicideS, inSecticideS, 1 litre package

56


TransiTion ManagerGuyomarc’h is a well-established company in the field of animal nutrition, founded by Jean Guyomarc’h in the cultural region Brittany, France, in 1954. The company is on Romania’s market since 1993, at first through a joint-stock company, settled in Craiova, being at that time specialized in premixes for zootechny (vitamin mixtures and other essential substances which, combined with forages, constitute the food for livestock).

Over the last decade, Guyomarc’h evolved, being taken over by Evialis, then integrated into InVivo group. Currently, InVivo

group owns a factory that produces animal nutrition products in Cioplani, being a majority shareholder of a factory in Bacãu as well.Mister Marc Pascal Huot, the current manager of Guyomarc’h, has been in the French company for less than a year. But he is not by far a newcomer: he has been established in Romania for 25 years, time in which he provided consultance to several investors in Brittany, including the ones from Guyomarc’h, enjoying good realations with

them. And when things took a wrong turn in the Romanian branch, Mr. Huot was asked to fix them, being issued a transaction manager

warrant.Probably one of the most enduring expatriates in Romania, living here since the end of 1989, Marc Huot had all the time in the world to understand the way things work and form his own opinion about management, the educational system and the local business enviroment. Kind and open-hearted, he does not

restrain himself from expressing his personal opinions - sensible on top of that - covering delicate topics in a tasteful and airy humor.

Guyomarc'h

The total production capacity of the two fabrics is of

max. 4.500

tons per month

57

iiHow long have you been working in Guyomarc’h?

Marc paScal huot: Since November 2013. But I have known the company for 25 years, I offered them

consultance in the beginning as well, when they decided to invest in Romania. I came here last year because the company had started to have problems, and had to recover significant amounts of money from the market and the level of sales was way too low.

What measures did you take to increase the profitability of the company?

We have immediately discovered the cause of the

company’s problems: the flawed management. The management of the society was working only on a certain market experience, but it wasn’t enough. The first measure I took to increase the company’s efficiency, and it wasn’t one of the most pleasant to me, was to make important (though not numerous) personnel reductions, some among the most important positions.Another thing that needs to be done as soon as possible and which we are presently working on is integrating the three brands – InVivo, Evialis and Guyomarc’h –, currently existing a confusion among clients and being extremly hard to obtain a coherent communication.

Marc huBlot

58


What are the products which Guyomarc’h produces in Romania?

We manufacture premixes, forage and forage additives for poultry, swine, ruminants and even for carp farms. Our total production capacity is of more than 4.000 tons of premixes monthly, 1.200-1.500 tons at the factory in Cioplany and 3.000 tons in Bacau.

is all this production intended for the internal market, or do you also produce

for export?Until my arrival in Guyomarc’h, the entire production was directed towards the internal market. For us, the most important external market is that of the Arab countries, which have a significant production of sheep. But there is a problem – those non-EU countries have to recover VAT, which is not that easy to be done. We intend to sell in countries such as Bulgaria, Belarus, Syria, Iran, Egypt – Romania’s traditional tranding partners. Another market with potential is the Republic of Moldova, where there are many breeders of quail and animals raised for their fur.

What are the advantages of using premixes and forage additives in

animal feed?What we actually offer to our clients are some services, a certain recipe. Our client needs

his animals to gain weight in the shortest time, with the smallest ration of food and the lowest costs. Our products are aimed to limit mortality, to strenghten the health of the animals and raise them in conditions that should provide satefy for our consumers.We have our own nutritionist, who prepairs the recipes according to the achieved forage and the species or the breed. According to the forage characteristics, we add the necessary substances – proteines, vitamins, cellulose etc. What the client wants also matters. We, for instance, have contracts with different milk producers and we ask them: “What do you want to obtain?” “We want a bigger milk production without fats”. And then we provide them a personalized recipe for lactation growth. Everything depends on animal nutrition. What we do is similar to the activity of a sporty doctor who, with the help of nutrition, increases the performances of an athlete. The genetic material is also important. In Romania no one invested in the growth of piglets for sale, for example. As a result, farmers buy piglets from the Netherlands or from Germany, while the quality varies according to each’s budget. Everything was thought for intensive fattening, but because there has been no investment in a quality genetic material, there was a high rate of mortality and many businesses gone bankrupt.

and what would be the risks of using premixes and additives in animal feed?

There are no risks to consumers. We are talking about some food supplements made of natural products.

“Supermarkets settle the prices”

59

But does the taste of meat change?It changes, of course it does. Between a

pig in a farm that reaches 100 kilograms in a few months and the artisans who practice zootechny in a year of course the taste of meat is different; and the price changes as well. You can buy a black pig from France that weighs 120 kilograms and was raised in a year and a half, eating nuts, acorns etc., but that one costs 1.000 euros. The problem is that the prices are established, in Romania and in other

European countries alike, by supermarkets.

Which are Guyomarc’h’s main clients in Romania?

Our main clients are forage factories and large farms that have integrated forage factories and can make the premix mixtures themselves, based on our provided recipe. It is important that those farms have the necessary equipment to mix the fodder following the recipe, because there still are those who work with the barrow and the shovel. We have a sales department consisting of around 20 vets, who contact potential clients directly. We sell forages and premixes to the farms directly. Yet we have recently launched a product special for distribution in retail network: forages packed in 5 kilogram bags, available in veterinary pharmacies. With these products we target individual farmers.We also provide products for animal hygiene – especially for disinfecting the halls – a general disinfection is mandatory each time the animal population is changed, because otherwise the animals might get sick and there is the risk of mortality growth. Animal nutrition and hygiene are essential for farmers and consumers alike.

