The power of commitment

Mr Roman Nota, president of the board of management of Croatian Končar Generators and Motors Inc., speaks to Vanja Švačko about the company’s operations and the latest developments since we last featured the company a year ago.

AS a part of Končar Group, Končar Generators and Motors Inc. is a leading Croatian manufacturer of equipment for the generation of electric energy. The core products are large and medium sized generators as well as motors. The company also deals with servicing, including overhauls, upgrading, revitalisation and modernisation of its own equipment, as well as of large hydroelectric power stations in need of new generators.

The products are manufactured according to specific customer needs. This means that its product development is dependant to a large extend upon current market trends.

Since the company serves many different industries (for example oil and transport), its product range includes engines for various purposes, such as those for tow vehicles, trams and trains.

When asked about the importance of suppliers, Mr Nota says: “We manufacture all our products in-house and have partnerships with material suppliers. We also need suppliers for certain components of our products. However, in Croatia we are facing a problem since many suppliers have stopped working, changed their scope of business or have not invested in modern technology. We cannot meet all our needs by outsourcing since it also has to be logical and sustainable.”

Necessary transition

Croatia is currently going through a period of de-industrialisation and the attempt to restore the reputation of its industrial production represents a huge challenge. The whole process has had an overall impact on local businesses, including Končar GIM itself.

Mr Nota explains, “Although nothing has significantly changed in the past year and market circumstances have been relatively stable, different situations are affecting various market segments in different ways. Owing to the fall in energy prices or some political and security reasons, certain projects get deferred or cancelled.

“Similarly, what has fundamentally changed in the past decade has been the investment structure. There are a growing number of smaller investors among dominant buyers of electrical energy who frequently grapple with getting concessions and licenses. Many of them continue to suffer major strains on their budgets, which eventually pushes our projects aside. Luckily, this has not had a dramatic impact on our business since the interest in our hydrogenerators is relatively stable.”

The company will need to transition away from local economic problems in order to create an environment of self-sustaining growth, marked by investments.

In pursuit of fresh knowledge

Končar Generators and Motors Inc. is aware that achieving such a strategic shift requires heavy investments in science and engineering. Having access to the group’s institute for electrical engineering helps the company to address the most important issues concerning production.

“We want to attract young people to take part in production – from workers to engineers to designers and IT experts. New products require new materials, fresh knowledge and updated methodologies. Our goal is to rejuvenate our teams and to share the knowledge we have gained in the field,” says Mr Nota.

“At this particular moment we are very cautious about investments. We have to consider our long-term prospects and look five to seven years ahead. We have managed to keep pace with market demands and to deliver satisfactory products in a battle with competitors.”

The preliminary planning has been completed and investments in technological processes are in progress. Next year, additional investments are to be made in reconstruction, which is expected to boost quality and increase productivity.

Sustaining the investment cycle

Končar’s customer base has traditionally been centred in and around Croatia, but owing to the suspension of many domestic projects about 80 per cent of its revenue has come from exports over the past 10 years. It is present in almost 20 markets worldwide today.

The company has recently signed a €16 million business contract with a client in Scandinavia, covering the revitalisation and upgrading of two generators and the possible refurbishment of a third one. It came about as a natural collaboration after Končar successfully completed a job for the same client in Finland.

Mr Nota claims, “We have always had good relationships with our Scandinavian partners and now a number of parallel projects are operating in the region. This is a very important and reliable market for us.”

Končar GIM has also completed many power station projects in Africa and India. According to Mr Nota, “In many jobs our company depends on its own strengths, but also on partners who deal with more complex products and who, after seeing our

excellent references, deploy us to work with them on projects with specialised agendas.”

Turbine manufacturers are also logical business partners for Končar GIM. “When it comes to hydroenergy, there are a number of environmental initiatives in many countries to start operating small hydroelectric power plants. Here we also depend on partners with a complete solution and access to big investors, but our advantage lies in the fact that for those potential projects we also have our own competitive product to offer,” concludes Mr Nota. n

Visit: www.koncar-gim.hr