May 2010 - Association of Dutch Businessmen

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Business Interview with Simon Kramer of Hertel Group Text Frank Kuijsters Photo Hertel Last year, Simon Kramer, Director Asia and Management board Member of the Hertel Group, participated in the panel “Starting a business in Singapore” that took place in September 2010. During the evening, he gave us a some insight on how Hertel Group started their business in Singapore. Now eight months later, how is Hertel doing in Singapore and the region? Could you provide us with a brief introduction to Hertel and your activities in Singapore? The Hertel group was originally founded in 1895 in the Netherlands. Our core business is insulation. During the last two decades, Hertel’s business was centred on Europe, particularly the UK, but also the Netherlands, Germany and Belgium. Seven years ago we foresaw a clear need to seek additional business opportunities to enable Hertel to sustain our growth plan. We checked out those regions where it was clear that considerable investment would be required to support the extraordinary economic development that was beginning to emerge. By filtering these prospects, the Middle East and Asia emerged as prime targets. In mid 2007, we committed ourselves to the implementation of a business plan for growth with Singapore as the base of operations. Since then, we have steadily developed our business through the winning of targeted contracts not only from our existing client base, but also other companies investing in the region. Today, our primary activities in Singapore are insulation and scaffolding. We are currently developing our capability in the installation and testing of pipework systems and associated chemical process equipment and intend to gradually introduce these capabilities, along with others already undertaken within the Group, to better position Hertel Singapore to become a single source provider of a greater number of support service disciplines under a common integrated management team. In addition to plant maintenance, are you intending to extend coverage to include the construction of new plants? Most certainly, about 80% of our current business is derived directly from new plant constructions with the obvious objective of following these construction projects into the operational plant maintenance phase. The new plants being built by ExxonMobil and Shell and the considerable extensions to the existing petro-chemical plants in Singapore provides us with an unparalleled opportunity to expand our multi-discipline operations into plant maintenance and shutdowns following completion. How important is Asia currently for Hertel as a group? How much of your sales are currently represented by Asia? Our operations in Asia are an integral part of the Hertel Group’s strategic growth plan. That plan requires us to generate 30% of our turnover from the Middle East and Asian Regions by then end of 2011. We are currently generating some 13% from our Singapore based activities. How much development opportunity do you feel there is in Asia and what are your plans to capitalize on it? Without doubt the development opportunities in the
Business region are significantly greater than those in Europe at the moment. Singapore is currently seeing an unprecedented level of construction activity. Fortunately, we are well placed to benefit from this activity and there are a number of other large projects planned for completion by 2013 / 2014. We are working very hard to secure follow-on construction work, following the sizeable petrochemical investments in Singapore. I am confident that Singapore will continue to be tremendously interesting and I am convinced that there will be abundant opportunities for Hertel’s offering in Singapore. Coming from Northern Europe and now establishing your activities in Asia, what have you found the main challenges in migrating across to Asia are and how are you dealing with them? To meet our strategic plan’s milestones, we opted to fasttrack establishment through the acquisition of Singaporean operating companies with a proven track record and who would complement each other as the integrated support services concept became a reality. Careful selection of companies able to demonstrate a high level of customer satisfaction through the consistent application of good management practices for up to 20 years was fundamental to the success of this phase of our development. Could you tell us about some of the companies you have acquired and what your criteria were for choosing those companies? The most important consideration has always been their relationship with their clients. Stability, consistency and robustness borne out of mutual respect were looked for in the relationships. The quality of the management and supervision were also key, as were their systems and procedures by which safety and quality could be delivered with minimal effect on the environment. Recognised ISO standards were used as the basis of evaluation. We considered the management’s suitability to grow in line with our plans and strategies through the implementation of some far reaching changes which would call for a degree of flexibility to be applied to established mindsets. Could you tell us about Hertel’s expansion strategy in the region? Our primary objective is to become the market leader in the provision of integrated support services, predominantly in the construction and subsequent maintenance of the regional petrochemical industry. We will offer a portfolio of services to support our clients based on access scaffolding and insulation and extended to mechanical installation and testing of pipework systems, structural steel and associated process equipment. It is not our intention to be the market leader in each of these disciplines, but the market leader in the provision of the combined service package under an integrated management structure. Each of the acquired companies will form an integral part of Hertel’s ability to bring this concept to fruition. How does Hertel distinguish itself from their competitors? We define for ourselves a customer value proposition which is based on a number of components. We are proud of our world class safety performance. We are also proud of our undoubted ability to deliver high quality product. As I have already stated, we are establishing ourselves as an integrated support service provider to a specialised high value market. Whereas we are aware that the integrated services concept has been implemented with varying degrees of success, we know that it has not been attempted to the scale and degree to which we have set our sights. A uniquely important factor we have is that we are able to transfer technology and resources from other parts of the world when needed and without delay. Hertel Singapore is not a European company in Asia, but an Asian company within a global organisation. In terms of our regional personnel, we have set a local content target of 100%. This will be achieved by increasing the number of Asian staff throughout the organisation, but particularly amongst them front line managers and supervision. We will successfully compete locally with local knowledge and expertise and international support thorough the Hertel Group capability. Are there any specific regional and local needs which are different from your experience in Europe? Applying an integrated approach to the management of the ongoing maintenance of petrochemical installations is a development which is gaining more importance in Asia. We have got that experience with Plant Operators in Europe and we can bring that expertise to help our customers by supporting them with the application of sophisticated asset integrity management techniques. We see this as the primary basis upon which we will grow the business during the coming three years. We have been awarded the maintenance contract for the existing Pulau Bukom Shell refinery for a 3 year period with a further 2 years option. We are a new entrant to the refinery. We are obligated to introduce a number of initiatives based on techniques developed in the UK over a number of years to continuously improve the means by which the plant is maintained and uptime is safely maximised. How important do you see Singapore being in the future? Will Singapore continue to be your regional headquarters? Our objective is to become the premier provider of integrated support services to the Singaporean petrochemical industrial market. We are confident that this objective is attainable, amongst others because the Singaporean government stimulates our enthusiasm to succeed and has positively assisted us in setting up our business. There are also many incentives offered by the EDB for start-up businesses. Do you have any final messages to the readers of ADB Magazine? Without doubt Asia is a major growth area. It is clearly well placed within the most economically dominant region in the world. So it is an absolute must for any business in the energy related sector to be in Asia. Not only is Singapore is a good place to do business on its own right, but it is also an excellent hub for expanding in Asia. I would encourage people with international ambitions for their businesses to have a good look at Asia and Singapore in particular.
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May 2010 - Association of Dutch Businessmen

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