With gasworld’s forthcoming East Europe Conference 2010 looming large on the horizon, what better time to recollect business in the Baltic countries?
May this year will see gasworld travel to Kiev, Ukraine for the eagerly awaited East Europe Conference, titled Industrial Gas – East meets West, to provide a deeper understanding of the needs of the region.
The Gasman’s Baltic business memoirs begin in Romania, a typically under-developed industrial gas market. Here in Part 1, we learn how AGA prepared for its first foray into the Romanian gases market.
The story begins…
In connection with the successful re-entry to the markets in the Baltic countries, Russia and Ukraine, AGA re-analysed its past experiences and came to the conclusion that a number of factors had been important. These include:
* A preparedness of company management to take some risks
* Past and recent experience of entering ‘new markets’
* Contacts with industry, business, banks, administration, governments
* Culture carriers, by means of in-house competence with knowledge of the so-called new markets
* A competent mix, blending experience in new markets with gas competence
* Involving individuals from a sister company with practical experience from gas operations
* The commitment of the top management of the supporting company (AGA France was assigned as the supporter & owner of Romanian gas operations)
* Identification of possible partners to establish JVs and other cooperation to share costs & investments
* Initial strategy: Identify local industry with surplus capacity of acetylene and liquid oxygen
* Sharing of investments to boost capacity of existing plants
We made sure that the whole organisation was informed about the formation of new companies in new markets and we also announced that we wanted to get in contact with people who had a background or knowledge from other cultures.
In autumn 1993 I was then contacted by Nicolae Gherman, born in Romania and graduated as a chemical engineer at the Politehnica University in Timisoara. Nicolae worked at the AGA specialty gas company. He explained to me that we had to start up an operation in Romania, a big country with some 23 million inhabitants.
Why, I asked? We had so many other interesting markets and we had no past history in Romania!
Nicolae, however, insisted and the result was that we did send him another colleague with background knowledge, from Transylvania to Romania for a first market investigation.
The two gentlemen came back with a report that, in short, told us:
* Romania was similar to many other countries from the commando economy, almost without any structured industrial gas companies of a Western nature or business model. Romania had no industrial gas company, neither at national nor at regional level
* Typical for this type of market was that major consumers of air gases have their own captive plants, and have then also got the task of supplying other consumers in the neighbourhood with cylinder gas
* Acetylene was mainly supplied by means of local stationary or mobile generators, this in spite of the fact that Romania was a major producer of calcium carbide. There were only two smaller plants for filling of acetylene in cylinders
* One of the main producers of liquid oxygen was the steel plant Sidex in Galati. (A company was later bought by the company Arcelor Mittal)
* Carbon dioxide supply was very limited and of low quality
The conclusion of the visit was that Romania was a ‘virgin market’ for an industrial gas company who was willing to establish themselves.
For Nicolae, it resulted in an altered assignment and three years of full time work as project manager for establishing an AGA company in Romania.
gasworld would like to thank the gasman, Lars Timner, for the contribution of his memoirs and his efforts in delivering these insights to our readers.
A former AGA employee, Lars was deeply involved with the expansion of AGA into new markets and will continue with his memoirs as the year unfolds. Watch out for more!