From Bergamo to Monza, the rustic skyline of towers, cupolas and campaniles typifies Italy’s Lombardy region. The industrialised route between Bergamo and Monza however, is also home to Italy’s very own ‘gas valley’. It’s a case of arrivederci to our UK office, as gasworld goes on tour in Part 2 of the Italian job.

During our visit to gas valley, we’ve already taken in trips to Tecno Project Industriale, SIAD and VRV, all located in and around the historic city of Bergamo. Here we pick-up the trail at our visit to Tenaris, just a short distance from our last meeting in Ornago with VRV S.p.A.

Situated on the edge of Bergamo and prominently positioned at the side of the A4 highway, Tenaris’s gas cylinder division is one of the only vertically integrated cylinder manufacturers of its kind.

The proximity to the TenarisDalmine plant, where the majority of the seamless tubes for gas cylinders are produced, and the industrial integration to the Tenaris’s mills worldwide allows for a control of all phases of the manufacturing process – from scrap iron ore and steel production, through rolling and on to the final cylinder product.

This is a synonym of quality and a key differentiator, as Giuliano Rossi, Sales Manager for the Gas Cylinders Division, and Giorgio Boccellato, General Manager for the Gas Cylinder Division stressed during our visit.

With a production of 6 million tonnes of steel pipes, 22,500 employees and a turnover of $8bn in 2009, Tenaris is a leading supplier of tubes and related services for the world’s energy industry and some special industrial applications.

The Tenaris gas cylinder plant boasts a workforce of 138 people and manufactures a broad range of high quality gas cylinders, large vessels (jumbo gas cylinders), special products like accumulator shells and cylinders for filling stations, as well as hollows destined for the same applications.

Feathers in its cap include the accreditation to ISO 9001, recognised by the major producers and distributors of technical gases, for export to all European countries and the majority of the world and developing countries. Its award of ISO TS 16949 certification, for those gas cylinders destined for NGV applications, is a guarantee of safety for the automotive OEMs and a further feather in the Tenaris cap.

In addition to the NGV sector, Tenaris’s gas vessels are used in feeding industrial plants, stocking and transporting gases, gas storage (even biogas) to filling stations, and drilling system motion compensators of floating offshore platforms. With such a broad range of uses and industries supplied, Tenaris ships cylinders from Dalmine to locations all around the world, as well as being a key supplier to several industrial gas majors for their global activities.

As we learn during our welcoming and thoroughly insightful visit of the Dalmine site, including a guided tour of its cylinder production line, the company’s credentials are well and truly proven. Who better to ask about the state of the cylinder/equipment market right now then?

Our engaging interviewees and hosts, Rossi and Boccellato, see a mixed path to recovery ahead for both gas & equipment companies alike. While the recovery of the gas companies is perhaps not as swift as they might like, Rossi
sees an interesting route of development ahead for the cylinder manufacturers – and certainly Tenaris itself.

Energy, we’re told, is an industry picking-up and likely to recover quicker than other sectors, while cylinder demand from the gas companies remained relatively flat earlier this year and there’s a very gradual curve back to form projected. By the close of 2010, we understand, cylinder demand is still likely to remain stable.

On the other side, Tenaris is ready to leverage its high quality standards ISO certified and the continuous product development and customer focus, which are an attractive proposition for any potential client.

Further still, Rossi suggests the biogas business and the NGV market could drive demand in the coming years, especially as certain ecological factors come into effect in future.

But perhaps the most important of all to Tenaris is safety. Rossi explains, “Our main objective is safety.”

“We do not forget that what we are creating is pressure vessels and equipment. There are always potential hazards with pressure vessels.”

“So the tests performed and the processes set-up are aimed at cancelling any risk of failure.”

Tenaris holds the safety of its employees in just as high regard as the safety of its components. “Our philosophy is to not lose sight of safety in pursuit of performance. Before everything, working in our plants should be safe.” he adds.

For this reason, he told gasworld, the company is putting in place a safety program, comprehending training, communication actions and substitutions/improvements of potentially risky equipments – aiming towards a zero-accident rate at Dalmine and all its other locations across the globe.

