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Issue No.1

ADROK:

Looking beneath

the surface A pioneer in the field of geophysical services, discover the next stage in the company’s growth and what it entails

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editorial Martin Ashcroft Editor In Chief

Martin has edited business magazines for 15 years and has been editor-in-chief since Business Excellence began in 2006. mashcroft@bus-ex.com

Will Daynes Editor

Will has been a business writer for three years. He joined the Business Excellence team in September 2012. wdaynes@bus-ex.com

John O’Hanlon Editor

John has contributed to Business Excellence since its inception: he joined the in-house editorial team in February 2013. johanlon@bus-ex.com

CONTRIBUTORS David Walton

David Walton is chief executive of specialist change management consultancy Bestoutcome.

Carol Mote

Carol Mote is head of technology and strategic change at executive search consultancy Tyzack Partners.

Simon Orme

Managing director of Emros Partners, helping technology companies develop and implement their growth strategies.

www.bus-ex.com The content of this magazine is copyright of Infinity Business Media Ltd. Redistribution or reproduction of any content is prohibited. Š Copyright 2013 Infinity Business Media Ltd.

Martin Marmolejo

A global investment strategist based in Mexico City, Martin is founder of MMA Global Investment Management.

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FEATURES 10 COMMENT: EXPORTING

EXPORT TO GROW

Businesses that export grow by almost a third in just two years, according to new research from Barclays.

12 Comment: Demergers

Strategically sound

When considering demergers, businesses must take steps to ensure that plans are not left to run wild, resulting in significant lost revenue and stock value.

12 16 Executive insight

Alan M. Clegg

The founder and executive chairman of Red Crescent Resources Ltd, Alan M. Clegg, talks trust, global warming, and the danger of assumption.

20 Economics

The world debt bomb The subprime and European debt crisis is the greatest threat/opportunity for mankind in a century, says Martin Marmolejo.

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contents 26 Crisis management

Crisis? What Crisis?

If not managed correctly, a crisis can spell the end for a company’s brand reputation, says Simon Orme.

32 Change management

Shareholder value at risk

CEOs should focus on shareholder value at risk in managing major change programmes, says David Walton.

38 Technology

Digital footprints

26

32

Technology development can often outpace an organisation’s ability to harness its opportunities. The stage is set for the digital director.

38

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business showcase

44 mining & minerals: 44 Adrok

Looking beneath the surface A pioneer in the field of geophysical services, discover the next stage in Adrok’s growth and what it entails.

54 KGHM

A solid strategy

54 78

One of Poland’s biggest copper and silver producers has embarked upon a campaign of global expansion.

64 ETI KROM

A STAINLESS SUCCESS RECORD Turkey’s home-grown mining company is building its own coal-fired electricity generation plant.

78 DORCE HOLDING

Building a better world A global business in every sense of the word, DORCE plans to build upon all that it has achieved to date.

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contents

86

86 Alacer Gold Corp: Çöpler Exceeding expectations

By world standards it might be a small operation but one new venture in Turkey is making a big contribution to the local community.

98 OKD

Solid as a rock Operations at one of Europe’s largest coal producers are underpinned by strong customer relationships, top-class training, and solid revenues and reserves.

108 TALVIVAARA MINING COMPANY

116

Top of the heap

How bioheapleaching technology is getting the most from low grade nickel deposits in Finland.

manufacturing: 116 Konecranes

Heavy lifting champion

124

One of the largest crane manufacturers in the world ironically comes from one of the smallest countries in the world.

124 KÄRCHER

STEAMING AHEAD In spite of the economic slowdown, global cleaning technology market leader Kärcher is achieving record sales and pursuing a strategy of expansion.

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business showcase

140 150

Oil & Gas: 134 Progetti Europa & Global (PEG) Straight and true

An engineering company that has made a name for itself in the oil business by playing it straight.

Telecoms: 140 cesk茅 Radiokomunikace

Making waves

Providing a full range of voice, data and internet services across the Czech Republic.

150 Telef贸nica

M2M: not just for B2B This Spanish telecoms giant is taking full advantage of machine to machine (M2M) technology.

158 MAGYAR TELEKOM

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FROM RED TO GREEN

Magyar Telekom has been making rapid progress towards sustainability, recently earning an A+ rating from the Global Reporting Initiative.

contents

170

170 MAKEDONSKI TELEKOM CONNECTING THE DOTS

How the company is contributing to the development of Macedonia’s telecommunications industry.

Transport & logistics: 182 EUROPCAR

Move as you choose Understanding the behaviour of travellers keeps the leading global car rental brand ahead of the trend.

190 DHL Express Network Management Global focus

182

DHL Express leads the market in global express delivery services, and is continuing to hone and improve its performance.

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Export to grow by: barclays

B

usinesses generate an average growth of 30 per cent after exporting for just two years, according to new research from Barclays.

Carried out among 1,500 small businesses in the UK, the research reveals the rapid benefits of exporting, with 29 per cent experiencing a positive impact on their bottom line within just six months of expanding into international markets.

Eight in ten (82 per cent) businesses experienced a positive impact on their

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bottom line after two years of exporting.

The research comes as Barclays recently launched a unique proposition, Business Abroad, which provides the tools and know-how that businesses need to start trading internationally with confidence.

Increasing the number of businesses that export is vital to the recovery of the UK economy and to boosting job creation. Nearly a third (31%) of businesses that currently sell overseas have recruited an extra 15 people each on average as a direct result of exporting.

This includes many smaller SMEs employing a few extra members of staff, and a small number of fast growing SMEs taking on much larger numbers.

Given the positive impact on the bottom line of a business, it’s perhaps not surprising that 31 per cent of those who currently export are planning on branching into new markets in the next year and a further 24 per cent in the next two years. And, with continuing uncertainty in the eurozone, businesses are looking for export opportunities further afield.

comment: Exporting Nine out of the top ten countries listed as targets by businesses exporting for three years or more are outside of Europe, with Hong Kong, India, China and Australia topping the list.

Beyond business growth, almost nine in ten (87 per cent) businesses claim there are other benefits to exporting, including having greater confidence in the longevity of the business (44 per cent), increased productivity (37 per cent), stronger innovation (28 per cent) and a longer lifespan for their products and services (27 per cent).

“Winning business overseas is a vitally important way for SMEs to prosper and help the economy grow out of recession,” said Steve Cooper, vice chairman of Barclays Business Banking.

“Our new research shows that in the challenging domestic market, exporting provides attractive new revenue grow th for businesses of up to a third, boosting the bottom line and supporting job creation.”

In addition to launching Barclays Business Abroad, Barclays has also joined

82% Businesses seeing a positive impact on their bottom line after two years of exporting up with UK Trade and Investment to help small businesses trade internationally – from securing their first international customer to setting up an overseas operation.

Lord Green, Minister for Trade and Investment, said: “Boosting the UK’s export performance and supporting the growth of small and medium sized enterprises are key parts of our plan for growth that will help us secure a stronger, more balanced and resilient economy. The Government wants to see a further

100,000 British businesses exporting by 2020 and is committed to helping businesses of all sizes take their products and services to new markets overseas.”

Barclays customer Sharda Glass was established in 2006 and now exports its architectural glass to the USA, Europe and Middle East. Neil Sharda, director and owner said, “I started exporting five years ago and have seen an incredible impact on my bottom line.

I first started exporting to Dubai and Qatar, and then a year ago won the contract to supply the new World Trade Centre in New York.

As a result of my move into exporting, I’ve been able to move into new, larger premises. I travel abroad regularly and I believe building good relationships with clients is the key to continuing and growing my business abroad.”

Barclays Business Abroad is a one stop shop to help businesses start trading overseas. It offers free access to expert guidance, advice, workshops and tools, as well as discounts on international products and services. To find out more call 0845 301 6308 or visit www.barclays.co.uk/barclaysabroad

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Strategically sound by: Ben Tye

comment: Demergers

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emergers are in fashion again.

After years of rampant and unpredictable M&A activity, 2012 is seeing a significant rise in corporate divestitures. According to a recent Financial Times report, global divestments will increase by over 90 per cent to become a ÂŁ250 billion market.

A nnouncements of demergers are usually welcome news to shareholders, but like many well publicised mergers, issues can and will conspire to prevent them delivering the benefits outlined at the outset.

More of ten than not in these deals, the dominant party wants to sell off an unwanted or underperforming division and strip out the best parts, setting it adrift to fend for itself as it adjusts to a new position in the market.

Employees left abandoned inevitably want to fight for the spin-off business, their shareholding and their futures.

Adding to the challenge is the unpredictability of

demergers: each case is very different and one size does not fit all. For the majority of CEOs (and their boards) this tends to be new territory, not an everyday activity.

So what can businesses do to ensure that plans to demerge are not left to run wild and end up costing significant lost revenue and stock value?

Executive teams first

ÂŁ250 Billion Predicted value of global divestment market in 2012

need to understand the likely issues. Demergers will throw up a number of headaches; some familiar, others less so. The team should appreciate that openness and amicability will be in short supply due largely to the wide range of vested interests inherent in a corporate split. Added to that are compliance and regulatory issues which

vary both by industry and country, even within the EU. Based on fact, fiction or a combination of the two, suppliers and customers will be wary of any potential impact from the transition of management, staff, structure and assets.

Fluctuations in cash flow and costs often lead to pressure on the balance sheet, which will need to be managed tightly during the programme.

One of the most misunderstood elements of demerging is the fact that there has to be an interim state, lasting anything from two months to more than two years where the divested company remains tethered to the mother-ship, but starts to operate as an independent business.

Of course the speed at which progress is made through this stage can have huge effects on morale and motivation of staff. If it takes too long, key personnel may become frustrated and leave.

Losing staff at this juncture is a very real possibility; but it can be managed. Having a well-designed interim state and a clear plan to

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comment: Demergers

Anything other than keeping the show on the road should be off the agenda

transition quickly will ensure the greatest chances of success here. Equally, while negotiating through an interim state, management should avoid the desire to implement change or fix non-essential issues.

Aside from demerging, anything other than keeping the show on the road should be off the agenda.

The need for impartiality is paramount and why chances of success will be increased greatly by appointing a professional, experienced and independent team for the programme. Emotion is often underestimated; it’s a serious factor which will increase risk, and lead to poor planning and decision making—which ultimately will cost more

and affect shareholder value more greatly.

Internal appointments rarely result in the best team being in place. Top executives and managers are needed to manage the business, and therefore by default it will be a less skilled, less motivated team, having to make decisions about which they would have limited experience. When faced with complex stages of demerger activity, there is no substitute for experience.

Finally, communicate like mad to each and every stakeholder group: employees, the market, suppliers, customers and shareholders alike. Keep the rationale for the demerger forefront of mind and keep everyone informed about where you are on the journey and what the destination looks like.

A good deal for the business, well brokered and strategically sound, will invariably net the executive team an appropriate level of appreciation from shareholders for a job well done. The reality is, however, that at this stage the job is only half done. Those who lead the company in to the deal need to ensure they’ve equipped it with right the team and tools to deliver.

Only then can they be sure of fulfilling those promises that won the plaudits.

Ben Tye

Ben Tye is head of Program Management Consulting at Cognizant, a business and IT services consultancy responsible for some of the largest merger and separation programmes in corporate history. www.cognizant.com

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alan m.clegg

Founder and executive chairman, Red Crescent Resources Ltd Nobody’s perfect. What quality or ability do you wish you had?

There is no specific change I would wish to make to myself with the possible exception that I wish I could be single-minded and selfish sometimes and put my own interests before the collective. I would have been crooked less, been disappointed in my fellow man less and certainly have lost less money!

What is the best business book you have ever read, and why?

Actually I have three that I always refer people to. The first is from 2008, The Last Lecture

by Professor Randy Pausch; he contracted terminal cancer so it really was his last. It talks about the importance of overcoming obstacles, enabling the dreams of others and seizing every moment: it’s about living!

The second is the 1990 book Barbarians at the Gate by Bryan Burroughs, really the story

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of LBOs (leveraged buy outs) and how RJR Nabisco falling to takeover by KKR started the private equity boom. But it’s also about the excesses lived by the CEOs of large corporations in the US, and the ultimate demise of their ‘God-like’ living from lack of sustainability.

The last one is a 2009 book, Heaven and Earth—Global Warming: The Missing Science

by Professor Ian Plimer. This is truly brilliant, revealing the truth about this controversial subject and how the world has been gullibly sold on this phenomena, making some individuals wildly rich and famous as protagonists and enabling governments to impose punitive taxes and create more bureaucracy to their advantage.

Someone you would most like to have met, living or dead, and why?

Mustafa Kemal Ataturk, the great founder and leader of the modern Republic of Turkey. From a middle-class family with no

executive insi ht

royal blood or entitlement, his legacy and achievement was to build a nation and drag a people kicking and screaming from the medieval times to the modern era within his short lifetime, on the sheer strength of his will, personality and great intellect. He ranks among the greatest leaders to have ever walked the earth alongside Mandela, Gandhi and Lincoln.

What do you consider to be your major achievement (in life or business)?

Despite everything, to still be able to smile and without regret accept that everything that has passed, everything that is present, and everything that represents and will manifest in my future, will ultimately be my own creation!

Who or what do you think is overrated?

Conventionalism of any kind; group thinking and flock mentality; most world leaders and all politicians; the news media in general; email, as it stops real human interaction; hierarchical organisation structures and titles.

“Those that fail must ‘walk the plank’ and leave the ship!”

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What mistakes have you made (professional or otherwise), and what did you learn from them?

My biggest mistake is trusting people and employees and believing that they will execute their duty diligently with the same due care and attention as do I—and that they will be loyal to me as I am to them. It has cost me millions in losses and severe dents to reputation.

Finding the balance in management and allocation of authority, responsibility and accountability is very difficult. Just delegating is not that simple.

Which one piece of wisdom would you pass on to your successor?

Don’t assume anything, check and follow up constantly, manage your people obsessively and enforce discipline aligned to your own self-discipline. Those that fail

Executive insight must ‘walk the plank’ and leave the ship!

Be a benevolent dictator!

Who has been your inspiration professionally?

No one individual with the possible exception of my father, who told me constantly, “Never let anyone tell you it cannot be done!” So, as a result I have been something of a maverick and mostly attempt the impossible every day and have regularly succeeded. Miracles though tend to take a little longer and I am still working on these!

How would you like to be remembered after your retirement?

As a humanist who had faith in his fellow man no matter what, always acted with good intent and absolute integrity, was successful and made a difference to the lives of those he interacted with, despite the odds against him.

Do you have a quote or motto you live (or work) by?

That’s an easy one: “Rule number one: there are no rules. Rule number two: if in doubt, refer to rule number one!”.

Alan M. Clegg is founder and executive chairman of Turkey-focused mineral exploration and development company Red Crescent Resources Ltd. www.rcrholding.com.tr

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editorial@bus-ex.com be europe | 19

The world debt bomb The subprime and European debt crisis is the greatest threat/opportunity for mankind in a century written by: Martin Marmolejo

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Economics

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W

i t h virtually no exceptions, every debt crisis is a prime example of major errors and omissions in fiscal policy management.

That was the case in the European subprime crisis, as well as in Japan. Although the monetary side has room for improvement, the major potential in most economies lies in the fiscal side of public management.

The persistent imbalance that generated the huge debt overload in Japan, the US and Europe has to do with improper funding of the social safety net.

During the boom years after WWII, social benefits increased dramatically.

These benefits became more widespread because they were funded with the new wealth generated by a healthy growth in productivity as well as in the overall economy – so the balance was maintained.

In recent decades, however, retirement, health, and unemployment benefits have been consistently and progressively moving up, while the subpar rate of

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growth of the underlying economies has not been able to fully provide the funding needed for those entitlements.

That income shortfall has consistently been financed with new debt – as opposed to what should have been new wealth creation. This produced the current huge debt overhang. So far, no major political system has had the courage and determination to face its citizens with the sad truth, opting instead for “kicking the can down the road”.

Thus, most economies in developed nations have ended up asphyxiated by the total debt overload.

The only sensible, lasting solution for this paramount challenge should be crystal clear. Reverse that pernicious trend by doing exactly the opposite of what created it in the first place— an outright reduction in social benefits to their populations. That reversion process has to be gradual, yet consistent. Given the short and medium-term social pain created by this reversal process, the social and political resistance for

The poor rate of growth has not been

n able to fund social spending

Economics

“The income shortfall has consistently been financed with new debt instead of new wealth creation” such a change is strong, but there is no other way out of this huge debt mess; this is an axiomatic truth. We must learn to look at it as a shortterm pain for long-term sustainable gain.

