The winning strategy is diversification Renco

THE WINNING STRATEGY IS DIVERSIFICATION

Italy’s Renco SpA has certainly diversified, with activities ranging from oil & gas and construction to asset management and other services. This is the secret of its success, as its current president, Giovanni Gasparini, explains to Industry Europe. Barbara Rossi reports.

Renco SpA is headquartered in Pesaro, central Italy. Here the company was set up as a design and engineering organisation for the oil and gas sector in 1979 by Mr Rinaldo Gasparini, father of the current president. The company grew over the years, diversifying its activity to also include materials supply and construction services. In the 1990s, diversification started on a geographical basis as well, and Renco began building residential facilities in Kazakhstan and Russia. A lot of the building stock was not sold, but rented out and managed by the company itself.

Renco, whose most recent turnover was €210 million and which employs 4000 worldwide, can boast of having completed 1000 projects globally, in over 50 countries, as well as having 16 subsidiary companies in 10 countries. It regards safety, quality and on-time performance as being the pillars of its activity.

Currently Renco is organised into four divisions: industrial plants, infrastructure, services and asset management. The industrial plants division deals with turnkey EPC contracting services, as well as with installation only, for upstream oil and gas plants, gas compression and storage systems, and power production and distribution systems (especially in terms of small to medium size generating stations). The division also supplies services to the renewable energy industry: for wind farms, photovoltaic systems and hydroelectric facilities.

The service division deals with supplying and managing technical personnel to the oil and gas and energy sector. It offers consultancy services, plant management, staff training, alongside on-site NDT and safety valve hot checks. “We have a database of 15,000 sector experts whom we can supply, wherever they are needed,” Mr Gasparini tells Industry Europe.

“Through our construction division we have built an array of buildings. We started in Russia and Kazakhstan, constructing buildings for renting. To start with we were building residential facilities and offices for expatriate staff working for the oil and gas sectors. We then widened the boundaries of our work, both geographically and in terms of the type of buildings. We have diversified, so as to be able to face the competition from what used to be called emerging countries. We soon understood that the way to do this was to be able to carry out projects with a strong service or technological element. The medical construction sector fits this description; hence we have completed medical centres and facilities in various locations.

“Our newest division deals with asset management. This side of the business was started in 2008 as a spin-off from the construction

division. I would say that the real estate stock that we manage is equally divided between hotels and rented flats or offices.”

The main contributor to Renco’s turnover, with a 50 per cent share, is the industrial plants division, while the remainder is equally generated from the rest. The balance among the different divisions varies from year to year, depending on market demand. Recently the company has further widened the boundaries of its work, including financial services in its range. “Every customer and every project is unique and we tailor our offer to them,” says Mr Gasparini. “We are also increasing our service quality, focusing on internal quality procedures.” The company already holds ISO9001, ISO 14001 and OHSAS 18001 certifications.

Spending time in Mozambique

“Right now our attention is focused on Mozambique, where important discoveries for the oil and gas sector have been made. We have actually entered this market with our construction division and are building a tourist village. We plan to then expand our activity in the country to the oil and gas sector. This is in line with our expansion strategy, as we establish our presence on a particular geographical market through one of our divisions, and then follow on with one or more of the others.”

As well as Mozambique, other markets where Renco already has a branch and where it intends to expand its presence are Iraq and the United Arab Emirates (in both of these markets the company has initiated its work through the oil and gas division).

Currently the geographical markets ranking in first position in terms of importance are Kazakhstan, Armenia and the Congo, followed by other countries, such as Russia, Tanzania (Zanzibar in particular), Libya, France, Poland and Colombia. The type of presence and activity carried out in these different markets varies. For instance, in Armenia Renco is active with regard to construction, in Zanzibar it has a tourist village and in the Congo it works in oil and gas.

When asked about Renco’s future, Mr Gasparini says, “In the short term I see the future of my company as unfolding in terms of organic growth, while in the medium to long term, acquisitions could appear on our horizon. Definitely the different divisions will grow in a balanced way. This is a winning model because it balances cash flow, as well as creating synergies that we can use for growth purposes. The various divisions generate and facilitate work for each other, alongside offering savings, as many overheads are shared.”

Renco has many existing strategic partnerships with companies which can offer products and services complementary to its activity (mainly for oil and gas and construction). Again partnerships are usually established in a particular market for a particular division and, once consolidated, are developed at a global level. n

Eurasian Economic Community A new big opportunity for European manufacturers

Since the break-up of the Soviet Union, there were many initiatives to integrate the newly formed independent republics. The Eurasian Economic Union “EurAsEC”, makes a step ahead, not only for its economical and political will, but for its effectiveness. Actually inside the EAC we have the first integration project called the Eurasian Custom Union (EAC) joined by Russia, Belarus and Kazakhstan (with more to come).

Why EAC can be regarded positively by the European manufacturers?

As we very well know, to adapt a production for a foreign market, moreover when language, norms and traditional rules are well far away from our experience, it’s a difficult and time consuming task. For those reasons many small and middle companies cannot afford the related costs and loose ground in terms of market shares and opportunities. With the EAC a market of more than 170 million persons is accessible with a common effort in terms of official language (Russian), certification procedures and permits.

As a very good example, before the EAC those three countries required a separate procedure of product / production certification for each with a three times higher cost and considerable time loss. Now this integration makes possible to choose in which country to certify the production and those certificates will be valid for all the EAC and also the validity of most of the certificates was extended from three to five years. Many European standards were also included in the new Technical Rules of the Custom Union simplifying the task of the engineering companies.

The very well known GOST Marking is now substituted by the new

However, the procedure once not taken very seriously of GOST certification of conformity, now require the understanding in full of the new rules and this is a difficult task and we strongly suggest to contact a qualified Certification Agency that can consult and follow up the procedures of certification needed.

The most important step is to act even before the contract is signed, and this is a must for an engineering company that deals with a complicated project. Only with a certification strategy well fitted will be possible to evaluate the costs and avoid useless procedures. With the new Custom Union Declaration of Conformity became important, not only to obtain from the suppliers the Declaration itself, but also to check the documentation on which it is based and the scheme of certification applied. For this a specialized Certification Agency should help the engineering company or the manufacturer with an audit job in front of the suppliers, both to avoid asking for unnecessary procedure and to get the proper documentation formatted according to the rules. To pass the custom is often an easy task but getting the permit to use for the equipment and avoid problems during installation can be a lot more complicated and the manufacturer is responsible for those steps too, regardless of contract.

(Our Company East Certification and Service, with more than 15 years experience and the high qualified staff can handle the task with minimum effort and a warranty of success even in the most complicated fields of oil & gas, heavy industry or petrochemical. www.eastcertification.com - info@eastcertification.com )

Marco Ponzalino Director East Certification & Service

*images taken from Wikipedia