SOL Group
Holding up its employees in an equally important light is the SOL Group, headquartered in modern Monza and the last leg of our journey through Europe’s gas valley.

On a cold afternoon in Lombardy’s third-largest city, gasworld found itself wrapped-up warm inside the impressive SOL S.p.A. offices and enjoying an espresso with welcoming company Chairman Aldo Fumagalli.

Having been involved in the family business since the 1980s, Fumagalli has seen difficult economic climates come and go. Even during the cataclysmic recession of 2008/9, however, SOL saw stable performances across its gases business. And while a programme of cost-cutting might have been the order of the day, this was not the case where staffing levels were concerned.

In fact, Fumagalli was keen to point out that employee cutting was not an option and described its more than 2000 group employees as ‘strategic assets’.

When all’s said and done, 2009 was actually a relatively sound year for the SOL Group, buoyed by the robust and non-cyclical healthcare & homecare markets. Drawing on figures correct as of our visit, Fumagalli told us that there was barely any change in turnover for the first nine months of 2009, at €342.3m – down 2% on €343m for the same period of 2008. Full-year turnover for 2008 was €460m.

Industrial gas performance was up in Italy, we understand, compared to slumps virtually everywhere else, but with healthcare/homecare accounting for 40% of SOL’s turnover (industrial gas 60%) the company proved resistant to recession.

Investing in growth
Up to 60% of SOL’s business is based in its native ‘home’ market in Italy and 40% overseas. This is a portfolio of gases and services that has proven to be resilient – and SOL is focused on strengthening this further still.

Fumagalli describes 2009 as broken down into four ‘steps’ and bookmarked by these key investments in the company’s growth.

A €20m investment in the start-up of a liquefaction plant in Frankfurt, Germany was the first step, whereby SOL buys in gases and liquefies these to produce liquid nitrogen and liquid oxygen. Further increasing its presence in Germany was the second major step in 2009, the acquisition of the Boesch homecare company in Freiburg. A €5m company, Boesch has been successfully integrated into SOL’s German business set-up.

Incidentally, gasworld understands that Germany and France are ‘two of the most important gas markets’to the SOL Group and each worth around €40m to the company.

The third step was the augmentation of an energy plant in Slovenia, for which 2009 was actually the first full-year on stream and Fumagalli notes was a ‘very good first year’. This was followed by the fourth and final step on the calendar last year; the acquisition of the €1.5m JLV homecare company in Spain.

So what’s next for SOL, we ask? The dynamic family-owned company expects to proceed on a strong financial footing, of which it is ‘very proud’, and is evaluating opportunities in neighbouring countries. The plan for 2010 then?

“We will continue to invest in growth, not necessarily on a huge level, but step-by-step,” Fumagalli explains. “We’ve reached the bottom (of the recession). Europe will not recover quite so well as other regions. In terms of volume, we can perhaps look forward to a marginal increase over late 2009. But it really will be very marginal.”

Room for everyone
This year sees SOL reach 83 years of age, firmly established as a respected Tier 2 gas company. Fumagalli’s and Annoni’s third generation has been involved in the company since the 1980s and keenly promoted a spirit of internationalism that has seen the company grow considerably.

And that’s one of things that our interviewee believes comprises the beauty of the industrial gases industry – there’s room for everyone.

He explains, “The industrial gas business shows that around the world there is room for all manner and sizes of company; from the big multinationals to the small-medium size companies.”

“It’s a business that embraces different business models, practices and approaches. There is room for both the family-owned independents and the medium and bigger multinationals.”

“That’s what’s great,” he concludes, “there is room for everyone. Even the smaller independents can realise their own development and potential.”

On that encouraging note our intrepid adventure reaches its conclusion and we begin the long road back to our UK offices.

From Bergamo to Monza and back again, we’ve been left warmed by the cautious optimism and prevailing positivity coursing through Europe’s industrial gas valley. Tecno Project Industriale, SIAD, VRV, Tenaris and SOL have all demonstrated the flexible, robust nature of our gases & equipment business – and share the same sense of hope going forward.

So we head for the airport departure lounge and leave Italy in high spirits, and we say to the doom & gloom of the past year: Arrivederci!