MPH on human

resources in

Romania:

“Unfortunately, there aren’t any schools of veterinary technicians left.”“The hardest thing to do is finding commercial agents – there are few the ones who have the education and necessary skills.”“Romanian managers should learn and have patience, think long-term.”

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Fighting a Fierce competitionVRANCART S.A. Adjud is one of the most important producers of corrugated cardboard, paper board and tissue paper in Romania, with over 35 years of activity in this field. We discussed with Mr. Ionel Ciucioi, President of the Managing Board and General Manager, about Company's strategy and development plans.

ii Vrancart produces paper for cardboard, corrugated cardboard and

cardboard boxes – basically, the entire range of components of the final product. Which of these three segments generates the highest income?ionel Ciucioi: The production cycle begins with cardboard paper manufacturing. About 70% of this amount is delivered to the corrugated cardboard section to be processed, while the rest is delivered to customers in the form of coils.

In the corrugated cardboard section, paper is processed in planar formats (boards of various types and sizes), out of which 90% are delivered directly to customers, and the other 10% is transformed into Vrancart boxes.Financially, the highest income is derived from corrugated cardboard sales, followed by cardboard paper and cardboard products (boxes).

What source of raw material do you exclusively use for waste paper?

We use 100% waste paper.

Which is the main raw material supplier – the internal market, import, both?

What is the relation between these two options in terms of suppliers?Over 95% of waste paper comes from the internal market. Vrancart provides its own 14 collection centres, which acquire 60% of the necessary waste paper, the rest being purchased directly from the big producers. Through its collection centres, Vrancart is one of the greatest waste paper collectors in Romania.

do you have your own design department for custom corrugated cardboard

boxes?Our specialists advice customers in the sense of choosing the cardboard type; they explain the processes of producing and assembling

VRANCART S.A.

61

the box and other technical characteristics, but also give information in terms of box design. Vrancart puts at its customers disposal specialized and efficient personnel.

as both cardboard and box producer, what differentiates you in terms of

advantages from printers that do not manufacture cardboard?We are not their direct competitors. The types of boxes produced by us (corrugated cardboard boxed) are produced by printers only as an exception. Compared to other competitors, box producers, our advantage is that we have an integrated production chain that starts with the waste paper collection (raw materials), the manufacture of cardboard paper, cardboard manufacture (planar formats) and ends by turning planar formats into boxes.

Were there situations when you competed with one of your customers

(a printer, for instance) in order to obtain a supply contract for cardboard boxes?Such cases are normal, the cardboard packaging market being extremely competitive. However, considering the competitive advantages mentioned above, we stand in a relatively comfortable position, compared to other manufacturers, our own customers. It should be mentioned that the main obstacle in increasing the cardboard

boxes production volume is represented by the low capacity of transformation that the Company has (about 10-12% of the cardboard production). We are though in an increasing process of this capacity through the acquisition of new machinery.

What are the advantages and disadvantages of cardboard

packaging compared to those of other materials?Using cardboard packaging presents several advantages, both for our customers – low costs and volume, light weight, high customization possibilities, logistic advantages – and the environment – the packaging is biodegradable, does not contain polluting substances, and the biggest advantage is that they are easily collected and recycled (the rate of turning waste paper into paper is extremely high – the specific loss below 5%).

you manufacture hygienic-sanitary products both under your own brand

and your partner brands. What are the differences between these products?

"We have chosen to launch our brands because we believe that it is important to differentiate our products from the ones of the competition."Ionel Ciucioi - CEO Vrancart S.A.

Ionel Ciucioi - CEO, Vrancart SA

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Toilet paper production is sold both as yarn (industrial coils) to other manufacturers – about 70% – and as rolls of various sizes (30%).The rolls are produced both under our own brands and our partner’s ("private label").Currently we have two ranges of

hygienic-saniatary products (rolls) "Lila Camila" – toilet paper from cellulose (cellulose bought from various suppliers) – and "Molena" – toilet paper from recycled paper (produced on Vrancart machine)We have chosen to launch our own brands because we believe that

it is important to differentiate our products from the ones of the competition. Being a common product, relatively simple, the differentiation is made especially through the brand image and through the way the product is presented.

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There is a differentiation generated by the product quality, but between quality categories the differences between our competition’s products are relatively small.The market is divided mainly between cellulose toilet paper

(with a booming demand) considered to be of superior quality and toilet paper made from waste paper. For operational reasons we have chosen to compete on both segments, thus being able to better satisfy our clients.

Exploitation of

energy resources

„In terms of energy and energy security, the exploitation of any type of new resources will gain ground. For example, in the context of the current geopolitical situation, the idea of exploiting shale gas. Over time, the humanity went through key moments when we had to make certain decisions. Now, we have to make decisions at a macro level – by referendum or by any other method – they will be made. But when you are facing a storm, you must choose the lesser evil. The society will have to choose between an energy security in conditions of reduced costs and risks associated with the dependence on another state and the possibility to increase the cost of fuel.”

Vrancart factory, overview

how tough is the competition to become

the hygienic-sanitary product supplier for an important retailer?There is a fierce competition in this market, due to the high production capacities available locally and to the significant imports. Profit margins for manufacturers are extremely small, because of the distribution chain monopolization by the major retailers. This does not help the consumer in the end (theoretically a strong competition should lead to lower prices), due to the rather large profit margins imposed by the retailers.