That leads us into both the greatest contemporary threat and opportunity in a generation: the need for a profound restructuring of the socio-political system.

It is evident that the built-in incentives in the current systems do not sufficiently reward good deeds nor sufficiently penalize major mistakes and omissions; otherwise, this horrible fiscal imbalance and the resulting debt mess would not have occurred. The world’s present socioeconomic and political system has to evolve continuously to be able to successfully cope with current needs and threats.

If this profound virtuous change does not take place,

the ongoing world economic stagnation will continue.

Throughout history there have been numerous examples of countries that have successfully overcome deep financial imbalances – including huge debt overloads. However, in the current global situation, the fact that many of the world’s leading countries are simultaneously immersed in debt, has never presented itself before. Although the solution to this global debt bomb continues to be the same, this fact poses a particular degree of difficulty.

All over the world, to a high degree, nations are controlled by a relatively small number of people behind the main political parties. The typical dynamics and inertia behind those political elites is mostly non-virtuous (essentially revolving around

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“At the end of the day, it doesn’t matter much which party is in power: all of them are essentially helpless”

Mariano Rajoy

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keeping power or regaining it). Furthermore, to a high degree, even that relatively small number of people are victims of the same system they “control” (the degree of control they exert upon the most important variables is negligible, given the numerous concessions granted along the way through the years). The influence of citizens is basically confined to voting parties in or out of office.

The sad truth, however, is at the end of the day, it doesn’t matter much which party is in power: all of them are essentially helpless. For a quick corroboration of this, take a look at Spain. In January 2012, the Spanish population, fed up with the escalating economic crisis, voted the Socialist party out of office and replaced Prime Minister Rodriguez Zapatero with Mariano Rajoy of the Conservative

Economics party. A major change at work? Not at all. And this has nothing to do with the best intentions of either of the two PMs. The Spanish political system, as well as most in the world, is worn out, exhausted, helpless.

Reality is far more powerful than the limited capabilities that the political elites actually have. The need for a profound re-energizing of our current political systems is imperative. We cannot keep confronting increasingly global situations with local legislations.

Behind all this global human drama lies an unquestionable fact: the best (and only) way out of this debt mess is with high long-term, self-sustainable economic growth for the world as a whole. Only in that scenario, the major pieces of the economic puzzle will tend to fall into their right place, effectively defusing the world debt bomb. Debt has to be repaid and extinguished, not simply transferred to the future. Granted, no one ever expects it to go down to zero, yet, a noticeable and consistent reduction

in the debt/GDP ratio is imperative.

The contempora r y economic and political system has not experienced any major upgrade since the foundation of the United States. It is time for a drastic, virtuous change. How to go about it?

There are no easy answers.

The extremely complex situations within and among developed nations do not lend themselves well for major constructive change in the near term. There are many loose bolts that have to be tightened to open the way for what is required.

Thus, it seems that from that angle, it may take a long time (maybe decades) for that virtuous evolution to materialize, if at all.

The urgency of the matter is unquestionable.

With those ideas in mind, an original and provocative approach is offered in

my book Globalization. In essence, it consists in jumpstarting and fast-tracking economic growth in failed nations. The initiative is called the Turbo-charged Global Project (TGP) and is based on applying, in a systematic manner, the major factors at work in formerly very poor nations that have recently transformed themselves from rags to riches in just a few decades.

Those countries are the most powerful, uncontroversial testimony that a profound virtuous tra nsformation f rom rags to riches can be accomplished anywhere, anytime, provided that the TGP system is appropriately implemented. Through a reverse/eng ineered analysis, those factors have been de-codified and the proposed TGP system has emerged.

Martin Marmolejo is a global investment strategist based in Mexico City. He is author of Globalization, which offers an in-depth look at how our current global mindset can be a positive force in transforming societies and lives. www.understandglobalization.com

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Crisis?

What Crisis?

Crises are for multinationals, aren’t they? It could never happen to you, could it? If not managed correctly, however, a crisis can spell the end for a company’s brand reputation written by: Simon Orme

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Crisis management

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T

here have been plenty of highprofile crises in the media over the last few months. In the UK we have had the phone hacking scandal and the recent Barclay’s Libor-fixing debacle to name but two. As we watch the media dissect these cases and inform the world of every last detail, it’s hard to imagine ourselves being in such a position.

The crises we have seen of late have involved huge, multinational enterprises so if you are a smaller organisation, you could be forgiven for thinking this could never happen to you.

However, all businesses are at risk of crises – they can happen to anyone at any time. If not managed correctly, a crisis can spell the end for a company’s brand reputation. Avoiding a crisis completely is not

always possible, so what can you do to limit the damage?

And what exactly constitutes a crisis?

Managers perform their roles in environments over which they do not have absolute control. From time to time life throws them a curve ball which causes disruption to their orderly lives. When the disruption is severe, they become exposed to a crisis.

Characteristics of a crisis Crises can have a serious impact upon the organisation or individual manager. They can arise from external or internal events, but they have a number of common characteristics. They are most often unexpected, their causes are not always obvious, their outcomes tend to be unpredictable, but above all, they require immediate attention—an

“When a crisis arises it has a similar impact to being told that one has a serious disease” 28 | be europe

Crises can have a serious impact upon organisation or individual manager

n the

Crisis management unattended crisis can lead to disaster.

External events include market shifts, regulative impacts, competitor actions, customer events and economic factors. Internal events include product failure, staff resignations, technical problems, cash shortage and sales failures.

When a crisis arises it has a similar impact to being told that one has a serious disease. Reactions include: • Shock – how did this happen?

• Defensive denial – I don’t believe it!

• Acknowledgement – so what does it mean?

• Adaptation and change – so how do I fix it?

These are human reactions that occur in any crisis. The first point is to recognise their existence and the second is to decide how to manage them. The other aspect to recognise is that crises are part and parcel of the life of a manager; they occur with some regularity due to the fact that management is an art not a science.

Behavioural scientists

have identified three stages in crisis management: • Pre-crisis: the period leading up to the actual crisis. Although most crises are described as being unexpected events there are generally indicative signs that a crisis is looming.

Unfortunately these signs are frequently ignored. A useful management technique is to ask the question – ‘if this set of events continues what will be the outcome?’

This is crisis avoidance and is much preferable to crisis management.

• Crisis: where the pre-crisis signs have been ignored or the event was entirely unpredictable before the crisis stage is reached.

• Post crisis: the typical post crisis stage is characterised by recrimination. This takes a number of forms ranging from personal acceptance of failure to shedding the blame on others. The important dimension is to ‘learn lessons’ from the crisis and take steps and actions to seek to ensure that it does not occur again.

Some ma nagement thinkers maintain that a manager has not fully

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matured in the job until a crisis has been experienced and coped with.

Managing a crisis A crisis is often caused by operational failure – quality management, market analysis, poor people management, sales performance or inadequate c a sh m a n a g em ent .

Whatever the cause, the first stage of crisis management is impact analysis. I have found it useful to develop three impact scenarios:

• Direct impact – what it does to my area of responsibility • Indirect impact – what it will do to the company • Disaster impact – the worst case scenario – if it all goes wrong.

By taking a cold look at the impact in this way, it becomes possible to identify the range of corrective actions needed. Just fixing the direct impact may cause further crises to occur in the future – beware of the ‘quick fix’ approach. The financial crisis we’re still going

Crisis avoidance is much preferable to crisis management

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through now demonstrates what happens when a ‘patch-and-go’ approach is taken – the sacking of Fred Goodwin from RBS for example, kept the public happy for a while, but RBS failed to do anything about the huge pension and reward scheme in operation, leaving the banks vulnerable to greedy fat cats and public outrage.

Following on from this, the effect analysis will help to identify the actions that need to be taken. As an

Crisis management

“Any major crisis will have a large audience—bad news travels” example – I once had a crisis caused by the failure to win a large deal. This would have insulated our profit target for the year. We confidently expected to win the order, but at the last moment, the prospect was acquired by another company and the deal was cancelled.

The impact analysis was

about the effect of the loss of revenue, but the effect analysis told a bigger story – without the expected revenue, we could breach our banking facilities and could go bust. I had to cut headcount immediately to avoid this and introduce an austerity programme – I also had to find a replacement opportunity very quickly so there was huge pressure put on the sales team.

Impact identifies what has happened, effect identifies what it means.

Communication and problem resolution Any major crisis will have a large audience—bad news travels. The immediate and natural response to a crisis is denial, but a better strategy is open and honest recognition of the problem, coupled with a statement about how it will be dealt with.

This is the next step in crisis management

– problem resolution.

Clearly this will depend upon the nature of the crisis but the key point is to let all involved know that the problem is being addressed and that it has high priority.

Attempts at cover-up almost always fail and tend to make the crisis bigger.

The final stage in crisis management is reconciliation. All parties affected by the crisis need to be kept in touch with the resolution actions, along with regular progress reports and action plans.

Once the problem has been solved, it is important to let all who have been affected by the crisis know, and inform them that measures have been taken to ensure this doesn’t happen again in future.

Simon Orme is the managing director of Emros Partners. www.emrospartners.com

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Shareholder

value at risk CEOs should focus on shareholder value at risk in managing major change programmes written by: David Walton

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Change management

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Change never ends and therefore the risk to shareholder value is constant

Change management

E

very major change management programme puts shareholder value at risk. If the project succeeds and meets its objectives, then shareholders benefit. If it fails or even partially fails, then the value of the company may fall and keep falling. And CEOs don’t usually survive such an outcome.

Ask any programme sponsor what the biggest threats are to a major project and you are likely to get similar answers: a lack of leadership and drive and not enough focus on business risk. Take the recent example of G4S’s catastrophic failure to deliver against the terms of its security contract for the London 2012 Olympics.

An unmitigated business risk issue if ever there was one. In just a few weeks, the company lost 14 per cent of its value.

In fact these two issues— managing shareholder risk throughout the duration of a project and top-down, active engagement by the CEO—are inextricably linked and are crucial

components of change in an era when intense and significant transition has become a permanent characteristic of so many large corporations. Change never ends and therefore the risk to shareholder value is constant. It follows, therefore, that the CEO must lead change by focusing on shareholder risk.

One of the biggest problems in major change management projects is what

14% Value lost by G4S after London 2012 Olympics could be called a ‘Bermuda Triangle’ communications failure that occurs between programme director, sponsor and CEO. The programme director and sponsor are often reluctant to raise issues or red flags to the CEO; they see themselves as being responsible for dealing with problems as they occur.

And that suits most CEOs just fine. They like green traffic lights.

But if the communication bet ween prog ra mme director, sponsor and CEO was focused on business risk so that problems and issues within the programme were examined in terms of shareholder value at risk, they immediately become more vital to the CEO. In this way, the CEO becomes actively engaged and the top-level communications problem is resolved.

So how do you make this happen? What do you need to deliver this focus on shareholder value at risk?

Too often there is a yawning gap between the CEO’s vision and the nuts and bolts of a programme to deliver it. A focus on business risk presented in terms that the CEO recognises and can engage with allows that gap to be bridged. At the heart of this should be a change map, with clear goals, key milestones and a focus on some of the softer issues such as the ability of individual departments to do what’s being asked of them. This ensures a culture of openness and honesty from top to bottom.

It’s essential to have

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accurate data and a system that ensures transparent, visible and objective reporting. That means one toolset that everyone understands, trusts and uses. Too many project management solutions prove so complex and opaque that only technical specialists can drive them. This simply encourages a culture of ‘green light’ reporting: trying to fix problems behind the scenes and not highlighting milestone risks, often until it’s too late to do anything about them.

Like it or not, big change normally demands external help. You need systems integrators, a change methodology and supporting project ma nagement software. Tempting as it may be to follow the best of breed approach to selecting these partners, it tends to work directly against openness, transparency and effective

risk management.

There are very significant advantages to engaging a niche change management team that has proven experience of your sector or industry. A specialist team should also be able to provide the methodology and the toolset to deliver the change map and desired outcomes.

Opting for a specialist team that can provide an integrated approach will enable better data transparency, objectivity and appropriate risk management at each level— from top-level shareholder at risk and down.

Big system project management tools typically prove counterproductive in practice. They are costly to run, are often underused and tend to distract from the real issues of risk management—risk mitigation, transparency and openness. Indeed, they

often end up being used for little more than timesheet management.

What’s needed instead is an elegant, easily understood toolset that guarantees objectivity, engenders honesty from top to bottom and gives senior people risk data in an accessible and concise format (i.e.

“Like change itself, the process of managing change requires continuous progression and innovation” 36 | be europe

Change management

CEOs need to be able to see how shareholder value is being protected

management dashboard).

The CEO needs to know when shareholder value may be at risk. They need to know what actions are being taken to mitigate this risk and whether a programme is actually on track or not.

The best toolsets are those built by the specialists themselves, as they are based on many years of practical experience in delivering major change programmes and will reflect the need for risk management and mitigation at every level.

Like change itself, the process of managing

change requires continuous progression and innovation.

Whether the programme is part of a corporate relo c at ion , merger/ demerger, re-engineering of the operating model or a technology migration, change is an essential and inescapable part of business.

For this reason, CEOs

and all senior management need to be able to see how shareholder value is being protected. That requirement demands a team of people, a methodology and a toolset that are all founded on data transparency, accuracy, openness and objectivity.

Proper risk management is impossible without them.

David Walton is chief executive of specialist change management consultancy Bestoutcome, which he founded in 2000 after spending 11 years as a management consultant with PricewaterhouseCoopers. www.bestoutcome.com

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38 | be europe

Technology

Digital footprints Technology development can often outpace an organisation’s ability to harness its opportunities.

The stage is set for the digital director written by: Carol Mote

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T

he globa l technology research and advisory firm Forrester faced a dilemma of unknown proportions back in August 2009 when one of its key strateg ists, Jeremiah Owyang, left the company for pastures new. While movement of people is a natural and regular occurrence for a business, when Owyang left Forrester he took with him his digital identity.

During his employment with Forrester, Owyang had generated and cultivated extensive social media connections. The long tail effect of his personal blog alone was massive as he had worked as a very thorough and systematic aggregator.

Forrester, like most major companies back in 2009, was seemingly unaware of the legacy impact of such a departure on the connectivity with their clients and business interests.

Fast forward to 2012 and it remains the case that many international organisations are still unsure how best to leverage and secure the

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personal digital footprints of their employees. Many aspects of an employee’s digital footprint originate from their employment connections and may have reference to, and have been generated in, their working environment.

While much has been said in the last decade about carbon footprints, the next decade is likely to see increasing interest in digital footprint identity and the complex implications of ownership.

A digital footprint refers to the interactions linked to an identity (individual, team, group or corporate) across a wide range of digital applications from the internet, including the dynamic flow of information through social activity streams and mobile phone connectivity. Complexity is added by the increased preference of individuals in many organisations to use their own devices for work, subjecting ownership of socially related business activity and connections to debate.

An individual’s digital footprint is measured by

“When Ow Forrester h him his digit

Many aspects of an employee’s digital from their employment connections

wyang left he took with tal identity”

l footprint originate

Technology the extent of their online activ it y.

Work-ba sed connections generated via social media remain long after an individual leaves a company. Post-employment, while they may not directly approach individuals (to do so may contravene their contract of employment), people will remain visible, connected and accessible via social media connections.

O w nership of a company’s digital footprint is predominately focused within the remit of the CIO function, linking it to technological connectivity.

However, this is a rapidly evolving arena where aspects of the digital footprint also encompass areas such as marketing and sales channels, in addition to internal communications.

With such a broad spectrum of bu si nes s -rel ate d implications, there is a new remit arising which may transcend the experience of incumbent individuals and organisational expertise.

The concept of ‘digital directors’ is emerging as organisations start to recognise the full impact of a robust, dynamic flow of

information across business interests and through social activity streams. These individuals will act in the capacity of ‘intrepreneur’, harnessing CIO and wider corporate knowledge with market dynamics to deliver business advantage (at a corporate and individual level), while managing internal and external digital risks.

Digital directors may be sourced from the CIO community, online trading organisations with a track record of success, social media organisations or perhaps digital marketing agencies. As with emerging market areas, investment is required at the front-end of experience and firms should anticipate a three to five year window for strategic delivery.

The best strategy may be to recruit two or three directors with variable remits and focus which will maximise early returns and allow the opportunity for the prime contender to emerge within an 18 month window.

