Constructing a better future JSC BMGS

CONSTRUCTING A BETTER FUTURE

After six decades of working in the area of civil engineering and hydraulic engineering construction in Baltic Sea harbours, Latvian company JSC BMGS is taking advantage of the fast growing construction sector in the Baltic region. Mr Ilya Rogov, the company’s purchasing and customs manager, explains the core lines of business offered by BMGS and how they differ from the competition. Vanja Švačko reports.

Since BMGS was established in 1952, its main business focus has remained unchanged. Not long ago the company added the production of foundations and precast reinforced concrete structures to its portfolio.

The key strategy for maintaining a strong market position is the continuous development of all business lines. From its several branch offices in the Baltic region, BMGS offers its expertise in the design and construction of various types of structures (bridges, railway structures, ports, pile foundations etc.). It has a department for on- and offshore geological surveys and three certified mixing plants for concrete manufacture in Riga and Ventspils. The manufacturing and assembly of precast concrete structures is organised in the most efficient and cost-effective manner.

Speaking about the profit hierarchy, Mr Rogov says, “Being predominantly a construction company, our main revenue is generated within that section, whilst the design and engineering are supplementary services. The fact that we produce concrete enables us to add more value and to provide the most efficient price level on the market.”

An extended business plan

During the recent financial crisis, BMGS acquired one of its daughter companies and is now fully responsible for the production of precast concrete elements. This new busi-

ness activity has been developing for the past two and a half years.

The company produces standard housings for concrete elements and non-standard precast concrete elements for foundations and various types of constructions. As an example, Mr Rogov mentions the work it has carried out for the Latvian state-owned energy company Latvenergo. “This involved the construction of a brand new and a high voltage transmitting network in Kurzemes, for which we have produced and delivered foundation logs and entirely bespoke precast units.”

It is therefore understandable that the company’s main investment focus is on these new production lines. All products from Riga and Ventspils manufactured for assembling houses, apartments, logistic centres and supermarkets are mostly intended for export. Around 80 per cent of production from those plants is exported to Sweden.

Efficiently executed projects

BMGS has been winning tenders for highprofile construction projects in the Baltic region. One that was recently finalised and has created significant media attention was for a liquefied natural gas terminal in Klaipeda harbour. The project aimed to provide more energy security to the region and was fully designed and built by BMGS.

“In 2013 the Lithuania-based oil company Klaipedos Nafta awarded BMGS the engineering, procurement and construction project for this terminal,” says Mr Rogov. “It was one of the rare projects which was fully compatible with our core business direction. We were able to offer the full scope of services starting from design, production of concrete and up to the construction of the gas terminal itself.”

Other successful projects on the company’s reference list include the extension and development of Krievu Island in Riga free harbour, signed two years ago for €100 million, as well as the recently completed new ferry terminal in Tallinn harbour.

Of course, huge marine construction projects call for a reliable supply chain. BMGS works with UAB Delta Nova from Lithuania, a company offering a wide variety of building materials, products and technologies used in transport hubs, industrial buildings and civil engineering works. The company also

works with ArcelorMittal, one of the biggest suppliers of steel pipes and sheet piles in the world. Cement for the production of concrete for precast elements is supplied by CEMEX’s production line in Latvia. The company buys inserts from Swedish Teiko, while the steel pipes for the ferry terminal are supplied by Swedish company SSAB/Finnish Ruukki – one of the leading suppliers of steel foundation structures in Europe.

A confident outlook

Although the expansion of its civil construction activities means increased market competition for BMGS, at the same time it opens up more opportunities.

Mr Rogov explains, “Some of our products and services are quite unique. I have in mind particularly technologies that we hold and that are offered exclusively by our company. There could be substitutes but these technologies have certain advantages that can only be used on this market with our geotechnical and geological conditions.”

With the market situation becoming more complicated thanks to the unstable political situation in Ukraine, BMGS has had to postpone its activities on the Black Sea and is more focused on Scandinavia. “We are using the precast concrete elements to penetrate the Scandinavian market, with Sweden as a gate,” adds Mr Rogov. The company is already present there in a few projects as a supplier of products and services for apartments and industrial structures through some famous contractors such as Skanska and Piab.

Whilst it is not possible to evade the possible risks connected to existing geopolitical tension in the Black Sea region, Mr Rogov is still confident that the market offers good prospects for the future. “Regardless of the fact that we have major investments from our biggest neighbour Russia, we are still seeing interest in the development of the private projects on the territory of the Latvian free harbour, which allows us to hope that, together with the market, we are heading in the right direction.” n Visit: www.bmgs.lv