Which are your development plans?

In the last 2-3 years we have invested significant amounts of money (15 million Euros) in increasing the cardboard paper production. Also in the next period we aim to make significant investments in increasing the waste paper collection capacity; we will open new collection centres, as well as in increasing the quality of our products. Another important investment, planned for the next 1.5-2 years, is a cogeneration power plant that will significantly reduce the production costs by reducing energy and natural gas usage.

Corrugated cardboard machine

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The mighTy TiTanWant to find out what's the next greatest thing after sliced bread? Then, read our interview with Mr. Mihnea Mocanu, General Manager of Titan SA, company which produces, near Bucharest, milling and bakery products for the past decades.

iiIndustry Insights: Titan SA is part of the GoodMills Group GmbH. What

meant for the Romanian company the integration into the Group, in terms of management style, know-how and working capital?

Mihnea Mocanu: While Titan SA is a renowned for honouring Romanian

by the quality and specifics of its products, the core values of the company correspond to the ones of the largest milling and bakery group in Europe, GoodMills; this generates a series of benefits such as: smooth transfer of international know-how, modern and innovative approaches in terms of management, implementation of the latest technology, etc. At the same time, we also benefit from financing sources, available at a competitive price.

iiHow did the group’s turnover evolve in Romania and what expectations do

you have for 2014?In 2013, the turnover of Titan SA was 71.8 million euros, about 13% growth YoY. For 2014, we expect further growth, by 10% compared with the previous year.

iiWhat were the most important investments made in Romania and

what are their results?Definitely one of the most important investments made by Titan SA was in the new buns and toast factory, in 2010, an investment of about 15 million Euros. Compared to 2011, sales volume of toast and buns increased by 43% in 2013, while the weighting in the total turnover of the company doubled in only two years. The result of the investment was the cooperation with several renowned international companies, and this led to the recognition of the quality level of TITAN products at international level.

titan Sa

Mihnea Mocanu- General Manager, TITAN SA, Member

of GoodMills Group GmbH

66


iiHow does the company’s income split between the four product categories-fresh, long life,

professional and frozen?The highest turnover share goes to professional products, followed by the other categories (fresh bread, long life, buns/frozen)

iiAccording to the information available on the company's website, Fortza brand cereals

own 54% of the market. How did you best your competition – I am referring to multinationals that also sell products under prestigious brands on the Romanian market?Forza is a brand that our clients grew up with, they appreciate it for its particular quality, for the very good taste and the fair price. According to the most recent audited research, conducted by us along with Exact Research and Consultancy, in 2013, Forza brand records the highest loyalty among customers, compared to our rival brands.

iiYou are one of McDonald's suppliers in Romania; how did you impress the fast food

chain? What made them choose Titan SA over your competition?The start of our collaboration with McDonald's Romania was one of our bravest decisions, but also one of the reasons to be proud, a great succes in the company’s history. Titan's promise was to complete the construction of one of the most modern, „state-of-the-art” buns factories in Europe in only six months, and we kept our promise: the works started in September 2009 and were ended in February 2010.McDonald 's – and we are not talking only about Romania’s market – is an important strategic partner for Titan. We have a solid partnership and we earned their trust in the past four years, by constantly responding with professionalism, quality and seriousness, always keeping deadlines and quality standards. Considering the strict measures and the high quality level that McDonald’s requests from their suppliers, this collaboration is a proof of professionalism and the high quality level of our services.

iiTitan's own retail network includes several stores, under Belforno Fresh brand, but other

stores baring Titan brand can be seen in Bucharest. What's the difference between those?Indeed, Titan's retail network includes stores under Belforno Fresh brand; the stores that promote Titan brand and ensure its maximum visibility are the traditional trade stores that sell mainly Titan products, especially fresh bread. For these, Titan logo represents a guarantee of the product quality and, therefore, an efficient customer and loyalty magnet.

iiHow many stores do you currently have and what is your retail network development plan?

We have currently 48 stores, and we will end 2014 with this number.

iiWhere are distributed Titan products, besides your own stores?

Belforno Fresh store chain currently sells fresh products such as Titan bread, pastry products baked in stores, pastry and sandwiches. This range of fresh products is completed by a complementary range of soft drinks, milk and ready prepared coffee. The product range is continuously updated on each category, and can be found in the entire Belforno Fresh stores network. In these shops we focus on the satisfaction of the customers who want to buy fresh bread directly from the producer, and at the same time we offer a variety of specialities for the ones who want something else besides the typical loaf of bread. We work with special recipes and ingredients of the highest quality to create our valued specialities, such as Pave, Baguette, Fibropan, Italian bread, Homemade Pita, and many others.Most of our products can be found in all supermarkets and hypermarkets, as well as in various groceries and convenience stores

iiWhat is the most popular type of bread produced by Titan SA?

Besides Titan loaf, recognized and demanded by our customers, the most popular type of fresh bread is Pave, a tasty product made from a high quality white flour and natural wheat leaven. Being a bread baked in hearth ovens, it has a soft and fluffy crumb, dressed in a crispy crust.Pave bread is very appreciated by our consumers, surprising through its irregular shape obtained through a long leavening process, but especially through the rich and hearty taste.

Buns factory-Main entrance

67

iiIf we are to talk about the public's preferences, what percentage of the

total of bread is sold as pre-packaged sliced bread and how much is it fresh bread?The most important sales share of fresh and packaged bread goes, obviously, to fresh bread – more than 80% of the total sales, the

consumption habit being a very powerful one; share that follows the bakery market trend in Romania.

iiWhat are the differences between the types of flour – between 650 standard

and upper 000/480 standard for instance? How does the buyer know what type to choose?