This is pioneering territory where new language needs to be created that balances:

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• the support and empowerment of the business to deliver its remit; • the support and empowerment of employees to deliver their remit; • monitoring content to ensure corporate values and strategies are upheld; and • securing the knowledgebased connections created throughout the work environment for corporate benefit.

Digital directors will be required to “own” the digital

agenda and be accountable for the organisation’s digital identity (both corporate and individual). Their key expertise will be to assuage institutional fear of loss of control, transitioning this through culture change dynamics to create an enabled, empowered workforce who are the company’s daily ambassadors.

As witnessed all too regularly, Twitter, Facebook, YouTube and evolving media such as Pinterest and Google+, demand immediate

attention, often resulting in inappropriate responses potentially ‘going viral’.

These cause significant bra nd m a n a g ement challenges, particularly where negative social media activities adversely affect trading.

Successf u l d ig it a l directors will have ‘digitally safe’ and experienced hands, being able to make things happen quickly and accurately for an organisation, aligning their agenda and environment

Work-based connections generated via social media remain long after an individual leaves a company

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Technology

“The next decade is likely to see increasing interest in digital footprint identity and the complex implications of ownership” and stretching their market reach. These individuals will be smart, emotionally intelligent and intuitive, and be able to articulate a vision, harness internal cooperation and knowledge while delivering excellence in digital credibility. Digital

directors will articulate a compelling story of digital evolution, cross-cultural transitions and territorial capture. The best will create connections on an individual level, even in the midst of volume traffic.

The stakes are high and errors will be made.

However, robust digital connectivity should ensure the construction of a ‘grid-safe’ environment to calibrate risks, ensuring speed and appropriateness of response to negative impacts.

The digital reach of employees such as Owyang are, for many organisations, still undervalued but (hopefully) will not remain so for much longer. Those

who know how to combine what exists now with a vision for the future position of a company on the digital highway, will soon be increasingly in demand.

The pace of technology development continues to increase rapidly, often outpacing an organisation’s abilit y to ha rness opportunities. In the coming years, it is likely that companies will seek and promote digital directors to hold and apply a vision to leverage capacity and opportunity, and to stay ahead of the competition.

This is definitely an era where combining a series of skill sets in a new and innovative way is a valuable investment.

A specialist in technology and strategic change, Carol Mote has worked for many prestigious organisations such as JP Morgan, Unilever, British Airways, Lloyds TSB, IBM Europe and EDF Energy before joining Tyzack Partners in 2012.

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Looking beneath

the surfac

For more than 15 years Adrok has been a pioneer in t geophysical services. Managing director, Gordon Stove the next stage in the company’s growth and what it en

written by: Will Daynes research by: James Boyle

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Adrok

ce

the field of e discusses ntails

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Coal bed tracking using a 4-channel receiver system in eastern Australia

Adrok

T

he US alone,” managing director, Gordon Stove enthuses, “represents the single largest geophysics space in the world, with a revenue generation of over $2.4 billion a year from geophysical survey services alone. This is just one of the reasons why we are so keen to expand into that part of the world.”

Until the turn of the year Adrok serviced the US market from its headquarters in Edinburgh, yet it has always known that having an indigenous base in the countries in which it operates would be of great benefit.

The next logical step for the business was to open a base in the country, which it did in February 2013 with the opening of Houston, Texas, based Adrok Geosciences.

“One of the challenges we had before setting up this office,” Stove highlights, “was that we had a limited ability to promote ourselves and our technology to clients in the US. Americans do have a tendency to buy only from Americans or American based businesses, therefore it is strategically a great move for ourselves to have someone there now on the ground who can move around freely, set up meetings and attract new opportunities.”

Following a successful academic career within the Geography Department of the University of Aberdeen, technology founder and major shareholder of Adrok Ltd, Dr G Colin Stove went on to hold a number of high profile positions within his field of expertise, from leading Remote Sensing research at the Macaulay Institute for Soil Research to pioneering new radar research for a company

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set up to service UK Government and other commercial organisations.

Six years after establishing a new Ground Penetrating Rader business, Dr Stove sold the company to an international drilling firm.

This presented him with the opportunity to establish a science business that would allow him to develop his ideas around Atomic Dielectric Resonance (ADR) technology.

Based in Edinburgh, Adrok combines

leading scientists and engineers and has successfully commercialised the technology to the advantage of numerous industries, ranging from oil and gas to geophysical exploration and research.

“The first two years of our life,” Stove explains, “were spent applying for the intellectual property for the technology that my father invented. It was then in September 1999 that we set up the commercial company,

“Adrok combines leading scientists and engineers and has successfully commercialised its ADR technology to the advantage of numerous industries”

One of Adrok’s many onshore surveys in USA. For this survey in Texas, the ADR scanner was deployed from a zipline.

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Adrok

Adrok work in all environments and have carried out mineral exploration surveys on frozen lakes in Canada and the Arctic Circle

before embarking on the long, arduous task of research and development in order to build up, test and improve the technology.”

After extensive research and development that lasted a number of years, Adrok successfully launched its first commercial service project in the spring of 2007. It was at this point that it set its stall out to become a leading geophysics and survey company, picking up work from several oil and mining businesses, going out to their respective properties and conducting a full survey of the land.

“In addition to deducing what the geology,

hydrocarbons, minerals or rock types are actually in the ground,” Stove continues, “we also provide our clients with better intelligence of the subsurface, while also helping to de-risk their drilling programmes. That is what we as a company are all about, helping our clients with their drilling programmes by conducting a detailed, intense survey in order to map out the rock types in the ground. We do this before drilling commences, so we are at a stage that helps filter the drilling decision making processes of our clients so they can definitively state where to drill.”

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Survey in a marshy field in Ireland prospecting for lead and zinc metals

“Central to the next stage of the Adrok’s growth is its ability to turn itself into a major geophysics services provider” Adrok uses advanced ADR technology to supply pioneering geophysical services for the location, identification, mapping and exploration of subsurface natural resources.

A patented investigation technique, ADR works by taking images inside materials and subsequently classifying them. It does so by measuring and interpreting resonant energy responses of natural or synthetic materials while these interact with pulsed

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electromagnetic radio waves, microwaves, millimetric or sub-millimetric radio waves being passed through them.

“The major benefit our clients derive from using ADR technology comes in the form of significant cost savings,” Stove states. “We guarantee that by using the technology we can save the client up to 90 percent of the cost of physically drilling a hole, meaning that for the price of one drill hole we can

Adrok

Hydrocarbons survey in Egypt

Extreme surveying for gold in the hills of Perthshire, Scotland

provide as many as ten virtual bore holes.”

Other benefits include low energy use, the ability to operate at close or long range, the lightweight nature of the equipment that allows for greater accessibility and transportation, and its ability to function in all manner of environments and conditions. Furthermore it has significant environmental pluses, being a nondestructive technique that does not have any adverse effect on the land itself.

While the technology has the ability to function offshore, Adrok’s current focus revolves around land based targets, particularly those in Canada, the US and Australia, which are among the largest oil and gas, and mining rich parts of the world.

As the company has found on a number of

occasions throughout its history, introducing any new product or service to the marketplace comes with its own challenges, not least the task of having to convince those who are sceptical. Adrok has discovered the best solution to this is simply for it to actively go out and showcase the technology is has and what it does for its users. In doing so it has been able to demonstrate up close the value the technology can bring to the table, something that has been greeted extremely positively.

“We are growing at such a fast rate that internally we have more projects than people in the company right now,” Stove says,” which is a good position to be in, but we do have to ensure that we remain capable of delivering strong, value added services to our clients.

What we have been very good at doing is

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Appraisal survey onshore Oman for hydrocarbons from a standard 4x4 vehicle.

Adrok’s first foray into the Middle East market

Adrok

$2.4 Billion Yearly revenue generation in the US from geophysical survey services setting up internal quality systems, procedures and policies to make sure that our work flows are working efficiently and effectively throughout the business. Meanwhile, being awarded ISO:9001 accreditation was also quite a big windfall for us.”

Central to the next stage of the company’s growth is its ability to turn itself into a major geophysics services provider, something that it hopes can be achieved by further educating the market about its technology, demonstrating the added value it can bring and ultimately securing new clients.

“We have achieved such a great deal in the space of 15 years,” Stove concludes. “Since the day we commenced operations we have secured the intellectual properties to our technology, worked with universities and academics in order to prove it up, demonstrated the technique countless times, secured a number of major multinational clients and secured several rounds of investment along the way. That is a lot to have achieved in a relatively short space of time and is a growth story I certainly feel is worth sharing.”

For more information about Adrok visit: www.adrokgroup.com

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54 | be europe

KGHM

written by: Becky Done research by: Abi Abagun

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KGHM operates three smelters in the area of Poland’s copper basin: Legnica, Glogow and Cedynia

KGHM

K

GHM is situated in the LegnicaGłogów copper belt, on one of the largest copper and silver deposits in the world.

Discovered in 1957, the deposit is formed from accumulated copper sulphates occurring in sandstone, copper-bearing shales and carbonate rock, which lie deep underground. KGHM began to mine the deposit in 1961 as the Polish state mining company Kombinat GórniczoHutniczy Miedzi.

The company’s basic operations are those of copper ore mining, copper production and the production of precious metals and other non-ferrous metals. KGHM’s production structure comprises three mines, two copper smelters, a wire rod plant and auxiliary units supporting the core business. It currently employs over 18,000 people, with its subsidiaries employing another 10,000.

The mines operate at depths of between 600 and 1,300 metres, with some shafts being deepened to 1,400 metres in order to access ore lying even further down. It’s a challenging environment, according to business development manager Krzysztof Kubacki, who says the company’s ability to achieve volume and tonnage while working at depth sets it apart from its competitors.

“The KGHM mines are unique because they are very deep underground and the working conditions down there are not easy,” he explains. “It’s very warm, and there are a lot of technical and technological challenges that we have had to overcome. If you look at typical copper mining companies in the top

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Mining equipment

58 | be europe

20 on a global scale, they usually mine openpit large porphyry deposits and that’s where they get their volume and tonnage from.”

By contrast, KGHM mines sedimenthosted stratiform deposits deep underground that are not very thick in relative terms— usually between two and four metres—so in order to achieve tonnage and volume, a lot of infrastructure, deep shafts and hoisting capacity is required. “So we think KGHM is unique, because we still manage to produce a lot of copper from this style of deposit,” says Kubacki.

Following the fall of the Iron Curtain in 1989, the company began to turn towards the free market economy and started thinking about expanding beyond Poland.

The state-owned enterprise transformed into a public-listed company—though this took some time, with the IPO taking place in 1997—and it began to consider its next move. “During the next decade, we developed a strategy to expand out of Poland,” explains Kubacki. “We wanted to grow our copper production because with the profits and the cash flow we were generating from our domestic sources, we could invest them into other deposits. However, there is only limited ability to do that in Poland, because there aren’t very many other deposits—or at least, they are not low-cost because they are similar in style to what we mine today. So we set out a strategy in 2009 that stated our aims to expand further afield, and we have taken that very seriously.”

In expanding beyond Polish borders, the company’s vision was to become a major, global copper producer by increasing copper

KGHM

The depth of KGHM’s three Polish mines varies from 600 to 1,300 metres

concentrate production to 700,000 tonnes per year. And it quickly took giant leaps towards that goal with the acquisition of a stake in the Afton-Ajax copper gold deposit in British Columbia in 2010, followed by the acquisition of Quadra FNX at the end of last year.

The acquisition of Quadra FNX will undoubtedly transform KGHM. “We are acquiring a company which has access not only to operating mines but more importantly, to very attractive and prospective copper deposits,” explains Kubacki. One such deposit is Sierra Gorda in Chile, one of the largest undeveloped copper projects in the world.

The mine is under construction and will start producing copper in early 2014 as a joint

venture with Sumitomo from Japan. Once the mine comes into production it will generate over 200,000 tonnes of copper per year: KGHM’s current production from mining is approximately 420,000 tonnes of copper each year. “We will add significant amount of production just from this one deposit,” asserts Kubacki.

Another project acquired from the Quadra FNX deal is the Victoria Project in the Sudbury basin in Ontario, Canada. This is a totally different type of deposit from Sierra Gorda, which is a large porphyry-style copper deposit: Victoria is an underground copper, nickel and PGM deposit similar to other deposits being exploited in the Sudbury basin.

“We set out a strategy in 2009 that stated our aims to expand further afield, and we have taken that very seriously” be europe | 59

“This project will also provide us with lowcost production of copper, nickel and PGMs and it should be in production by 2017,” states Kubacki. “So in general, if you look at the acquisition of Quadra FNX, it will transform KGHM from being quite a high-cost producer into a medium-cost producer.” An integral part of KGHM’s strategy was not only to grow its production but also to reduce production costs. “Given a downturn in the market, the producers who have competitive costs are the ones who will survive,” says Kubacki.

The Quadra FNX acquisition was by far the biggest M&A transaction made by any Polish company in the country’s history, so no-one can blame KGHM for now wanting to channel all of its energies and finances into bringing these three exciting overseas deposits—Sierra Gorda, Victoria and the Afton-Ajax project— into production, rather than looking around for new opportunities. “But opportunities come when they come,” says Kubacki, “and you cannot forecast ahead and say you’ll make more acquisitions several years from

“Given a downturn in the market, the producers who have competitive costs are the ones who will survive”

Worker drilling

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KGHM

Mining shovel in action

now: it doesn’t work that way. Having said that, what we want to do right now is focus on building our mines; but we will perhaps look for opportunities where we can invest in stages, rather than spend a large amount of money up-front.”

The company has, however, diversified by investing in non-core business areas such as the power generation sector; and has also established KGHM (Shanghai) Copper Trading Company to increase its copper sales to China.

As KGHM grows and expands, then so does the remit of its responsibilities; but corporate social responsibility is not a new concept to the company. “We’ve been mining deposits for over 50 years in this area and corporate

social responsibility was always part of what we did: maybe in the 70s, 80s or even 90s, nobody called it that—but we were already doing the work,” says Kubacki. “KGHM takes a lot of pride in what it has been able to accomplish through its corporate social responsibility activities in this area.”

The evidence is all around to see, says Kubacki. The Polish copper basin is populated by towns and cities that boast schools, churches and hospitals occupying renovated, refurbished or completely new buildings. “Given the size of our operations here, we try to be involved with and support all kinds of activities,” he says. “For example, we spend a lot of money on education by supporting schools and students, and we

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KGHM has made acquisitions in order to increase production

KGHM also spend a lot of money on healthcare.”

In fact, KGHM owns Miedziowe Centrum Zdrowia (MCZ), which has a local hospital in Lubin and offers excellent services in specialist areas such as cardiology.

The company also supports cultural and sporting activities: it sponsors festivals and cultural events, and helps fund the renovation of certain heritage sites in and around the copper basin. It also owns a football club in Lubin—Zaglebie Lubin—which plays in the first division. “We are very proud of our longterm commitment to supporting that team, but we also support a lot of other activities— we try to be involved in the local community in a very positive way.”

According to Herbert Wirth, the CEO of KGHM, there are many who doubted that the company would come good on its promises to expand and deliver on its expansion strategy. “KGHM set out this development strategy in 2009 and we were very serious about implementing it, because a lot of people doubted it,” Wirth says. “We have now demonstrated that we are capable of delivering, and I think this will influence the company positively.

“We have a very bright future ahead of us with all our mines and deposits, not only in Poland but further afield, and I hope KGHM can keep developing, keep growing and become an increasingly efficient company,” he concludes.

For more information about KGHM visit: www.kghm.pl

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A stainless success record 64 | be europe

Eti Krom

One of Turkey’s most important home-grown mining companies is weathering the decline in demand for chromium ore and continuing to supply its customers year-round

written by: Alan Swaby research by: Abi Abagun be europe | 65

KEF mines and beneficiation plant

Eti Krom

T

here’s an interesting tale relating to the discovery of chromium ore in Turkey. Apparently, in the 1930s, a German company was mining and smelting copper in the Elazig region of the country and local inhabitants were making some extra cash by collecting wood in the hills that the Germans then converted into charcoal. So the story goes, one such forager needed a rock to counterbalance the panniers straddling his donkey for the trek down the mountain. He didn’t need the rock to go back up, so left it lying around, only for it to be noticed by a sharp-eyed German engineer who recognised what he was looking at. In true Cinderella fashion, the local worker was found, the source of the ore identified and the Germans switched their attention from copper to chrome—at that time, a particularly strategic ore with many geopolitical implications.