Packing line control panel

Final product- packing line

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The main difference between the types of flours on market is given by the extraction degree. Thus, the most popular types of flours made in Romania are: the superior flour type 000 (0.48% ash content) - a fine, white and simple flour, excellent for light and fluffy pastry, bakery and cake shop dough; flour type 650 (0.65% ash content) – a less fine flour, darker in colour, with a higher gluten content, being thus ideal for elastic doughs that need leavening: all kinds of bread, pizza, focaccia; black type flour 1250 (1.25% ash content) – a higher nutritional flour, with a high content of minerals, cellulose and vitamins, intended for black bread or intermediate production.

iiWhen you decide on a new type of pre-packaged bread production, what

factors do you consider? What influence do the marketing department, the public’s tastes and competition have?The factors that we take into consideration when we decide to produce and launch new products are mainly linked to the market potential, the competitive environment and the alternative products analysis. Obviously, the marketing department’s role, in terms of research, whether it's related to testing the consumers taste or competition, is essential.Therefore, any decisions related to new products are based on market research, to identify the product’s characteristics that corresponds to the target markets.

iiWho are the main competitors on Romania’s market? How do you win

„the shelf competition”, knowing that it is a fierce one, especially in supermarkets and hypermarkets?Milling&bakery industry is a highly competitive industry; we count on functional products, permanently adapted and improved, on a continuous interaction with our customers, promotional activities and the correct positioning of the products portfolio’. We try to offer our customers the best quality/price ratio.

iiHow difficult is the acquisition of raw materials? What are the major

suppliers that you rely on?The real challenge in milling-bakery industry, in terms of raw material supply, is the price volatility of grain, resulted mainly from the dependence on weather-climatic conditions, but more and more from evolution of the

international and Black Sea basin commodity exchange markets. The company is supplied with Romanian wheat mostly, and in case of special flours we use imported wheat (Austria, Germany); we follow the specific quality parameters of wheat.

iiHow important is tradition and what does innovation in the field of bakery

mean – especially when it comes to the everyday bread?Bread is considered to be the basis of human food. Romanians in particular consider bread a holy symbol, a practice of old times – the cross drawn on bread before cutting it into slices, a sign of great respect for the daily food. In this context, the harmonious combination of tradition with innovation is a priority for Titan, the Romanian consumer being both open-minded and interested in new tastes. We take pride in the skills and the long experience of our bakers, who succeed every time to offer consumers the unique experience on the hearth baked products such as Pave, Homemade Pita, Øãrãneascã, but also of new, innovative products, such as rolls with wheat germ.

Cooling tower

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Involvement In the socIety Is part of the company's Dna Mr. Dieter Schulz, who is responsible for the activities of Danone in Romania, Bulgaria, Greece and the countries in the Adriatic region, was kind enough to reveal some of the secrets which made Danone the unchallenged leader of the Romanian yoghurt market.

iiFast-forward to 2014, you are looking at almost 50% of the market. How

does it feel to be so much ahead of the competition – and how do you intend to keep it that way?

dieter Shultz: In Romania, 1 out of 2 yoghurts bought is Danone and I can tell

you that we are very proud of our work and, above all, this result is the recognition of our consumers’ satisfaction and loyalty. This leadership comes also with the responsibility to deliver constant best quality at a good price, which we take very serious.Daily 1 million best quality yoghurts are delivered from our Bucharest factory.

What changed and what remained the same in the company, in these 15

years? What has never changed is our constant development and strive for best quality, superior taste of our products. This together with our ongoing innovation leadership is at the core of our mission of “bringing health through food to as many people as possible”.Nevertheless, as Danone is a very flexible, entrepreneurial and open company; we changed as we accelerated our growth: in 1999 when we produced the first yoghurts in our Bucharest factory, we were around 150 employees and we were producing 35.000 pots

DANONE rOmâNiA

70


daily; today we are 500 employees and we produce more than 1 million pots every day.

What about retail market – how different is it now compared to 1999?

Retail has gone through a big change – in 1999, traditional trade accounted for more than 75% of the market, and modern retailers were merely 25% of the market. Today the trend has reversed. Along with this fast development of big retailers, the store formats changed significantly, from mainly hypermarkets and Cash&Carry stores to Discounters and Supermarkets. There is also now a bigger product offer & diversity to match the evolving Consumer needs and expectations with specific moments of consumption and with a tighter shopping budget. Yogurt still has a strong potential to grow since consumption per capita is still very low and Romanian’s growing attention to a healthy lifestyle and balanced nutrition.

What was the biggest challenge you, as a company, encountered in this

period? There is one challenge which we also consider more of a priority – to educate Romanians about healthy nutrition and to develop the yoghurt category. In Romania, the yoghurt consumption is still very small compared to other countries: France – 5 yoghurts per week, Poland - 2, Bulgaria - 3, Romania only 1 yoghurt on average per week. More and more Romanians are confronted with health problems because of unhealthy nutrition and lack of phisical activities.

this year, Activia Breakfast has been designated consumer product of the

year, accumulating the highest score in all three criteria: attractiveness, innovation and satisfaction. How much science and how much marketing contains a cup of yoghurt? What about milk?Present in more than 70 countries in all 5 continents, Activia is the largest fresh dairy brand in the world, launched by Danone in

1987. It contains a unique mix of bacteria selected by Danone's research experts, including the exclusive Bifidus Actiregularis. The Activia fermented milk products benefit from more than 20 years of research and expertise. It has been consistently demonstrated through several clinical trials that the Bifidus Actiregularis survives the passage through the digestive system and is able to reach the intestinal flora alive, in high quantities.

In Romania, Activia was launched in 2001 and is produced in our Bucharest factory, being succesfully exported in other 6 countries from South Eastern Europe.Activia is, according to ICERTIAS Best Buy Award Report

for Romania, 2013/2014 edition, the yoghurt that offers best quality price ration on the probiotic segment.You asked about how much milk Activia contains; All our products are made of milk, mostly collected daily from Romanian farmers, and ferments; as an example, our Activia drink natur contains 99% milk + ferments.

danone's roots can be found in the most various places – from Greece

to Spain, France and US. How was this multiculturalism engraved into the DNA of the companyDanone's largest worldwide business unit, Danone Dairy, is the worldwide leader in yogurts, fermented fresh dairy products with probiotics and other specialized fresh dairy products.Danone Dairy's first steps can be traced back to 1919 in Barcelona with the sale of the first yogurts by Daniel Carasso. Today, the Division is strongly committed to accomplishing Danone's mission to bring health through food to as many people as possible: it markets a wide range of tasty and nutritious fresh dairy products in more than 70 countries around the world. Its leading fresh dairy brands include Activia, Actimel, Danonino, Danacol, greek-style and protein-rich yogurts (Oikos, Danio), indulgent brands

1 million

pots every day

71

(Danette, Fantasia) low-fat / low-calorie brands (Vitalinea, Taillefine, Ser) and Danone brand with plain and fruit yogurts. In 1972 in Marseille, Antoine Riboud explained his vision of a company’s role by stating that economic and social goals are interdependent. At the national conference of French employers' association, he declared that “the role and responsibility of a business leader will be judged on two criteria: meeting business targets with shareholders and meeting target for human and social progress for employees." Ever since, Danone has made this a condition for sustainable development. This visionary thinking provided the cornerstone for Danone’s dual economic and social project. To this day, our teams around the world imagine operating models that create economic, social and environmental value. This is what makes Danone a unique company with “something special inside”.All over the world – whether in retail outlets, on production lines or with suppliers – the 100,000 Danoners demonstrate the same openness, the same desire to share, and the same unwavering passion.

how much does the local tradition influence Danone's range of products in

a certain country?Besides our global brands, Danone’s product portfolio is adapted locally for each country’s consumer preference & tastes; for example, in Romania we produce Danone Natural which contains only milk and ferments, in Bulgaria we produce yoghurt in big pots because Bulgarian are big yoghurt eaters, in Greek our Danone yoghurt texture is very consistent with Greek style yoghurts.

do you have any product developed especially for the Romanian market, or

the Balkan area is similar enough not to require country-specific differentiation?Of course, we have local ranges like Delicios, Cremosso, Casa Buna, Traditii, just as well as the global ones Activia, Actimel, Danonino.

Which is the most popular Danone product in Romania?

There is a tight “fight” between Danone Natural and Activia – both are similarly popular and have a strong, loyal consumer base.

What about your favourite yoghurt? How often do you eat it?

Healthy habits are essential for me: I start

72


“every morning having one hour gym and a healthy consistent breakfast which always includes a Danone yoghurt which I combine with cereals; during the day if I need a snack I usually grab an OIKOS, a perfect product for a snack with high level of protein and low in fat, and if I need to indulge myself I get a Cremosso Intens - a very creamy, intense, fruit on the bottom yoghurt. There is always yoghurt in our fridge and if there was one thing that my kids had always been allowed to take from the fridge without asking for permission, it is yoghurt.

What does it mean "quality milk"? What makes one milk better than

other? How do you ensure that you collect "nothing but the best"?The milk we use is daily collected from our Romanian farmers all over the country. Then it is carefully tested in order to ensure that we use only the best quality for our yoghurts. We are talking about EU milk standards for all of our products because we are responsible everyday for millions of consumers that choose Danone products.Without a good milk, which is the basis, you cannot obtain a good yoghurt. All yoghurts are, in fact, milk with ferments.Moreover, this best quality milk combined with the expertise & passion of our people is what makes our products so superior and delicious.

do you have people who test the yoghurt – like they do with wine, beer etc.?

Actually, before launching a product we always test our products with our employees and consumers. If the product is not by far a first choice compared to other yoghurts, we do not launch it.

how different is a certain yoghurt from country to country?

It all depends on the consumers preferences – the French like it less sour, the Polish prefer the fruit yoghurt, the Bulgarians like it sour and the Romanians like it mildly sour.

Which do you reckon is the most efficient communication channel:

TV, social media, YouTube, BTL or CSR campaigns? The most effective communication model is an integrated campaign. The successful model for us is based on reaching multi-touch points so that the brand message spreads in an efficient

way: Tv and in-store remain the most powerful channels in Romania, however, some others are becoming more and more popular, for example, on-line and social media.

recently, Danone launched a new image campaign for Activia, starring Shakira.

What chances do I have, as a middle aged man, to dance like her if I eat Activia? Dancing it’s one of our many ways of expressing our inner happiness, our feeling good factor. It’s something we all do from time to time when we’re feeling particularly good on the inside and there’s no denying that our digestive health plays a key role in our ability and desire to move the way we want to.