“It probably meant,” says Dr. Alp Malazgirt, recently appointed chief executive officer of Yildirim Holding, “that the Germans had not focused on chromium mining until it became a strategically important metal. I’m not a trained geologist but on an inspection tour of new leases we have acquired near Adana’s Aladag region, it is possible to see many such lumps of chrome ore and I am sure it was even in greater abundance at Elazig back then.”

After the Second World War, the Turkish state continued to run Eti Krom, as the mine and processing plant was known, but never very profitably. At the start of 2000, the country began a wholesale privatisation programme and in 2004, when the mine was losing over

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Zero w

rries

The only air compressors TÜV-certified as “oil-free” (ISO 8573-1 CLASS 0) If your industrial process requires a completely oil-free air supply, Atlas Copco now offers a compressor range that is certified 100% oil-free. Our Z-range of oil-free screw compressors is the first in the market to receive an ISO 8573-1 ‘Class 0’ rating from the German certification authority TÜV. TÜV testing detected no oil contaminants whatsoever in the compressed air supply. So when you need to avoid all risk of oil contamination – rely on Atlas Copco oil-free air compressors. Want to know more? Visit www.classzero.com Committed to your superior productivity.

www.atlascopco.com

Eti Krom

Turkish HC FeCr (high carbon ferrochrome)

$100 million a year, the brothers Yildirim took reserves top 100 million tonnes, with current over the mine. “Today,” says Malazgirt, “Eti annual production capacity of about 1 million Krom is the flagship of all Yildirim operations. tons of chromium ore. Ferrochrome production It’s the largest and richest chromite source in capacity is 150,000 tonnes and the smelting the country and generates much of the over operation takes place in four furnaces, two open and two new semi-closed arc furnaces $1 billion in revenue for the group.”

The mine itself is located on a 200-hectare near Elazig, all of which have been updated site 55 kilometres from Elazig. The main and modernised in the past five years. activities there can be summarised as open Turkey has no shortage of chromium mines pit and underground mining of chromium but what sets Eti Krom apart is the high quality of the ore. There’s a very high ore, a chrome beneficiation ratio of 2.7:1 chrome to iron along with a briquetting but even more desirable is the facility, production of high carbon ferrochrome, and the low silicon content. “Silicon can be removed readily,” recovery of ferrochrome from slag. In total, the Eti Krom explains Malazgirt, “but at operation numbers around 80 a higher cost as neutralising The brothers Yildirim chrome ore mines with 20 of the silicon needs more carbon took over the mine and therefore more coal. The them currently active. Proven

2004

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ATLAS COPCO IMALAT MAKINALARI A.S. Atlas Copco Turkey operates in Istanbul as a customer & service center with its more than 200 dedicated personnel to help Turkish industry to have the most efficient and reliable solutions. With the experience exceeding 75 years, we are able to offer a comprehensive total compressed air solutions to different compressed air requirements.

driven compressors, was and still is a success for the company. It is no surprise that Atlas Copco was the first air compressor producer certified as “oil free” by TÜV ISO 8573-1.

Innovation does not stop there, we launched variable speed drive compressors in 1994 to save our customers’ energy up to 35% compared to fixed speed compressors.

Atlas Copco way of doing business is based on sustainable productivity. To support this way, we constantly improve our equipment and offer fit to purpose solutions. With its highly efficient components, Atlas Copco compressors are leading the way in terms of energy efficiency.

With these technological advances, we help our customers every day to sustain their profitability and productivity.

Innovation is in our genes, when Atlas Copco first introduced screw compressors to the industry it was 1954. In 1967 Atlas Copco launched Z series. Oil free and electrically

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Nowhere is this more evident in the Eti Krom A.S. where Atlas Copco Turkey provided technical expertise to reach the most efficient solution. After detailed analysis, Atlas Copco offered 3 Oil Free, Variable Speed Drive (VSD) oil free compressors where demand is precisely matched by supply and any extra supply avoided with state of the art VSD technology. Moreover, with its highly efficient desiccant dryers Eti Krom shall not waste any of its compressed air as a purge air. Whole system is controlled with an Atlas Copco patented modulating system which controls the units and have them work in their optimum conditions. With this modulation system, our customers can save up to 30% of their precious energy. In total; Eti Krom “expects to save about 68.500 euro per annum”

If your industrial process requires a completely oil-free air supply, Atlas Copco now offers a compressor range that is certified 100% oil-free. Our Z-range of oil-free screw compressors is the first in the market to receive an ISO 8573-1 ‘Class 0’ rating from the German certification authority TÜV. TÜV testing detected no oil contaminants whatsoever in the compressed air supply. So when you need to avoid all risk of oil contamination – rely on Atlas Copco oil-free air compressors. Want to know more? Visit www.classzero.com

Eti Krom

Committed to your superior productivity.

www.atlascopco.com

according to Kadir Salman, Mechanical departments manager. These technical advances were not the only reasons why Eti Krom chose Atlas Copco over its competitors.

From the day one Atlas Copco were in the site with its sale engineer and diligence that Atlas Copco demonstrated were not matched by its competitors. Moreover, previous experience with Atlas Copco’s reliability and customer centricity also affected Eti Krom’s decision to continue with Atlas Copco. Atlas Copco were”

positive , constructive and reliable” says Mr. Salman. This is how we place our customers first, this is how we explore and excel .

With a combination of technical expertise and putting our customer first, Atlas Copco Turkey is ready to asssist you for your compressed air needs. This is how we put our customers first.

This is the Atlas Copco way. www.atlascopco.com

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phosphorous content of our ore is also low which means it is ideally suited for the very high grades of stainless steel.”

These characteristics have helped Eti Krom weather the decline in demand and the suppression of prices seen since 2008. At the time, chromium ore was fetching around $750 per tonne; now the price is either side of $270. Nevertheless, through a combination of operational hedging and optimising its mining and manufacturing units, Eti Krom has remained viable. Productivity and process improvements have led to increased flexibility and a low cost operation. Eti Krom has used its financial strength and steady cash flow to make capacity-increasing investments with zero leverage.

Eti Krom remains an important partner to its customers as it is the only Turkish chrome ore supplier that can produce chrome ore all around the year, without any suspension, even through the tough winter season. By stockpiling product in 18 strategically located warehouses, it can rapidly supply customers worldwide with the ferrochrome they need.

When it comes to ferrochrome, the market for standard grades is now dominated by the Chinese, who have taken over from South Africa as the world’s greatest producers just recently. “South Africa has 70 per cent of

all known chrome ore,” says Malazgirt, “but that hasn’t stopped China investing hugely in its own ferrochrome production. Of course the power shortages in South Africa haven’t helped, as the smelting process is extremely energy-hungry.”

Electricity supply is just as critical for Eti Krom but more under control. The grid supply is reliable but is gradually being supplemented with Eti Krom’s own generated

“Silicon can be removed readily, but neutralising the silicon needs more carbon and therefore more coal” 72 | be europe

Eti Krom

Entrance to underground mining

electricity. “Yildirim has been all), many of which provide importing coal since 1995,” synergy for the mining and says Malazgirt, “and we have fertilizer operations. Yildirim a very experienced team has its own fleet of 18 ships, which knows how to get the of which 9 are tankers and the rest are dry bulk carriers, best out of its partners. Next year we shall build a new so has the means of shipping Tonnes of proven product to customers or electricity generation plant reserves importing those commodities near at Elazig using coal imported from South Africa, it needs. In the case of coal, Colombia, or Russia—the ore is shipped in wagons best source of coal for the high temperatures down to the Mediterranean ports for export needed in the smelting process. What we and then coming back, the wagons will don’t need for our own purposes will be fed haul imported coal for the future 200 MW power generation plant. Hence, the synergy back into the grid.”

In a relatively short period of time, the will be accomplished by combining all, or Yildirim brothers have created a group with most of the steps in the ferrochrome a very wide range of interests (10 sectors in operational supply chain.

100

Million

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Despite these interlocking divisions, Yildirim has yet to take any interest in manufacturing, although it comes as a great pleasure to Malazgirt to note the extent to which Turkey is developing its ability to be self-sufficient. “When the crushing and beneficiation plant was originally built at Elazig,” he says, “all the technology had to be imported. Now we are seeing that much of what a plant like ours needs can be produced within the country.”

Such improvement in manufacturing

capabilities will be good news for the government also. Considering the number of new mining developments that have been seen over the past decades, the mining sector still only accounts for one per cent of the country’s GDP. By 2023, the target is for mining to generate five per cent of the country’s wealth. In other words, there will be plenty of work for local suppliers. But for this target to be met, Malazgirt is warning that the country’s bureaucracy needs to become as efficient as its manufacturing.

“Much of what a plant like ours needs can now be produced within the country”

Open pit chromite mining

74 | be europe

Eti Krom

Chrome hauling operations at ETI KROM’s Elazig facilities

“Getting approval for anything is a slow process,” says Malazgirt. “We have licenses for 20 other sites all over Turkey that are waiting for development and which could be creating new jobs and export revenue. Most of the concern is for environmental protection of the countryside, which is admirable, but the process needs to be streamlined.”

Eti Krom already has good credentials in trying to create a sustainable operation. We’ve already seen that by tapping into Yildirim’s logistics network, coal is being imported and finished products exported with the maximum degree of efficiency—thereby

minimising its carbon footprint.

As electricity is the largest single cost associated with smelting, becoming selfsufficient is high on Eti Krom’s to-do list. In addition to the coal power generation plant underway, the operation is also trying to recycle some of the energy found in the hot gases produced during smelting. A system is currently being built which will collect 600°C waste gases from the smelter, filter them and cool them down to 400°C and then use them to power the boilers. This way it is hoped that 5.5MW of electricity will be produced in a clean, closed circuit.

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Eti Krom A by-product of any smelting operation is the impurity carrying slag that forms on the top of the molten metal. In the case at Eti Krom, the chrome content is already very low—at no more than four per cent. Nevertheless, slag is being recycled in order to re-claim as much of the chromium as possible. When the last drop of value has been wrung from the slag, it can still be processed for secondary purposes.

Rather than disposing of it as waste, Eti Krom is investigating ways in which the slag can be put to good use, for example, as a wearresistant additive to concrete.

Although there is no shortage of job opportunities in the mining industry in Elazig province, Eti Krom remains the most important employer, with currently around 1,000 people on the payroll. It’s the largest source of tax for the city and the whole of the province and its long history makes it an important part of the countryside’s social fabric.

“Eti Krom has been part of Elazig life for as long as most people can remember,” says Malazgirt, “something that Yildirim is keen to maintain. As well as supporting local institutions such as schools, the group has a major project underway to convert one of the most important historical buildings in the city into a museum, celebrating the region’s mining heritage.”

What a pity the lump of chrome ore that started it all off can’t be available as the principal exhibit.

View of the KEF concentration plant

For more information about Eti Krom visit: www.eng.etikrom.com

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DORCE Holding

Building a better

world A global business in every sense of the word, DORCE plans to build upon all that it has achieved to date.

Deputy general manager Dr. Ferzat Mercan discusses how it intends to do so

written by: Will Daynes research by: Will Kirby be europe | 79

Fujairah Housing Project UAE

DORCE Holding

T

he legacy of DORCE as a company electro-mechanical works on site. “In addition can be traced back to 1982, to its contracting services, DORCE also owns with the founding of parent one of the largest prefabricated, steel structure company, ALÇE Prefabricated manufacturing facilities in the world.

Steel Construction Industry and “As the many hundreds of projects that Trade. What began as a small workshop have been successfully realised over the years operation based in the Turkish capital of prove,” Mercan continues, “we have always Ankara producing minor steel construction been a company that embraces innovation. works and steel furniture, quickly evolved Nevertheless, what I would identify as to become a key supplier of prefabrication DORCE’s most important characteristic is its steel structures to some of Turkey’s biggest ability to work quickly and effectively under construction companies. even the most difficult of conditions.”

The foundations on which DORCE was In destinations across the globe DORCE built truly began to take shape prior to its has been able to realise projects under not establishment in 1989 when only intense geographical its owners purchased ten environments, but also in the acres of land in Saraykoy on face of man-made conditions which they built its factory. such as political instability Initially employing 40 people, and civil war. “At present,” it was only five years later, in Mercan states, “we have Construction sites 1994 that the company began several large construction being simultaneously to expand internationally. projects under way in Iraq. At managed at present the same time we continue to “As of today,” states deputy general manager, Dr. Ferzat take on work in a number of Mercan, “we are a holding that simultaneously other countries that present complex political manages 32 on-going construction sites in and natural conditions, including Sudan, four continents. From our 13 branch offices Niger, Nigeria and Mauritania.” and agencies we manage more than 550 Africa is certainly becoming an ever engineers and technical supervisors, and increasing source of work for DORCE, with some 3500 workers.” the company involved in four on-going EPC DORCE provides engineering, procurement and design and build projects. In Mauritania and construction (EPC) services for projects it is carrying out the 8400 person, Tasiast that require high quality solutions to operate residential village project for mining in extreme environments. While providing workers and engineers as well as a prethese services to projects that encompass engineered process buildings and concrete conventional construction and steel structural office building project. Meanwhile in Guinea works, DORCE also conducts all manner DORCE has temporary construction camps of engineering tasks required for civil and being established in 23 different locations

32

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and in Niger it is undertaking work on the Imouraren Uranium Plant worker camp project. Such projects are executed through its sub companies and branch offices. These assets have helped contribute towards successful operations in the likes of Algeria, Libya, Equatorial Guinea, Morocco, Cameroon and Democratic Republic of Congo.

“Africa is a very important market for us,” Mercan explains, “primarily due to its vast amount of natural resources such as oil and gas and minerals. Across the continent one will find numerous developing countries that are embarking on large construction projects involving mass housing, industrial facilities and other infrastructure projects. On top of this, many of the world’s leading oil and gas, mining and construction companies operate

in these developing nations and that makes Africa a huge market for DORCE.” At the heart of the company’s African growth strategy is an advanced expansion execution plan that encompasses three core themes, those being local manpower, local procurement and local services. When undertaking projects in Africa, DORCE prefers to use local resources as much as possible. “DORCE has always subscribed to the idea of improving local employment and of utilising local manpower,” Mercan enthuses. “Through the appropriate training we integrate local workers with our own qualified personnel and construction technology.”

Similarly, DORCE prefers to utilise local procurement means and local services

The 8400 person, Tasiast residential village project for mining workers and engineers in Mauritania

82 | be europe

DORCE Holding

“DORCE’s most important characteristic is its ability to work quickly and effectively under even the most difficult of conditions” when undertaking work in Africa. “When we are awarded a new project,” Mercan says, “basic services that we require to take place at the project site are often provided locally. Such services include the maintenance of tools and the providing of water and electricity, while the personal needs of our employees are sourced from local markets. What our local supply and recruitment business model does

is to enable low income individuals to develop themselves and their abilities. This is something we are understandably proud of.”

What it can be equally proud of is the safety excellence award that was presented to DORCE Prefabricated Building and Construction Industry Trade for completing five million man-hours without any accident or incident during its Tasiast project, which in on-going in Mauritania.

During the first week of December the company will be turning some of its focus to London where it will be exhibiting at the Mines and Money Exhibition. “We believe this event to be the most important for the global mining industry,” Mercan says, “providing a huge opportunity for companies to promote their own innovative products and services.

We exhibited there in 2011 and found it to be a hugely beneficial experience indeed.”

With the vast majority of the major decision makers in the mining world expected to attend, Mercan clearly has high hopes for this year’s exhibition. “Our fundamental goal over the course of the five days is to highlight the importance of prefabricated and steel building systems to potential mining customers. Furthermore we intend to spread the word about our own ability to operate in

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Pre-engineered steel process buildings and concrete office buildings, Zouerate, Mauritania

DORCE Holding extreme conditions and under the strictest of government regulations.”

If you take a tour through DORCE’s production facilities you will find that the world’s leading manufacturing technologies are being used on a daily basis. “It is unquestionable that as technological developments continue, we will follow these and be one of the first parties to put new innovations to use,” Mercan says.

Additionally, the company is aiming to further draw attention to its contracting abilities. Today in Iraq DORCE is involved in a public housing turnkey project that consists of 1416 houses and 11 social facilities. At the same time it has 20 on-going vehicle station projects underway in 18 Iraqi cities and has recently signed a contract with the government of Basra to construct a reinforced concrete university hospital.

“As we continue to grow,” Mercan concludes, “South America and Australia are also becoming two of our newest target markets, with serious steps having been taken to establish a visible presence there. We already have four hospital projects under way in Venezuela and these will be an important reference point as we aim to capture new business opportunities. Between our growth in new markets and the increase in projects we expect to see coming from the mining sector, we feel that the future is very bright for DORCE indeed.”