That’s why Activia is so passionate about this – because we believe that everyone should be able to celebrate those awesome feel-good moments by breaking out into his/her dance moves. And who better to show this than the Colombian international dancing super-star Shakira?Consuming Activia in the context of a balanced diet and a healthy lifestyle will help your digestive well-being. And when your tummy is happy, yes you have chances to dance like Shakira! Of course after practising at least like she does may convert this overwhelming good feeling into that high quality dance. But, in the end, it's not about performance; it is all about expression and freedom. Activia believes that when you feel good inside, you show it outside. No need to be shy! Just try! Once again!

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“

“

For us, getting involved in society is part of the DNA of the company – one of the founders, Antoine Riboud is considered as the pioneer of social responsibility concept through his speech of Marseilles in 1972: “Corporate responsibility does not end at the factory gate or the office door. The jobs a business creates are central to the lives of employees and the energy and raw materials we consume change the shape of our planet”. Growth cannot and should not take place without having corporate social responsibility constantly in mind. This idea was disturbingly new at the time, as he was the first CEO ever to state that the human (and environmental) aspect of the company must be taken into account. Danone thus chose to respond by defining a “dual project” that still inspires the company’s action 40 years later: a dual commitment to successful business and social progress. For example: the Danone Ecosystem fund aims at reinforcing the company’s ecosystem by providing appropriate help to all its partners, especially the small ones, as a direct answer to the 2008 crisis; Romania is also part of it (pilot

project of 2 mil euro investment) – The socioeconomic programme “A chance for your family!” launched by Danone Romania, together with Heifer Romania Foundation and with the support of Danone Ecosystem investment fund, ended 2013 with notable results for the participating communities: 170 pregnant cows were delivered to the new owners, and the communities were equipped, for the first time in Romania, with 16 milking stations in order to ensure the best quality of the collected milk. The largest co-ed soccer competition for children 10-12 years old, the Danone Nations Cup is sponsored by Zinédine Zidane. The tournament brings together, as it has for the past 15 years, nearly 2.5 million children per year from around the world. « To participate in a tournament of this

magnitude and to have the chance to play in Brazil just after their idols is a dream for all children” Zinédine Zidane says. The Danone Nations Cup, a unique and unforgettable event, based on sport, strong values and emotions. The Danone Nations Cup has gained credibility and legitimacy in the international world of football. This credibility had been built on over the years with the ever-strengthening involvement of the national ambassadors in each country, such as Vicente Del Bosque in Spain, Cafú in Brazil, Dimitri Berbatov in Bulgaria, Hagi in Romania, Michael Ballack in Germany, David Trézéguet in Argentina… The Danone Nations Cup has for goal offering to the greatest possible number of kids the opportunity to live a

part of their dream. In Romania, we have a local partnership with Hagi and the competition is called Cupa Hagi Danone. Over 30 000 kids have played in this competition. More than 7 million ron have been invested in this competition.Moreover, Danone Romania donates annualy yoghurts for social causes or ONGs, products worth more than 1 mil ron every year.

Dieter Schulz

Growth cannot and should not take place without havinG corporate social

responsibility constantly in mind.


THE ULTIMATE TEST: TO PLEASE CUSTOMERS' TASTES

Secuiana

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Secuiana is one of the very few authentic Romanian brands that survived in the highly competitive clothing industry. Squeezed between the invasion of cheap garments coming from Asia on one side, and the marketing muscle of international chains on the other, Secuiana found its own path betting on quality, tradition and fair prices, addressing a specific market segment. Mr. Dobra László, General Manager of Secuiana, shared with us some of the secrets of a success story in the fashion industry which started almost 50 years ago in the small town of Târgu Secuiesc.

The pride of Târgu Secuiesc, a small town from Covasna County, Secuiana is representative not only to the region, but to the whole country.

Trousers and shirts wearing the label Adam's by Secuiana can be found in almost every single city in Romania.

But who is “AdAm”? Obviously, a man. But what kind of man? Who is the one who works, hangs out with friends and travel in Adam's clothes? Mr. Dobra László shared with us his vision about the “Adam”: “He is active and confident, maybe in his

thirties or forties. Works as a head of department within a multinational company or as a public servant and earns more than the average wage, but does not like to waste money. He likes to travel and drives a medium-sized car.”And all products made by Secuiana are tailored to this “Adam”. Fabrics are carefully chosen by a special team – only those made of high quality, natural fibres (cotton, wool, linen) having been picked for the new collections. “We analyse the colour pallets and ask for fabric samples. Then, a small series of garments is made and tested for quality, wearability and comfort; we double check with our own stores and get feedback from the customers. Only then, the fabrics for mass production are ordered,” explains Mr. Dobra.

For the new models, secuiAnA rely on its own teAm oF FAshion designers. Each season, new collections have to pass the ultimate test: they are bound to please customers' tastes. And, in the last half of a century, they succeeded every time. The success of Secuiana's collections was reflected in the companies bottom line. Since 2009, which was a difficult year, Secuiana managed to grow every year, reaching 6.2 million in revenue in 2013, and expects further growth in 2014. Part of the revenue is generated by the 24 Adam's by Secuiana stores and the company also launched an online store which is gradually taking of.

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Secuiana has approximately 1,000 shareholders, all Romanian individuals, but there is a group of 10 shareholders who control over 55% of the shares. Secuiana is a Group that, besides the mother company, also includes two other factories – Seconf and S'Mode – as well as a transport company (Secuiana Trans). In all these companies, Secuiana owns over 75% of the share capital.

the trouser

Valley “ I arrived in Secuiana in October

1989, as a commercial director, on

the eve of changes that followed

the events in December 1989. By

January 1990, I was already promoted

General Manager. I was representing

the new wave of managers, without

a compromising past from the

communist era.