For more information about DORCE Holding visit: www.dorce.com.tr

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Exceeding expectations By world standards it might be a small operation but one new venture in Turkey is making a big contribution to the local community

written by: Jeff Daniels research by: Abi Abagun

86 | be europe

Alacer Gold Corp: ร รถpler

s

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Alacer Gold Corp: Çöpler

N

The first gold was poured at Çöpler in December 2010

ature has been very uneven in its distribution of bounties.

Take gold, for example. Plenty has been found throughout North and South America.

Africa and Australia are similarly blessed.

China is by far the largest source of gold; but poor old Europe has been left holding all the low cards.

The highest European representative on the list of gold producing nations is Turkey, ranking just 26th in the world’s top 100 gold producers. To put output into perspective, in the same period that China produced 320,000 kilos of gold, Turkey weighed in with 12,000 kilos.

It could be argued, of course, that Turkey’s gold deposits aren’t even European, located as they are on the eastern side of the Bosphorus. But what is not in dispute is that the Çöpler Gold Mine is an important part of the Alacer Gold Corp’s portfolio and one that is all set to increase significantly in size.

In the trade, Alacer is classed as an intermediate gold producer. It is registered under the laws of the Yukon Territory in Canada, has its head office in Colorado in the States and operates mines in Australia as well as Turkey. In 2011, total production measured 421,204 ounces of gold, a figure that is certain to be surpassed in the current year. Çöpler is located in the eastern part of Turkey, roughly 550 kilometres east of Ankara and 120 kilometres south-west of the provincial capital city of Erzincan.

It’s a remote area, high in the mountains,

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Alacer Gold Corp: Çöpler serviced by the nearby town addition to the almost of ĺliҫ (population 2,500). one thousand jobs the The mine is important to mine has created, means the town and the immediate a massive boost for the vicinity and provides much local economy. needed jobs in an area The mine itself is owned where little else is going on.

80 per cent by Alacer with the Like all good employers, remaining 20 per cent held A lacer maintains

by Alacer’s minority Turkish par tner— Lydia Maden constructive partnerships with the local communities İşletmelerş A.Ş. Alacer first and regional stakeholders The mine is high in the mountains acquired an interest in surrounding Çöpler to Çöpler over a decade ago ensure that activities which may impact and by 2004 it had consolidated 100 per them are carried out in a consultative and cent control of the property. However, at participatory manner. Wherever possible, that stage, all it had were the rights to mine Alacer has a policy of buying parts and what was still virgin territory. In 2009, services from local suppliers which, in though, it entered a strategic relationship

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C O N S T R U C T I O N

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C O

E-mail:kar-sa@kar-sa.com.tr www.Kar-sa.com.tr

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Alacer Gold Corp: Çöpler with Lydia Mining and Kar-sa construction of the mine Kar-sa was established as a mechanical construction began not long after, company in 2006. The scope of our jobs includes: with the first gold being industrial plants’ mechanical, electrical & instrumentation poured December 2010 erection and installation; steel structure erection and and f ull commercial installation; stainless steel, carbon steel, and HDPE pipe production announced a fittings installation; cold and hot commissioning tests; fire extinguishing systems design and installation; cladding few months later. and insulation; and maintenance and modification of heavy In fact, ramp up to full industries systems. production and progress In the past, Kar-sa was a sub-contractor for Mitsubishi Heavy in general at the mine has Industries at the Afşin-Elbistan B Power Plant. The company gone better than planned, also serves as a sub-contractor for Alacer Gold Company at meaning that Çöpler the İliç Gold Mine for new projects and modifications. exceeded expectations www.kar-sa.com.tr during its first year of operations. Commercial gold production came on stream earlier than planned and the mine produced a total of 185,418 ounces of gold at a cash operating cost of $322 per ounce. Ore was sourced from the manganese pit during 2011 and 26 per cent more gold was mined than modelled, with reconciliations being 30 per cent higher on grade and three per cent lower on tonnes.

For the geologists, mineralisation at Çöpler occurs in both oxide and sulfide forms, making the ore amenable to conventional open pit mining. The oxide ores are being processed in a simple crush, The remote Çöpler Mine

“Like all good employers, Alacer maintains constructive partnerships with the local communities and regional stakeholders surrounding Çöpler” be europe | 93

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Alacer Gold Corp: Çöpler agglomeration and heap leach circuit. For the deeper Haycarb activated carbons from Eurocarb are the leading sulfide mineralisation, solution for the goldmine sector in Turkey and around the Alacer is at an advanced world. High quality carbons are backed up by our market stage of a feasibility study leading technical support and analysis service from our into assess the processing of house goldmine consultants, ensuring that our customers the sulfide ores through have the right carbon and all the information they need to conventional cr ushing deliver maximum profits from their operations. www.eurocarb.com and milling, leading to a pressure oxidation circuit.

When Alacer announced the results of its preliminary feasibility study (PFS) around 18 months ago, indications were that such a project would have marked impact on the life of the mine. Gold reserves would increase from 2.2 million ounces to 4.6 million ounces and life of mine production would increase from 1.3 million ounces to 3.7 million ounces. The working life of the mine would extend to 16 years.

At a gold price of $1,038 per ounce, the sulfide project would deliver $739 million in cash f low and provide a real internal rate of return of 24.6 per cent on a US$410 million initial capital investment. At a planned production rate of 8,000 tonnes per day, such a pressure oxidation circuit would not only recover

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7.3 million oz The target is for Çöpler to produce a total of 400,000 ounces

Çöpler’s measured and indicated resources as at December 31 2011

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Mineralisation at ÇÜpler occurs in both oxide and sulfide forms

Alacer Gold Corp: Çöpler additional gold but also 91 million pounds of copper.

After a break in exploration drilling during the construction phase, more than 50 kilometres of drilling were completed during 2011 at Çöpler. This has extended and upgraded known gold mineralisation.

Only about half of this drilling was incorporated in an updated Çöpler resource announced early in 2012 which already reported increased measured and indicated resources to 7.3 million ounces.

Drilling is continuing at Çöpler and a further resource update is expected in the near future. This is particularly important to the work underway on the Çöpler sulfide feasibility study that is due to be completed in late 2012. Çöpler is forecast to produce 180,000 to 190,000 ounces (on a 100 per cent basis) during 2012 at a cash operating cost of $360 to $380 per ounce.

A positive development decision following the completion of the Çöpler sulfide feasibility study in late 2012 would enable construction of the sulfide project to commence. The target is for Çöpler to produce a total of 400,000 ounces when both oxide and sulfide ores are processed. With measured and indicated resources totalling 7.3 million ounces as at December 31 2011, Çöpler is proving to be a world-class deposit in a well mineralised district.

For more information about Alacer Gold Corp: Çöpler visit: www.alacergold.com

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OKD

Solid as a rock Operations at one of Europe’s largest coal producers are underpinned by strong customer relationships, the continued implementation of topclass training and safety measures, and solid revenues and reserves

written and researched by: Richard Halfhide

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Klaus Dieter-Beck, CEO

OKD

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oal represents the Czech Republic’s only significant indigenous energy resource; and as such, its importance to the economy in relation to export revenue and employment cannot be understated, and is as crucial today as it has been for the last two centuries.

OKD operates as a subsidiary of New World Resources Plc (NWR), headquartered in the Netherlands and one of Central Europe’s leading hard coal and coke producers. As well as OKD, NWR also owns OKK Koksovny, a.s.

(OKK), which is Europe’s largest producer of foundry coke. The company is listed on the London, Prague and Warsaw Stock Exchanges and can also be found on the FTSE 250 Mining Index.

Today, OKD produces coking and thermal coal, mainly for the steel and energy sectors, and is the only producer of bituminous coal in the Czech Republic. As such, it represents both the history and the future of this most traditional of industries. A nod to the past is hard to ignore: generations of men have mined the same area in the Ostrava-Karviná, in the east of the country.

“We are mining in old infrastructure: some of the shafts are close to 100 years old. The new shafts are 25 years old, but on average each is 40 to 50 years old,” says OKD’s CEO, Klaus Dieter-Beck.

The current operations of OKD are split between four operating mines. The Karvina and Darkov mines are the largest sites, with Karvina holding the title of the largest deep mine in the Czech Republic. The CSM mine in Stonava and Paskov mine in the Staric

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OKD area of Ostrava make up the other operating sites which Cantoni Motor S.A. offers a full range of motors from when pooled together, offer 0,04kW up to 5000 kW – standard and special application a total reserve of about 200 motors: high voltage motors, explosion-proof motors, brake million tonnes. It is not just motors, single-phase motors, motors for fans, slip ring the age of these mines that motors, crane motors, motors with foreign cooling, marine creates a challenge to those motors, traction motors and high efficiency motors IE2, IE3 and Nema Premium Efficiency. who work at them but also www.cantonigroup.com the diverse nature of the geology, as Beck explains.

“Our seams range from 80 centimetres up to almost eight metres in height, which poses its own challenges. Each year we go deeper and deeper. We are currently close to 1,000 metres, and it’s here that we face additional technical challenges in terms of air conditioning and rock pressure. In fact, we are in one of the most bounce-prone areas in the world.”

In many people’s eyes, coal mining still conjures an image of pick hammer-wielding men with coal dust-covered faces, but today this could not be further from the truth.

OKD has embraced the future and is rightly regarded as a truly modern company, utilising and often designing the latest technologies.

Within the modern coal mining industry the greatest investments are generally split between new innovation for performance or for safety, although the two are intrinsically

Cantoni Motor S.A

€200 million OKD’s average annual CAPEX Mining machinery in use

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linked. If maximum efficiencies are to be realised, it is imperative that continual improvement be the watchword. This is not lost on Beck. “We are investing permanently in new equipment, spending on average €200 million each year in CAPEX. This brings in new levels of technology for our investment programme, and it will also help develop new coal field access in the future. Our level

of investment today has tripled from six or seven years ago, when I first came here.”

It is clear that OKD’s investment strategy has led the company into a bright and ambitious new era. Despite the rise of alternative forms of energy in some countries, coal remains the only viable energy source for both the energy and steel sectors in this area of Eastern Europe and this is something

“Our level of investment today has tripled from six or seven years ago, when I first came here” 104 | be europe

OKD

The company invests heavily in safety programmes

that will not be changing any time soon. By Beck’s own admission, “the long-term outlook six or seven years ago was not so bright, but there is now a different perspective. There are huge resources here: last year we exceeded 11 million tonnes again and we plan for the next 20 years to mine coal.”

One of the main foundations that enable OKD to plan for a profitable future lies in its relationships with its customers, which have been forged over many years. A key advantage that OKD’s operation has over many of its rivals is that it mines coking coal for the steel industry and thermal coal for power in equal measures, thus creating a more flexible supply

model. The companies it supplies represent some of the major blue chip organisations in the region, all located within an excellent logistical infrastructure—companies such as Arcelor Mittal, Moravia Steel, US Steel, CEZ, ThyssenKrupp and voestalpine.

The latter recently granted OKD with an award in recognition of the relationship the two companies share, as Beck explains: “We were rewarded for being their Supplier of the Year. They know we deliver on time; and they are pleased with the quality. We talk, we meet, and we quickly eliminate any problems that arise. After safety, the customer is our number one priority.” Beck speaks of simple

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and honest principles but there is no doubt that they are a recipe for success.

As Beck makes clear, the issue of safety should always be the main concern for any modern day mining house. This is especially true when mining underground to the depths witnessed at OKD’s properties. The company invests heavily in programmes to minimise the risk of accident and injury, one of its major initiatives in recent times being ‘SAFETY

2010’, which focused on providing all staff with the very latest personal safety gear including hi-visibility work wear, personal lamps and detection devices—vital for the rescue of workers should an accident occur.

OKD is also well known for its Productivity Optimisation Programme (‘POP 2010’). Between 2008 and 2010, POP 2010 saw OKD mines equipped with the most sophisticated gateroad and longwall technology, worth nearly CZK10

“There are huge resources here: last year we exceeded 11 million tonnes again and we plan for the next 20 years to mine coal”

Operations underground

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OKD

Mining machinery in use

billion. All underground coal mining might be hazardous if not properly managed; but the workforce at OKD face additional challenges specific to the region, which are bounces related to the extraction of coal seams in connection with sandstone layers in between.

The fact that such natural geological conditions occur in this part of the world holds OKD up as an example to the wider coal mining community. Beck explains that OKD is not ‘shy’ when hiring expert consultants in the fields of rock mechanics, process improvement and training related to safety and new technologies. The unique conditions also mean that many international manufacturers approach OKD to request their equipment be tested in the extreme

conditions of its mines, in the knowledge that should equipment perform well here, it will do so anywhere else: a true testament to the workforce of OKD and the results it achieves.

Under Beck’s leadership, the short and medium term outlook for OKD is secure and it seems that everything is in place.

“We have solid customer relationships, an experienced and knowledgeable workforce and management team, a solid reserve and solid revenues every year—what else could you want?” he concludes.

For more information about OKD visit: www.okd.cz

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Top of the Chief executive officer Harri Natunen explains how the company is using bioheapleaching technology to get the most from its low grade nickel deposits

written by: Will Daynes research by: Jeff Abbott

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Talvivaara Mining Company

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T

hough it is perhaps not the first country that one associates with the industry, Finland’s mining history in fact dates back to 1540.

Today the raw material base for its metal industry is made up from the exploitation of nickel, copper, cobalt, zinc and lead ores, as well as chromium, vanadium and iron deposits.

Located in Sotkamo, in the east of the country, Talvivaara boasts two metasedimentary hosted, low grade nickel sulphide ore bodies, Kuusilampi and Kolmisoppi. Originally discovered by the Geological Survey of Finland in 1977, the deposit was at first deemed to be too poor for existing technology. It was determined at this early stage that the only process that would be capable of concentrating the nickel enough would be bioheapleaching, a technology which, at that point, remained untested in such a scenario.

Obtained by Outokumpu Corporation, the mining rights were eventually sold to one of its former employees, Pekka Perä. It was Perä’s purchase of the rights that gave birth to the Talvivaara Mining Company in 2004.

Today an internationally significant base metals producer, with its primary focus on nickel and zinc, the company’s Kuusilampi and Kolmisoppi deposits are now recognised as comprising one of the largest known sulphide nickel resources in Europe. Their combined contents of 1.1 billion tonnes of ore, in measured and indicated categories, are thought to be sufficient to support extensive production levels for several decades to come.

Talvivaara supplies metal intermediaries to companies with metal refining operations.

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Mine site

Talvivaara Mining Company

Arguably its most important contract to date is the ten year off-take agreement it has entered into with Norilsk Nickel Harjavalta. This agreement involves the delivery of the entire output of the mine’s nickel and cobalt production at market prices. A similar long-term partnership was established in November 2010, with the company entering into a zinc concentrate streaming agreement with Nyrstar NV. The terms of this contract involve the delivery of all of Talvivaara’s zinc concentrate to Nyrstar up to 1,250,000 metric tonnes.

“What makes the work we carry out unique,” explains chief executive officer, Harri Natunen, “is the fact that we apply bioheapleaching technology to extract nickel from the ore.”

Dumpers

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Commonly used in copper processing, particularly in Central and South America, bioleaching is a process in which metals are leached from ore as a result of a bacterial action. Triggered spontaneously by microorganisms in the presence of air and water, commercially applied bioleaching technologies replicate the same natural phenomenon, but accelerate the process in order to speed up metal recovery.

“What we do is,” Natunen continues, “we mine the ore, crush it down in four stages to a size of minus 15 millimetres and then utilise a process of agglomeration using a pregnant leach solution.” After the agglomeration process the ore is conveyed and stacked eight metres high on the primary

Talvivaara Mining Company

“The company’s Kuusilampi and Kolmisoppi deposits are recognised as comprising one of the largest known sulphide nickel resources in Europe” heap pad to undergo one and a half years of bioheapleaching. The heap pad is equipped with piping and laid on the bottom of the pad, through which low-pressure fans supply air to the stacked ore. From the top, the heap is irrigated with leach solution, which is recycled through the heap until its metal content is sufficient for metals recovery.

Following its time on the primary pad

the leached ore is then reclaimed, conveyed and re-stacked onto a secondary heap pad, where it is leached further to recover metals from those parts of the primary heaps where the leach solution couldn’t previously penetrate. After secondary leaching, the barren ore remains permanently on the secondary heaps.