Fortunately for me, and I think for

Secuiana as well, I had an open mind

and I was ready and determined to

make the necessary changes within

the company. Thus we took our

destiny in our own hands and became

the first company to directly sell its

products abroad (until then export

was done through a state-owned

“foreign trade” company). Secuiana

was also one of the first Romanian

companies privatized through MEBO

method.

In the '90s, we heavily invested in

Secuiana, and also founded two new

production companies and a transport

firm, Secuiana being the majority

shareholder of all three. Our positive

example encouraged others to invest

in the textile industry, thus the region

was named by the US Ambasador

in Romania “The Trouser Valley” - in

Covasna County 13 companies have

an annual production of 7-8 million

pairs of trousers, both for domestic

and foreign markets.”

Dobra LászLó, GeneraL ManaGer of secuiana

50% of Secuiana's revenue is generated

by the products sold under Adam's

brand in the domestic market.

The remaining percentage is

generated by the production in

lohn system, thus from export.

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Pragmatic ServiceS and USefUl informationChambers of Commerce and Industry play an important role in supporting and promoting local companies. We discussed with Mr. Mihai Daraban, President of the Romanian Chamber of Commerce and Industry (CCIR), about the involvement of the organization in the development of the country’s economy.

iiWhat determined you to accept the CCIR interim presidency?

Mihai Daraban: First I want to clarify one aspect, namely, I was elected as Interim

President of the Chamber of Commerce and Industry by the General Assembly of the organization on April 11, 2014; being the only proposal submitted for this position by

the Board of Management. There is much to discuss about the conditions that have to be fulfilled for this position and the steps which need to be followed in order to convene the management forums.

iiWhen you were invested in this position, did you consider your

application for a permanent position – did you think that the interim position would help you win the elections? Did you consider, for a moment, that it could negatively influence your candidature? A new meeting of the General Assembly of the Members will take place on June 6 in order to elect the president of the National Chamber. Of course, in the Board of Management other proposals can be made, which will be put to the vote. But these are formalities; the trust of my colleagues, presidents of the County Chambers, who proposed and supported me for this position, was very important. No, I did not think that this interim period in the management of the organization, might have a negative influence on the final elections.

iiYou have very strong knowledge on the Chambers System of Romania,

being at the helm of the Chamber of Commerce, Industry, Navigation and Agriculture (CCINA) for 12 years. Becoming President of the CCIR, which were the first

CCIR

79things that surprised you - positively or negatively? I served as Vice President of CCIR since 2011, and even though this position was one of representation, I had knowledge on the organization chart and activities of the National Chamber of Commerce. But I think there are important activities that should be implemented and developed; an example being the creation of an office/department for European funded projects and programs. During this period I worked hard on issues concerning the reorganization and the development of Chamber activities in order to support the members of the National Chamber System and Romanian and of the business environment.

iiYou took over as President of the CCIR in a moment that is, let's say,

delicate. What do you think should be done to remedy the image deficit? In the following period, the Chamber of Commerce and Industry aims to restore its position as a real dialogue partner for policy makers in taking measures concerning the economic environment and to exert a documented lobby for the business community in Romania.

iiWhat do you think should be done in order to improve the operation of the

CCIR? The priority objectives until the elections in June 2014, are, as I have mentioned, the reorganization and introduction of order in management. This is it, the time is short.

iiAttached to the CCIR is the Court of International Commercial Arbitration.

What role does it have and how much influence does the President of CCIR have on its activity?This question is welcomed, given the fact that, on April 10, 2014, the Management Board of Directors of the Chamber of Commerce and Industry of Romania adopted a new Statute of organization and functioning of the Court of Arbitration. In this context, I would say that the autonomy of the Court of Arbitration in relations with CCIR has been increased, especially by abolishing the role of “appointing authority" of the CCIR President. The great merit of the regulation contained in the Decision no. 6 of the Board of Management of the CCIR, is the return to the traditional rules which are specific to any Court of Arbitration in the world, and I mean, in particular, giving the right to parties to choose the arbitrators

80


that they trust. Also, the two arbitrators chosen by the parties will be entitled to appoint an umpire.

iiUnder which conditions do the companies appeal to the Court of

International Commercial Arbitration? Companies resort to arbitration if they have inserted in their contracts an arbitration clause. They choose to insert such a clause in the contract taking into account the indisputable advantages arbitration possesses: a fast procedure, the professionalism of those who do justice arbitration, and not least, as of April 10, the right of parties to choose arbitrators from the legal professionals they most trust.

iiCan you give us an estimate on the number of claims settled during a

year, and what is the average duration of solving a particular case? The Court of Arbitration has resolved in recent years, on average, three quarters of hundreds of cases annually. The average duration of a case is of 3-6 months, a much shorter period than the duration of resolving a dispute in state courts.

iiWhat are the criteria for selecting the arbitrators?

The criteria for the selection of arbitrators will be extremely demanding and are incumbent to the Board of the Arbitration Court, which,

among other things, has the mission to reconfigure the list of arbitrators.

iiUnder which circumstances are foreign arbitrators resorted to?