“The total leaching process,” Natunen says, “takes approximately five years, at which point the pregnant solution is collected, with the majority being pumped to a metals production plant where it is infused with hydrogen sulphate. These materials are precipitated as sulphites and then, through a combination of dewatering, thickening and filtration the final product is processed ready for delivery.”

Bioheapleaching was chosen as the preferred technology for the Talvivaara mining project based upon its favourable capital and operational cost profile. A low cost process requiring only air, sulphuric acid, water and microbes to work, bioheapleaching has lower capex and opex than traditional grinding and flotation processes. It is also widely recognised as a cleaner and more environmentally friendly process.

The concept of responsible mining exists throughout Talvivaara’s business operations

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and incorporates three dimensions of corporate social responsibility, these being economic, environmental and social aspects.

Across its operations the company seeks to meet the challenges associated with achieving sustainable development.

The primary objective of Talvivaara’s environmental management is to ensure the sustainable and economical use of natural resources, while at the same time minimising any adverse effects on the environment that could be caused by its mining operations.

From a social perspective, the company is equally as committed to the development of its employees, encouraging them to acquire and develop the necessary professional skills.

“In all that we do,” Natunen states, “our aim is to be a pioneer within the mining industry. As a young company we have had the opportunity to develop responsible best practices from the offset, while introducing environmentally efficient technology at every possible turn. As a result of a combination of an eco-efficient metals recovery process, the very best new technology, an advanced operating environment, and a high level of expertise, we are in a prime position to be able to grow into our desired role of being a leading player in responsible mining.”

Today, the company finds itself on the cusp of making its first test delivery of copper concentrate, marking another milestone in its

“Perä has created a company that has incredible potential and the ability to increase its production levels”

Stacker

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Talvivaara Mining Company

The company is in the construction phase of a uranium recovery plant

short history. In addition to this, Talvivaara has recently entered into a co-operation agreement with Cameco, one of the world’s largest publically traded uranium companies.

This partnership will allow Talvivaara to make use of the uranium by-product which is created during the bioheapleaching process.

Furthermore, the company has entered into the construction phase of its building of a uranium recovery plant. This project is expected to be completed during the first six months of 2013 and will create an additional revenue stream for the business.

“When Pekka Perä first set about developing this operation,” Natunen says, “he worked especially hard to bring together a group of individuals that boast experience and expertise

in different areas of mining, as well as those that specialise in the use of bioheapleaching.

In doing so he has created a company that, while still in its ramp-up phase, has incredible potential and the ability to increase its production levels, and achieve the cashcost position it is targeting. What Perä has managed to do in such a short space of time is already a well-recognised achievement here in Finland, and I’m sure it will only continue to garner the attention of the mining world as a whole as time passes.”

For more information about Talvivaara Mining Company visit: www.talvivaara.com

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Konecranes

One of the largest crane manufacturers in the world—which ironically comes from one of the smallest countries in the world

written by: alan swaby research by: vience kielty

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W

atch any strong man competition and the odds are there will be a Finn in the final.

For a country with a population of far less than Greater London, Finland manages to create some of the biggest and strongest specimens in the world.

It’s only fitting, then, that one of the most important crane manufacturers in the world is also from Finland. Within the industrial sector, Konecranes believes it is in first place while in the port handling sector, it ranks as either third or fourth. “Within the sectors where we operate,” says vice president Mika Mahlberg, “we estimate that our market share globally is about 15 per cent.”

Even for those not in the crane business, the name might sound familiar. Konecranes used to be part of Kone Corporation— manufacturers of lifts, escalators and automatic doors, products that all of us will have ridden in or walked through many times. But in 1994, the crane division was the subject of a management buyout and went public just two years later.

To give some perspective to the company, Konecranes is just putting the finishing touches to the world’s largest goliath crane, being supplied to the Ecovix-Engevix shipyard in Brazil. This monster has a span of 210 metres and can pick up ship sections weighing 2,000 tons. At the other end of the scale, many thousands of family-run workshops around the world make their lives lighter with Konecranes chain hoists.

Alongside industrial cranes such as these are port cranes—the division headed by

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Konecranes

Rail mounted gantry crane at BNSF Railway, Seattle, Washington, US

Rubber tyred gantry crane at Valencia, Spain

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Mahlberg. “Cranes to handle containers account by far for most of the machines we make,” he says, “but we still need to have the full spectrum of options so that we can provide equipment to suit every specialist activity that an individual port or shipyard performs. These past 12 months have been our busiest for some years and output has been higher than it was before the recession in 2008. In 2010, sales exceeded €1.5 billion.”

Mahlberg puts the success that Konecranes has achieved down to several factors: “We are not typically the cheapest manufacturer in the industry,” he says, “but generally the orders that we want to win come from clients who are making a more rounded assessment of whole-of-life costs and for whom the highest levels of productivity are the key to better value. Therefore, we put considerable effort into maintaining technological superiority and pushing the boundaries of what can be achieved. Having said that, though, customers know that the designs we provide are well proven and more than reliable.”

Cranes might be bigger and reach further than they used to do in order to satisfy the bigger vessels in service these days but on the whole they don’t look much different to how they did 20 years or more ago. On the other hand, the way they operate has changed enormously: the speeds at which they accelerate and travel, as well as the speed at which objects are lifted and lowered, are all significantly faster than they were.

“The crane design plays a major role in this: the steel structure has to cope with the millions of changes in stress that a crane has to contend with in its life as loads are

Konecranes

Ship-to-shore crane at Terminal De Contenidors Barcelona, Spain

lifted and lowered,” explains Mahlberg.

“But equally important is the contribution that comes from advances we have made in control systems. All Konecranes designs share similar technology and components.

As well as the software we have developed, the volume of cranes we make justifies having our own manufacturing facilities rather than being obliged to buy proprietary products from others. This represents a major technological difference between ourselves and our competitors.”

Commonality of design also makes life

easier to provide service for any Konecranes product. With close to 5,000 technicians in 578 service locations across 46 countries, a service engineer is never far away from a customer. Additionally though, by having no distinction in the way any of the products operate, a service engineer taking care of an overhead ladle crane in a steel mill can just as easily service the same client’s bulk iron ore and coal handling cranes.

The most common types of crane found in a port are likely to be rubber tyred gantry cranes (RTGs) or rail mounted gantry cranes (RMGs).

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Straddle carrier at Kotka, Finland

Konecranes These are the bread and butter machines of any installation handling containers, with RTGs giving complete freedom of movement while RMGs are to be found at container terminals or inter-modal junctions—loading containers onto trains, for example.

Over the years, operators and crane designers have tried to squeeze the last drop of productivity from these machines by making them work harder and at greater levels of safety. The limiting factor, as always, has been the human component. Some drivers are more skilled than others and some work harder, while no-one likes working in rain or high winds. When incidents and accidents occur, schedules go out of the window. So the holy grail has been to have a completely driverless scenario: and this option is getting ever closer. Already, Konecranes produces automated stacking cranes (ASC) that can follow pre-programmed instructions to a very large degree, although in practice—and not dissimilar to automatic airline pilots— touch downs are generally carried out by human operators, albeit working from a remote location.

“The advantages are enormous,” says Mahlberg. “By working in a cleared environment, safety issues are virtually eliminated. Machinery can work around the clock with no diminishing of performance.

Rain or shine—it makes no difference to an ASC. Productivity is appreciably higher.”

These machines carry a hefty price premium over a manually operated equivalent but since Konecranes sold its first ASC five years ago, the number of sales has been rising rapidly. Recent significant

16-wheel rubber tyred gantry crane at MassPort, Boston, US

investments in ASCs have been made in Abu Dhabi and Barcelona, where 30 and 36 ASCs respectively are under delivery.

Developments in crane engineering are gradual and evolutionary so don’t expect quantum leaps. Mahlberg is content to work hard to retain the company’s leadership in technology while maintaining the huge investments in labour and resources constituting the high level of customer service Konecranes provides. Just like the strong men of Finland, he knows that only those who work hardest will ultimately win the prizes.

For more information about Konecranes visit: www.konecranes.com

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K채rcher

Steaming

ahead In spite of the world economic slowdown, global cleaning technology market leader K채rcher is achieving record sales and pursuing a strategy of expansion

written by: Gay Sutton research by: Jon Bradley

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Kärcher

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Kärcher cleaned the colonnades on St. Peter’s Square in Rome

leaning some of the world’s most iconic historic monuments is not only a technological and physical challenge but also a great responsibility. Over the last few decades the world leader in cleaning technology, Kärcher, has worked in partnership with organisations around the globe on heritage structures such as Mount Rushmore in South Dakota, the Statue of Christ in Rio de Janeiro, the Colossi of Memnon in Egypt and St Peter’s Square in Rome.

In many of these cases, the company has assessed the challenges of the project and designed equipment specifically for the job. It is regularly asked to safely clean and restore precious architecture, removing everything from moss, mildew, dirt and sand to the effects of environmental pollution—a great demonstration of the creativity, adaptability and reliability of the company as an innovator of technology.

Kärcher, with its instantly recognisable bright yellow branding, is known worldwide for the design and manufacture of industrial and household cleaning technology, and yet when the company was first set up in Stuttgart in 1935 by the inventor and entrepreneur Alfred Kärcher, it was to pioneer new heating technology.

Alfred Kärcher was one of a group of engineering innovators that included Robert Bosch, Gottlieb Daimler and Count Zeppelin, who transformed the fortunes of the Wurttemberg region of Germany and created a thriving industrial centre in a region that possessed very little in the way

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of natural resources. It was not until 1950 that Kärcher launched Europe’s first hot water high pressure industrial cleaner onto the market, and laid the foundations for the global cleaning business we know today.

Kärcher continues to be a family-owned company employing some 9,000 staff, managing 93 subsidiaries in 57 countries and a network of over 50,000 sales outlets and service centres in all countries around the world. Currently some 85 per cent of its turnover is generated outside of Germany, and that proportion is likely to rise as the company continues to expand its worldwide footprint.

With the rapidly changing world economic dynamics, Kärcher sees plenty of opportunities for introducing its products and services to new customers and is actively pursuing a strategy for growth. The vision is to set up new sales subsidiaries in hitherto under-represented areas, and to take the product and after sales services directly to the customer.

This growth strategy has been effective.

In spite of the global slowdown of the last few years the company achieved a record turnover of €1.7 billion in 2011 and sold 8.25 million units—more than have been sold in any one year in the entire history of

the company. Much of this ongoing success can be attributed to the ethos of customer focused engineering and innovation that was originally laid down by the founder Alfred Kärcher.

“Everything at Kärcher revolves around the customer,” says Hartmut Jenner, chairman of the board of management. “They provide the input as to which direction to take for innovation and corporate orientation.” The

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Kärcher

Manufacturing of a scrubber drier at the Kärcher plant in Winnenden/Germany

Kärcher product development new pr o duc t s a nd process focuses on solving continuously improving and updating well established cleaning problems for its customers, and this requires ones. Their record of a high level of interaction achievement speaks for Number of patents with the customer. To itself. Over its lifetime the Kächer has taken out on achieve this, the company company has taken out an new developments has nurtured a culture of astonishing 1,270 patents open and friendly dialogue on new developments, 424 with the customer, and has of which are active today. built strong relationships and communication Meanwhile, the R&D department is working routes both directly and through the network on 49 new patent applications. of subsidiaries, sales offices and after sales “We invest above average amounts in service partners that span the world. research and development,” says Jenner, This business intelligence is then fed back “and also in further training and education to company headquarters in Winnenden, of our 9,000 employees all over the world.”

Stuttgart, where a team over 600 engineers This focus on raising the level of skills and technicians are engaged in developing across all divisions of the organisation is a

1,270

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key to maintaining quality and improving performance. In addition to the standard induction and skills training, the company has a policy of ensuring every member of staff receives a minimum of 2.6 days of specialist training every year.

People are placed very firmly at the heart of the organisation and this is reflected in the Kärcher corporate culture. Creativity,

commitment, team working and a proactive exchange of information across the company are all actively promoted and highly valued.

Today’s product portfolio comprises over 3,000 devices including industrial and household carpet cleaners, pressure washers, wet and dry vacuums, steam cleaners, scrubber driers, spray extractors, window cleaning equipment and even a fully

“People are placed very firmly at the heart of the organisation and this is reflected in the Kärcher corporate culture”

The RC 3000 RoboCleaner works automatically and is suitable for nearly all kinds of floor covering

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K채rcher

DIY application of a wet and dry vacuum

automatic robot vacuum cleaner. These are supplemented by pumps for the home and garden, a comprehensive range of irrigation accessories and water treatment plant.

The company has a well defined environmental policy that reaches into every aspect of the business. Initiatives are in place to reduce power and water consumption in the administrative and production areas and this is achieved through a combination of intelligent procurement, process and plant improvement and changing staff habits.

The environmental focus is not purely

internal to K채rcher. The R&D team is continuously working to optimise the products themselves, to improve their environmental performance and to conserve natural resources through the lifetime of the product. Simple improvements in the design of attachments or in machine efficiency, for example, can markedly reduce power and water consumption when the equipment is in use. Units and cleaning agents are optimally coordinated to perform impressively under strenuous conditions and yet reduce the impact on the environment.

Meanwhile, steam cleaning by its very nature

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The compact MC 50 municipal sweeper is suitable for year-round use

Kärcher

3,000+ Number of devices in the Kärcher product portfolio makes it possible to clean surfaces effectively without the use of chemicals.

Over the years Kärcher has built an enviable reputation for quality, reliability and excellence, and is aware that any reputation is only as good as the latest product to leave the factory gate. The company therefore works very hard to protect its distinctive yellow brand through a policy of zero defects at all manufacturing plants. An extensive quality management system is in operation across all Kärcher factories and every piece of equipment, even on lines that produce up to 10,000 machines a day, is tested before being shipped to the customer.

Cleanliness is often a quality that goes unnoticed: it’s dirt that attracts attention, dulls the environment and creates a health hazard. But in homes around the globe, in heavy duty and often challenging industrial applications and indeed on many of the world’s most sensitive historical monuments, Kärcher is helping to achieve an ideal—an environment that is clean, safe and good to look at.

For more information about Kärcher visit: www.karcher.com

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Progetti Europa & Global (PEG)

Founder and president Paolo Trocca talks about how Progetti made a name for itself in the Middle Eastern oil business by playing it straight

written by: Alan Swaby research by: Jon Bradley

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here is an oil and gas industry in gas sectors involves the engineering, supply Italy – but not much of one. In and commissioning of specific modules and 2008, the BP Statistical Energy in some cases their installation as well.

Survey estimated oil production “When units such as sulphur recovery units, there at an average of 121,000 ammine plants, etc, are included in the scope barrels of crude oil per day or 0.15 percent of work we do not create something new,” says Trocca. “In these cases we can buy the basic of the world’s total.

On the other hand, though, Italian design from the holders of the technological engineering companies do have a real presence intellectual property and build the equipment in the oil and gas world, where the six legged according to the plans we receive. Having dog logo of ENI is particularly well known said that, on our metering systems, although throughout Northern Africa and even as far we do use proprietary components, we have afield as the US and China. developed our own exclusive On a more modest level is software which controls how Progetti Europa & Global these components work.”

(PEG), a Rome based, family R at he r than ne w owned engineering company technology, what PEG does that has been doing like to offer is old fashioned pr of e s s ion a l i s m . “ We business in the Middle like to remain absolutely East and Northern Africa for 40 years. straight and always work Contract to build a new “There are two distinct to the highest standards,” pumping station at Al says Trocca, “doing our sides to our company,” says Habaneya founder and president Paolo best to meet the agreed delivery dates.”

Trocca. “We do a lot of front end engineering design and PMC (project Another official pat on the back occurred at management consultancy) for infrastructure the start of the year when PEG was awarded projects but the majority of the time we the first EPC project issued by SCOP (State are involved with engineering and supply Company for Oil Projects) in Iraq, since the of GOSP (gas oil separation plants) for the 2003 war. The €72 million contract to build upstream oil and gas process.” a new pumping station at Al Habaneya, not PEG’s first contribution to the oil business far to the west of Baghdad is also at the upper was concerned with providing engineering end of projects ever tackled by PEG and due services, but when many years ago it was to be completed by the end of February 2014.

Interestingly, PEG has opted to take on asked to design and build a complete oil metering package, the company took the work involving fabrication without its own opportunity and never looked back. These manufacturing facilities. In Trocca’s eyes, this days, almost all the work done for the oil and gives the company the maximum operational

€72

Million

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Progetti Europa & Global (PEG)

Site survey during construction works

180 km Super-highway between the Tunisia/ Libya border and Egypt

Crude oil stripping column

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flexibility possible while at the same time removing the need to made heavy investments in plant and equipment and the responsibility of keeping a factory fully occupied.

“We do like to subcontract fabrication to Italian companies,” he says, “but we don’t have any regular arrangements with particular businesses and in any case, fabrication in Italy is not always possible or practical. Sometimes, clients want to increase the local content of a contract and then we find suitable fabricators closer to the project site. At other times, the cost of transporting especially large modules outweighs the value of the equipment, so again it makes sense to manufacture near the site. This business model gives us great agility but it does place considerable responsibility on our inspection teams to make sure that things are done as they should be.”

Coming back to the different types of activities PEG runs, it’s not easy to compare the contribution to the company from the two sides of the business. Certainly, the oil and gas sector brings in the majority of revenue earned as it contains a considerable element of materials and capital equipment, while the management and engineering services purely reflect manpower used. The latter is useful,

Progetti Europa & Global (PEG)

Dehydration and desalting unit

however, as it provides Italian based income, but as expenditure on infrastructure has been hit by austerity measures there, looking outward is much more rewarding.

Trocca is anticipating the time when three members of his family who are in their forties, will take over full control of how the business is run. “We know,” he says, “that to lift our company from the €40 million bracket, where we are at the moment, to an €80 million level, we shall have to broaden our horizons both geographically and in the scope of work we handle.”

No doubt PEG will be hoping for more contracts like the recently announced superhighway between the Tunisia/Libya border and Egypt – an 1800km three lane road across the top of North Africa for which Progetti as part of an Italian consortium has won the PMC contract.

The company has already identified gas treatment as a growth sector as nuclear energy is scaled back and replaced by gas powered power plants. Trocca envisages that the same professionalism that built PEG’s reputation with state and private oil companies will serve it well in taking on tier 2 projects for key modules of the plant involved with gas production. “Thirty years ago, it was the relatively modest work we were doing on oil metering systems that got the business recognised and opened the door to bigger things and we will be working towards the same scenario again in the coming decades.”

For more information about Progetti Europa & Global (PEG) visit: www.progettieuropa.it

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CeskĂŠ Radiokomunikace

Making waves

A modern broadcasting and telecommunications company with the aim to develop and strengthen its market position by a continual improvement of services

written by: John O’Hanlon research by: David Brogan

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Václav Aulický’s unique telecommunications tower in Prague

eské Radiokomunikace

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amil Levinsky has been at the helm of eské Radiokomunikace, the company he joined in 2007, for just over a year. This is an exciting time for the much evolved broadcaster with a strong stake in communications infrastructure, new platforms and constantly changing modes of data interchange – not to mention runof-the-mill developments like the shift from analogue to digital radio and TV currently being implemented in the Czech Republic. eské Radiokomunikace traces its origins back to 1963 when it was the Czechoslovak government department for radio communications. Privatised after the restoration of democracy in 1989, it went through restructuring to become a full service provider of electronic communications and broadcasting services. In 2010 it was acquired by MIRA, a fund management company within the Macquarie Group, now the sole shareholder.

One of the largest telecoms organisations in the modern Czech Republic, it has three principal business streams. It provides a broadcasting platform over the airwaves for government and licensed broadcasters; it offers comprehensive voice data and internet services; and since it owns hundreds of structures and buildings throughout the country, including Václav Aulický’s unique telecommunications tower in Prague from which, as from its other assets, it leases space to other telecommunications operators.

Twelve digital television and eight radio stations broadcast from the Žižkov Television Tower as well as another six analogue VHF

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60% Czech households receiving digital TV

Top of a broadcasting tower

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radio channels. And eské Radiokomunikace is the operator of three out of four digital TV multiplexes in the Czech Republic—it owns two commercial DVB multiplexes including that of Czech Digital Group acquired in 2010, and operates the multiplex owned by the national broadcaster eské televize. With the switch over from analogue to digital complete, the company is now focusing its efforts on the rollout of DVB-T2, the second generation digital system that is more effective as a carrier of HD (high definition) TV content with the ability to provide pay TV over terrestrial platform. Around 60 percent of Czech households are now receiving digital TV, which launched in 2008, and that number is rising steeply. Cable and satellite remain fairly flat at around 20 percent.

In July 2012 the Czech Telecommunication Office gave the go-ahead to eské Radiokomunikace to start experimental DVB-T2 broadcasting from Prague and Plze – in time to show HD coverage of the London Olympics. “We negotiated inclusion into an experimental DVB-T2 multiplex with eská televize, Prima and Barrandov for HD. Since so many Czech households now have widescreen HD sets, migration to higher standard TV broadcasting is a logical and natural step. We are committed to showing the viewers that

eské Radiokomunikace

Multiplex - digital broadcasting technology

terrestrial broadcasting can provide them for free with the same high quality content as via cable TV or satellite.”

Radio is still broadcast as an analogue service in the republic, and though radio is a highly diversified field, eské Radiokomunikace broadcasts 98 percent of the stations transmitted domestically, including Radio Prague and the regional stations operated by the national carrier eský Rozhlas. In addition it supports the four competing mobile phone companies

Telefónica O2, T-Mobile, Vodafone and U:fon, offering them space on its 600 towers. “Using our infrastructure in rural areas is a lot more cost effective for mobile operators than building and owning their own towers,” he points out.

Control of the infrastructure is an important strategy. “We live or die by our reliability in the market, particularly in corporate data services,” says Levinsky. “We own the city networks and also 2,600 kilometres of fibre and microwave infrastructure.” He goes on

“Since so many Czech households now have widescreen HD sets, migration to higher standard TV broadcasting is a logical and natural step” be europe | 145

TV HEADENDS CONTRIBUTION & DISTRIBUTION SYSTEMS • MPEG Compression and Multiplexing in Highest Broadcast Video and Audio Quality • Contribution and Distribution Systems for TV and Radio • Management and Control Advanced Control for Headends and Contribution Networks

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to say that this is a 100 percent redundant system. Redundant in the engineering sense that there is always at least one alternative route for any data communication – the client will never detect a failure; a very significant asset for corporate clients for whom security of communication is business critical.

However, for these clients the security of their data is just as critical. In 2010 eské Radiokomunikace came to realize that the telephony market was on the decline – at least as far as the fixed network was concerned – and that having established itself as firmly in control of the physical infrastructure it needed to start looking at the future of business communications. It concluded that the path led clearly in the direction of smart cloud services – so it launched Smart Cloud a year

eské Radiokomunikace

Microwave radio technology (at Prague tower)

ago. Smart Cloud offers business clients the opportunity to store, manage and distribute all their data using eské Radiokomunikace’s infrastructure, which has been extended to a data centre based in the Prague Tower.

At first, take-up was slow, Levinsky admits. “Though the savings to our clients are truly significant – they typically work out at around 60 percent of their IT spend – businesses are reluctant to lose control,

as they see it, of their critical data: but they don’t lose control of it! When we launched the Smart Cloud services we were the only company in the Czech Republic that could link its ring-fenced virtualized server to its own telecommunications network. It is a completely secure environment for running business applications.” This message is beginning to get though as companies realise that they can get reliable IaaS (infrastructure

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“It’s only a cloud based system in the sense that it is virtual – the data remains inside a private network”

The 91 metre Ješted broadcasting tower in the north of the Czech Republic

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eské Radiokomunikace as a service), PaaS (platform as a service) and flexible data management over powerful servers with data backup and long term archiving.

Clients still need a lot of reassurance before they will entrust their data to a third party, but this offers them state of the art outsourcing firmly located in their own backyard – understandably they don’t like the idea of their data being warehoused in Ireland or India. eské Radiokomunikace needed to populate its data centre with servers that delivered virtualization and costefficiencies but were entirely secure, so it deployed the Cisco Unified Computing System, consisting of 30 servers powered by Intel 5600 Xeon processors that provide all the control they could wish for – as Levinsky explains: “Some people are scared off by the name. It’s only a cloud based system in the sense that it is virtual – the data remains inside a private network.” An added advantage for business clients, he adds, is that the service is completely scalable, and if their business is seasonal their fees will contract or expand with their demands.

The business has changed radically since Levinsky joined it five years ago. It is financially much more stable, relying less on short term contracts and more on sustained partnerships. “We got out of activities where we didn’t think we could

The 59 metre Radhošt broadcasting tower in the eastern Czech Republic

add value, like retail telecommunications and now we are concentrating on business to business solutions.” Moving into the ICT space and staying ahead in that space is his number one priority as the bread and butter channels become commoditised.

Some large government outsourcing contracts are coming up for tender: if eské Radiokomunikace can land these contracts and significantly increase its stake in public sector data and voice services Czech taxpayers will gain the benefit already seen by corporate clients.

For more information about Ceské Radiokomunikace visit: www.radiokomunikace.cz

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Telef贸nica

M2M: not just for B2B Digital communications are opening many new opportunities. This Spanish telecoms giant is taking full advantage of machine to machine (M2M) technology

written by: Alan Swaby research by: David Brogan

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Telef贸nica flagship store

Telefónica

O

n any visit to Spain, it’s impossible not to notice the presence of Telefónica. This is the institutional face of Spain’s principal telecommunications company which is presented to both the business and domestic sectors through the ubiquitous Movistar brand. Since 2006, O2, another of the bigger players in the cellular mobile market, has also been part of the Telefónica family.

In fact these days, Telefónica has moved a long way from what was once a purely national operation, set up in 1924 as CTNE with the aid of ITT. At the end of World War II, the business was effectively nationalised with the Spanish government taking 79.6 percent of CTNE shares and by the 1960s, CTNE had become the #1 Spanish enterprise with 32,000 employees.

By the time the Spanish government sold its shareholding and Telefónica had returned to completely public hands in 1999, the business was already international with interests principally in South America but also in key markets throughout Europe and the Far East. Today it operates in 25 countries and has a workforce of 287,000, generating revenues of €63 billion.

Telefónica is well and truly one of the leading integrated telecommunication providers, ranked 6th largest among terrestrial mobile phone network operators as measured by number of subscribers. As of June 2012, Telefónica’s total number of customers amounted to 311.8 million and of these, more than 75 per cent came from outside its home market.

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$8 Billion Estimated value of M2M market by the end of this year

Entrance to Telefónica’s flagship store

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It’s with this global market very much in mind that Telefónica announced in July this year that it was pressing for the establishment of international collaboration and cooperation in the advancement of cellular M2M technology and had helped form an alliance of like-minded telecoms operators.

In itself, there is nothing new about M2M – or machine to machine – communications.

The concept has been around in one form or another for decades under numerous titles.

Effectively it refers to any technology that allows a remote device to transmit data to an application somewhere else, either by wired systems or wireless. Originally, this invariably meant a remote network of machines relaying information back to a central hub before being re-directed to a PC for the data to be processed.

Even cellular M2M has existed for over two decades since Siemens launched a GSM data module based on one of its mobile phones for M2M industrial applications, enabling machines to communicate over wireless networks. Modern M2M communication progressed with the expansion of IP networks across the world, opening new business opportunities.

Now Telefónica has teamed up with

Telefónica

Telefónica is known to both the business and domestic sectors through the ubiquitous Movistar brand

leading mobile operators in Europe, the East and Australasia who will discuss ways in which they can provide a seamless solution for the provision of M2M communications to multinational customers. Although the initial grouping consists of seven businesses, Telefónica has stressed that the initiative is open to other operators.

The goal is to stimulate the sale of M2M communications across a number of distinct high-potential industries such as consumer electronics, automotive, energy efficiency, etc, enabling the development of new business models, the creation of new products and

services and a reduction in operational costs for these target industries.

The Telefónica initiative is based on using an existing platform from Jasper Wireless in the USA—one of the leading exponents of M2M technology. Jasper estimates that the M2M market will be worth $8 billion by the end of this year and by building on its technology, network operators can quickly enter the M2M market.

The traditional markets for M2M applications, such as fleet management, vehicle telemetry and energy monitoring smart meters are expected to be joined by

“M2M refers to any technology that allows a remote device to transmit data to an application somewhere else” be europe | 155

other consumer directed offerings, many of which simply haven’t even been thought of yet, but will be once the technology is in place. As the Jasper platform has the advantage of being a cloud based service, both operators and customers should find faster times for products to get to market and continuous innovation.

Although Telefónica was a key mover in getting this alliance underway, it is very much a case of equality across partners, enabling all operators to benefit equally in

terms of providing better services at lower costs. The opportunity is there for all to develop partnerships with key regional players rather than expanding individually country by country.

And of course, it should never be forgotten that multi-operator schemes such as this are particularly attractive to key corporate customers who also work across global markets and want the simplicity of a compatible system for their communications across borders.

“The goal is to stimulate the sale of M2M communications across a number of distinct high-potential industries”

The CNSO (National Centre for Supervision and Operations) control room

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Telefónica

Telefónica and Mozilla pioneer first open web devices

The above scheme is ideally suited for Telefónica’s global plans but the company is equally keen to develop M2M on the local scene. It has recently jointly invested €3 million in the Barcelona based technology company AddFleet with the aim of promoting the commercialisation of the company’s products worldwide.

It has developed a new mobility system based on M2M technology and cloud computing that uses mobile devices to connect vehicles to taxi dispatch centres and to potential taxi users.

Taxi dispatch centres are currently managed using analogue radio systems, with the distinct disadvantage of not enabling direct communication between the three

parties: dispatcher, the vehicle and the user. Instead of expensive investments in communications that can only be used in the taxi, AddFleet’s technology allows the driver to receive the same information but via his mobile phone, paying only a small fee on the receipt of each new fare.

Telefónica has developed into the global force it is through the timely application of new technology and it expects that the growing interest in cellular M2M will contribute further to the company’s growth.

For more information about Telefónica visit: www.telefonica.com

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Magyar Telekom

FROM RED TO GREEN Since Hungary emerged from Soviet control, Magyar Telekom has been making rapid progress towards sustainability, recently earning an A+ rating from the Global Reporting Initiative

written by: Jeff Daniel research by: David Brogan

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Magyar Telekom

A

Germany’s “T” brand is popular in Hungary

fter more than four decades of Soviet control, the late 1980s saw a whole swathe of Eastern Bloc countries again become the masters of their own destiny. In Hungary, the transition occurred in 1989 and within just a few months, the country’s infrastructure was being modernised.

The road to where the communications network is today began when Hungarian Post was split into three and the telephone service hived off as the separate state owned company Matáv Hungarian Telecommunications.

In 1993, the service went private and a consortium of two telecommunications companies, Deutsche Telekom and Ameritech International acquired a controlling interest and Magyar Telekom was born. Under the guidance of Deutsche Telecom, the German’s “T” brand was promoted to a Hungarian populace itching to catch up with the rest of the industrialised world.

With such a backlog of technological catching up to do, you’d hardly be surprised if observing the niceties wasn’t so high on the agenda. And yet, barely into the first years of operation, Magyar Telekom had already put special emphasis on environmental protection.

Under the guidance of Katalin Szomolányi, head of the Corporate Sustainability Centre at Magyar Telekom, the business gained the distinction in 2007 of being awarded Hungary’s first A+ rating, signifying it operates in full compliance with the third generation guidelines of the Global Reporting Initiative (GRI G3).

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innovative!

Sometimes, the most remarkable innovations are the ones we don’t see…

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For nearly a hundred years we’ve built up considerable expertise in implementing them in your operating environments so that the only thing you can see is the creativity of your projects… and the quality of our services !

UPS from 600 VA to 5400 kVA

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Magyar Telekom “The company has had a Group-level Environment Protection Policy since 2003,” she says, “and sustainability has been on the agenda since 2004, meaning that in addition to environmental considerations, social and economic dimensions also receive special attention. Our Sometimes, the most remarkable innovations are sustainability strategy has been in place since the onesSince 2002, Magyar Telekom has been we don’t see…

Availability, control and security of electrical energy, installingregular and 2005 and not only does it have to be approved issuing environmental reports commissioning UPS systems: each day we provide innovative by each member of the top management describing solutions to our customers. its environmental performance, For nearly a hundred years we’ve built up considerable expertise in team, they have to commit themselves to a practice that then formed the basis of implementing them in your operating environments so that the only thing you can see is the creativity of your the projects… and the quality of implementing it.” subsequent sustainability report. The our services !

SOCOMEC Group

UPS from 600 VA to 5400 kVA

www.socomec.com

SOCOMEC Group is an independent manufacturer specialising in the distribution, control and quality of power supplies serving low-voltage electrical networks in industry and service sectors such as telecoms.

Created in 1922, the group has three business areas: trip and low voltage protection systems, UPS systems and solar power.