Given the fact that an important part of the cases settled by the Court of Arbitration are international, and involve foreign companies, it is only natural to them to chose a foreign arbitrator, possibly of the same nationality as the entity it is appointed by (for example, a company from France may choose an French arbitrator).

iiAs a businessman, how much aid do you feel a certain Chamber of

Commerce and Industry offers? The aid offered by the Chambers of Commerce is vital for a company, but it must also include pragmatic services and useful information for the business development on both domestic and foreign markets. On the other hand, the Chambers of Commerce have an important role in informing and consulting the business environment on current legal and fiscal regulations and in supporting their proposals to government decision makers.

iiHow effective is it for small and medium companies to become

members of a particular Chamber? I believe that SMEs in particular should become members of the Chamber of Commerce in the county in which they are registered, in order to benefit from its services, namely business consulting, business information updates, trainings, internationalization on foreign markets of interest etc..

iiHow would you illustrate the relationship between CCIR and

the County Chambers of Commerce and Industry - having inside experience at the regional and local level? The National Chamber is the "umbrella" of the Chamber System, having a representative role both nationally and internationally, CCIR being a member of the most important international organizations. It is a natural relationship of collaboration; the County Chambers of Commerce are constantly consulted in regard to the elaboration of normative acts proposals that help strengthen business and economic development at a local, regional and national level. And the vice versa is also valid; the County Chambers require assistance from CCIR in supporting these proposals at the central level.

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AEM SA26, Calea Buziaşului Street, Timişoara, Timiş, Romania+40 256 222 200 www.aem.ro

ANDRITZ AGStattegger Strasse 18, Graz, Austria +43 316 6902www.andritz.com

ALCHIMEX 58, Ştirbei Vodă Street, district 1, Bucharest, Romania+40 21 310 84 84 www.alchimex.ro

CHAMBER OF COMMERCE AND INDUSTRY OF ROMANIA ( CCIR )2, Octavian Goga Blvd, district 3, Bucharest, Romania+ 40 21 319 01 14www.ccir.ro

CONNECT GROUP40, Sos. Borsului, Oradea, Romania+40 359 403 250 www.connectgroup.com

CONPET SA1-3, Anul 1848 Street, Ploiesti, Romania+40 244 401 361www.conpet.ro

DANONE 140-160, Sold. Nicolae Cânea Street, District 2, Bucharest, Romania +40 21 204 62 04 www.danone.ro

DIPER KIMYA ENDüSTRISI SAN. vE TIC. A.S. Kirovasi Mevkii, Taskahve, Kemalpasa Asfalti 1250.m, 35171 Kemalpasa, Izmir, Turkey+90 (232) 877 07 12www.diper.com.tr

ELECTRICA SA9, Grigore Alexandrescu Street, District 1, Bucharest, Romania, +40 21 208 59 99 www.electrica.ro

ELECTROCENTRALE BUCURESTI ( ELCEN )227, Splaiul Independenţei, District 6, Bucharest, Romania+40 21 275 11 03 www.elcen.ro

EXPOARAD Aurel Vlaicu Street / Fabric area, Arad, Romania +40 257 216 520. www.expoarad.ro

FARMING SERv256, Basarabia Blvd. , FAUR industrial area, District 3, Bucharest, Romania+40 37 420 5478 www.farmingserv.roFECNE 104, Sos. Berceni , District 4, Bucharest, Romania+40 31 805 4180 www.fecne.ro

FELBERMAYR ROMANIALogistic Park, km 13, Bucharest West, Dragomiresti Deal Village, Ilfov Country, Romania+40 31 224 83 07www.felbermayr.ro

GREENBAU TEHNOLOGIE12, Libertatii Blvd., Bl 113, District 4, Bucharest, Romania+4021 337 77 76www.greenbau.ro

GUYOMARC'H ROMANIA1, Expozitiei Blvd. , floor 6, cam 611,613,622, District 1, Bucharest, Romania+ 40 21 310 27 64 www.guyomarch.ro

HUF ROMANIA5, Street I, Zona Industriala Nord – Vest, Arad, Romania+40 257 220 110 www.huf-group.com

IGW ROMANIA6, Chimiei Blvd., Area B, Iasi, Romania +40 374 100 100 www.watteeuw.ro

ISROM IMPEX 56B, Tudor Vladimirescu Street, Oradea, Romania+40 259 457 771 www.isrom.ro MATEI CONF GRUP136 A, Tepes Voda Street, District 2, Bucharest, Romania+40 21 326 16 71 www.mateiconfgrup.ro

MELSPRING ROMANIA2, Portului Street, Zona libera, Giurgiu, Romania+40 246 211 070 www.melspring.com

MOB&IUS SA 50, Narciselor Street, Brașov, Romania,+40 268 333 429 www.mob-ius.roPLASROM PRODUCTION100 Bis, 23 August Blvd., Ilfov Country, Buftea, Romania+40 21 350 59 91 www.plasrom.ro

PROIECT ARAD 2, Decebal Street, Arad, Romania+40 257 280 286 www.proiect-arad.ro

ROMEXPO SA65-67, Marasti Blvd, District 2, Bucharest, Romania+40 21 207 70 00www.romexpo.ro

SECUIANA SA42, Păcii Street, Târgu Secuiesc, Covasna, Romania+40 267 363 440 www.secuiana.ro

TINMAR IND S.A. 155, Calea Victoriei Street, District 1, Bucharest, Romania +40 21 318 07 72 www.tinmar.ro

TITAN SA11, Soseaua Cernica Street,Ilfov country, Pantelimon, Romania+40 21 204 67 90

vRANCART 17, Ecaterina Teodoroiu Street, Adjud-Vrancea, Romania +40 237 64 08 00 www.vrancart.ro

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