With 25 subsidiaries throughout the world and nine industrial sites, SOCOMEC combines technological innovation and technical knowledge with high-quality pre and post-sales services.

SOCOMEC UPS division provides UPS systems, inverters, load transfer modules, and rectifier/chargers, and applies innovative ideas to develop a complete range that offers a unique characteristic—3-level topology.

When applied to uninterruptible power systems with double conversion online

technology this makes it possible to achieve maximum energy efficiency, equivalent to 96 per cent (verified by Bureau Veritas and TÜV SÜD), while guaranteeing total load protection at all times and in all conditions.

This is the background to the GREEN POWER UPS family, currently the only one to cover a power range from 10 to 400 kW. SOCOMEC UPS’ green commitment continues with a kinetic alternative to batteries for storing energy—the flywheel.

It provides outstanding reliability, long service life (> 20 years), high efficiency and is environmentally friendly. SOCOMEC also has a wide range of software solutions for monitoring UPS and shutting down servers, both virtual and physical.

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order a taxi without phone call- use smartphone application

+36 1/777-7777 +36 20/777-7777 +36 30/777-7777

www.radiotaxi.hu

offer@radiotaxi.co.hu

Show the world what your company has to offer with our tailored packages

Seen www.bus-ex.com

Magyar Telekom implication of the higher level of compliance that We are not only the biggest taxi company in Budapest but comes with A+ rating is also the most modern, due to technological developments greater transparency and carried out with our telecommunication partners Bull more opportunity for being Hungary and Magyar Telekom. judged.

The unique taxi dispatcher programme enables electronic In order to encourage the and online payment and facilitates billing. Each vehicle is equipped with a POS terminal, enabling the acceptance of same level of commitment electronic taxi cards as well as American Express, VISA and and performance within MasterCard. We have developed new applications for iPhone, its supply chain, Magyar Android and Windows phone operating systems together Telekom has initiated an with EvoPro for our customers’ convenience. Customers can annual award to suppliers now order a taxi using just their smartphone application. who demonstrate leadership www.radiotaxi.hu in their own sustainability endeavours. “It’s known as the Delfin (dolphin) Award,” says Szomolányi, “and is an acronym for the Hungarian name of the initiative, which translates into English as: Prize for a Committed, Sustainable, and Innovative Generation.”

From its position as leader of the telecommunication industry, Magyar Telekom is setting examples which it wants others to follow in the harmonisation of business, social and environmental interests and in the process, reward suppliers for their help in achieving its sustainability goals.

Applications can be made in one or more of four categories: innovations that have already

RT 5 Taxi Holding Ltd

2,000,000 KM Air and road travel distance saved by audio and video-conferencing Katalin Szomolányi

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Szigma-X is specialised in general construction design, construction management and the resolution of special engineering problems

THE LAMINATED-GLUED MONOPOL WOODEN TOWER OF

SZIGMA-X LTD.

Szigma-X Tervezõ és Tanácsadó Kft. www.szigmax.hu www.ecopol.hu

Magyar Telekom been completed and which promote positive change in social and environmental effects; the promotion of equal opportunities and anti-discriminatory practices; investments and developments aimed at climate protection; and training and education raising awareness about sustainability.

As an example of sustainability projects, aimed at benefitting society as a whole, Szomolányi describes the Digital Bridge

initiative. “Certain sectors of society,” she says, “are at risk of being left behind in the technical era. This is not just a function of age or affluence but also location. Digital Bridge is directed towards isolated settlements of less than 3000 inhabitants, teaching people personally how the internet can be tailored for their own personal needs and interests for them to have a more fulfilling way of life. The really rewarding aspect of

Szigma-X Design and Consulting Ltd Szigma-X Design and Consulting Ltd (founded in 1989) specialises in general construction design, construction management and the resolution of specific engineering problems.

Its key focus areas include the design, construction, expansion and safety testing of antenna towers and other telecommunication support structures. More than 1,600 antenna towers have been completed on the basis of our design work. We have designed more than 50 types of tower structures, including lattice, monopole, unique, camouflage, laminatedglued timber, steel mobile, and carbon mobile.

Since our inception, we have worked in the Hungarian telecommunication field. Our towers became the type-towers of Hungarian Telekom as well as Vodafone. Based on our unique patented method, we also reinforce existing weak towers using crossbars and fixing ropes.

Our new, outstanding product is Ecopol, a

laminated-glued timber tower family, which can be used for electric poles, advertising, lighting, or windmills. The 30 metre high prototypes are already operating as base stations. Our experienced team is now ready for the challenge of producing a 40 metre high wooden pole which blends into the surrounding landscape.

2010 was a successful year for Ecopol, when the Hungarian patented tower was granted design protection. Moreover, it won the Dolphin Award, nominated and awarded

by Hungarian Telekom in the category of ‘Innovation Came True’. The project gained recognition for setting an example in the field of sustainable growth by fulfilling all three pillars of sustainability in the environmental, economic and social dimensions. www.szigmax.hu www.ecopol.hu

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this programme is that Magyar Telekom’s employees participate on a voluntary basis and since 2004 there have been more than 150 events involving thousands of people.”

Since 2008 Magyar Telekom has been holding an annual focus event, in conjunction with a number of NGOs, under the banner ‘Sustainability Day.’ The event has a complex agenda, serving multiple purposes. Interactive panels featuring group discussions on current issues regarding the environment, society and economy are led by prominent and well respected representatives of their related fields.

Last year the environmental focus was on water, while poverty and responsible communication were the social and economic issues. The event also discussed how the role of volunteerism could be promoted.

The Sustainability Day, despite the fact that it is organized by a large corporation, differs in format and appearance from traditional branded events with the emphasis very much remaining on the topic and substance. The event is becoming more and more successful as years go by with participation doubling each year along with extensive increases in media coverage. From an initial attendance of 300 in 2008, the number of delegates grew to 3000 last year.

In a more commercially oriented programme, specifically aimed at doing business in a greener way—and with very measurable results—Magyar Telekom is encouraging the use of technology to remove the need for travel. In 2009 it installed TelePresence video-conferencing facilities at strategic sites within Hungary and at its international affiliates in Macedonia and Montenegro, as well

“We want Magyar Telekom to be recognised as the leading advocate of sustainability and to be admired for our championing actions” 168 | be europe

Magyar Telekom

A Digital Bridge event

as the majorit y owner set itself some ambitious Deutsche Telekom. In the targets for spreading the first year alone, the group message, understanding saved 476,410 kilometres a nd appl ic at ion of of f lights by using this sustainability, throughout Number of Digital Bridge service. In the subsequent all le ve l s of t he events since 2004 year it saved 1,368,361 km organisation and within of international flights and the wider community. “We 164 tons of carbon dioxide. want Magyar Telekom,” At the same time, audio and video- says Szomolányi, “to be recognised by the conferencing facilities with document public as the leading advocate of sharing abilities were installed on all sustainability and to be admired for our workstations enabling small groups of championing actions.” three or four staff to communicate without the need for travel. All in all, Magyar For more information about estimates that it saved almost 2,000,000 Magyar Telekom visit: km of air or road travel that year alone. www.telekom.hu In coming years, Magyar Telekom has

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Connecting

the dots

Chief executive officer Daniel Szasz talks about how the company is contributing to the development of Macedonia’s telecommunications industry

written by: Will Daynes research by: David Brogan

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Makedonski Telekom

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Makedonski Telekom promotes personal and social networking

Makedonski Telekom

I

n the years since gaining independence from the former Yugoslavia, Macedonia has undergone considerable economic reform. In fact, its development of an open economy saw the country ranked as the fourth ‘best reformatory state’ out of 178 countries rated by the World Bank in 2009.

The economic development of the country has seen the rise of various industry sectors, not least the telecommunications sector. At the end of 2010, Macedonia was estimated to be home to more than 413,000 fixed line telephone customers and a staggering 2,150,000 mobile phone subscribers.

Providing innovative solutions with high quality and efficiency Makedonski Telekom plays a defining role in modernising and improving the telecommunications market within the country. A leading national provider of electronic communications, the company offers its customers a range of cutting-edge services and entertainment content.

Through the development of industryleading products and services, Makedonski Telekom promotes personal and social networking between the people of Macedonia. It is this networking that is fast influencing the construction of the country’s information society.

Prior to 1 January 1997, and operating under the name PTT Macedonia, the predecessor of the company originally provided telecommunication, postal, banking and other services. In accordance with a decision taken by the country’s government in 1996, however, PTT Macedonia was subsequently divided into two legal entities, thus dividing postal and telecommunication activities.

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ONE OF THE MOST PROFOUND SHIFTS IN YOUR BUSINESS IN DECADES HAS ARRIVED. AND IT LOOKS LIKE THIS. At first glance, she’s an employee working on a tablet. But she also represents a growing number of people who are working their way— on their favorite devices. It’s good news for companies, considering the significant savings and productivity gains associated with this new way of working. And it’s great for your team members, who can collaborate better than ever, from anywhere—accessing virtual desktops on their laptops or meeting face-to-face via Cisco Jabber™ on their tablets. Now, collaboration is enhanced. Employees are untethered.

Security is built in. And at the center of it all is the Cisco® Intelligent Network.

Use your favorite device to learn more at cisco.com/go/yourway.

©2012 Cisco Systems, Inc. All rights reserved.

Makedonski Telekom

Makedonski Telekom implements next generation network with Cisco Technology “Three fundamental trends are shaping the world of service providers today: mobility, video and cloud,” says Peter Hajdu, general manager Cisco South East Europe.

For the past 14 years, Makedonski Telekom has been working with Cisco, the worldwide leader in networking technologies, to build a state-of-the-art telecommunication infrastructure for Macedonia and to get prepared for these new trends. A key milestone was the implementation of an endto-end Internet Protocol Next-Generation Network (IP NGN) to expand IP-based and broadband services and to create a platform for video, mobile, and for managed and cloud-based services.

Cisco technology helped enable Makedonski Telekom to design and build a highly reliable countrywide service delivery network to support the introduction of new, interactive applications such as Asymmetric Digital Subscriber Line (2003), Voice-over-IP (2005), Point to Point Metro Ethernet (2005), Ethernet in the first mile over copper (2006), Internet Protocol-based TV (2008), Video on Demand (2008), and Fiber-to-the-Home (2009). At the same time, Makedonski Telekom was able to improve the quality of all existing IP services, for example IP/MPLS Virtual Private Networks (VPNs) and high speed internet access.

The proven reliability of Cisco networking solutions helps Makedonski Telekom to fulfil its aim of having a core network with 99.999% availability—a milestone for every top service provider worldwide.

Most recently, by deploying the Cisco® Carrier Routing System (CRS) family, Makedonski Telekom is preparing its network for an increase in high-speed broadband demand and the launch of advanced IP-based video services.

The Cisco IP NGN architecture enables Makedonski Telekom to expand its broadband subscriber base and evolve service offerings from the current triple play and quad play to “any play” services.

The close integration of services with T-Mobile and implementation of fixed-mobile convergence will enable customers to fully enjoy the power of mobility and borderless networks. www.cisco.com/go/yourway

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It was in 2001 that the company formally became part of the international Deutsche Telekom group. Seven years later the current era of Makedonski Telekom began with its adoption of the globally recognised ‘T’ brand.

Since 2001, and thanks in part to a brand new custom structure that has allowed it to remain in-step with the latest achievements in electronic communications, Makedonski Telekom has strived to meet the demands

and needs of its customers. One way it has done so is by always using the best practices of the Deutsche Telekom group in order to maximise user benefits.

“One of the biggest challenges that the company has had to overcome since it became part of Deutsche Telekom,” explains chief executive officer, Daniel Szasz, “has been the task of blending its traditional, local values with the international branding and reputation

“The company has been able to retain a local emphasis, while still enjoying the backing and support of a global telecoms powerhouse”

T-Home employees

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Makedonski Telekom

Customers waiting for the new iPhone

that exist throughout the comprehensive training structure have combined to Deutsche Telekom Group. help bring these two groups By successfully overcoming together under a shared these issues, the company has been able to retain a local business philosophy.

Named Best Employer in Makedonski Telekom’s emphasis, while still enjoying a Triple S Group survey commitment towards the the backing and support of a wellbeing and success of global telecoms powerhouse.�

Making the transition its employees has been from being a more traditional, rightfully recognised in recent times, most state-run, fixed telecoms company dealing notably by the Triple S Group’s anonymous with landlines to becoming a competitive survey of the best employers in Macedonia. mobile operations provider has also The results of the survey, whose participants not been without its difficulties. One include employees from the cream of particular challenge has been its need to the crop of Macedonian business, identified integrate together its long-serving employees the company as the Best Employer for and its next generation workforce. A 2011, in the category of companies with programme of heavy investment and a over 500 employees.

2011

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In order to achieve its aims of being recognised universally as a highly esteemed service company, Makedonski Telekom has developed a new company strategy incorporating three main messages, “Sustain-Transform-Innovate”. This strategy is very much aligned with that of Deutsche Telekom, which is “Fix-Transform-Innovate”.

Customers and their demands, as well as market movements, are the main drivers of the changes that have been made to the company’s strategy. In a market that is continuously evolving and highly

178 | be europe

competitive, both private and business customers are increasingly seeking an all-inone service that provides them with constant access to information via various different devices and platforms.

“The company is continually looking for opportunities to modernise, invest and diversify to provide new income streams as traditional fixed streams become less relevant,” Szasz continues. At the forefront of the industry today are themes including IPT V technologies, implementing 3G networks and platforms. The evolution of

Makedonski Telekom

Local tariff & product campaign, making the biggest cake for the sweetest promo offer

Macedonia’s communication network and the introduction of new services is clearly the primary focus of the company. Of critical importance is the implementation of the “fiber to the home” project. This

involves the construction of a significantly faster telecommunications net work, providing speeds of up to 100 Mbps to every home.

Makedonski Telekom is a company that

“Market conditions strongly hint that even-greater opportunities for cooperation with other European telecoms providers lie ahead” be europe | 179

T Day - The Rebranding of Makedonski Telekom

Makedonski Telekom

100 mbps Target speed to every home is seen as leading the way in the region in terms of the many technological advances being worked on at present. Furthermore, through a mix of local implementation, strong relationships with maintenance service providers and the know-how and support Deutsche Telekom is able to offer, the company has built itself a long, proven track record of handling vital telecommunications projects.

Future prospects for the company revolve around exploring the opportunity to expand into other sectors of the industry. These include media advertising, e-payment and mobile payment services and the launching, and hosting, of cloud computing solutions. “Wherever business may take it,” Szasz concludes, “Makedonski Telekom’s immediate focus will remain primarily on the local market.

Nevertheless, while there are no direct plans to expand regionally at this time, market conditions strongly hint that evengreater opportunities for cooperation with other European telecoms providers lie ahead.”

For more information about Makedonski Telekom visit: www.telekom.mk

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Move as you choose Most travellers would be unaware how fast their individual needs are changing, but understanding their behaviour keeps the leading global car rental brand Europcar ahead of the trend

written by: John O’Hanlon research by: Jon Bradley

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Europcar

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Europcar buys around 270,000 cars a year

Europcar

R

oland Keppler has been at the helm of Europcar for nine months and is determined to lead the company towards a new and not always familiar role in the travel industry. In the public eye Europcar is seen as one of the big three car rental companies, together with Hertz and Avis. Its strategic alliance with the global Alamo and National Car Rental brands provide it with the world’s largest car rental network.

What the public eye does not always see is the direction in which its own behaviour and needs are moving the market. Car rental is beginning to complement other modes of transport rather than simply competing, revealing new opportunities that Keppler for one is keen to seize.

Keppler came to Europcar in 2009 from the German low-cost airline TUIfly where he was CEO. Having made the German subsidiary, which represents approximately 30 percent of Europcar’s revenues, into its most profitable asset, he also played a key part in the launch of several projects including car2go urban mobility, which represents one of the sources of future growth for Europcar. Since his appointment earlier this year he has continued to push forward his enthusiasm for customer focus and developing people in that sense, innovative mobility models, digital solutions, and operational excellence.

Europcar is owned by investment group Eurazeo. It is organised into nine ‘corporate’ countries (Germany, France, Spain, the UK, Italy, Belgium, Portugal, Australia and New Zealand) in which it owns 100 percent of the operation and 140 franchises around

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Statistics show a fall in private car sales across the developed world

186 | BE Europe

the world, normally one to a country. Global revenues for the brand are in the region of €3 billion, including National and Alamo, while the corporate territories generate two thirds of that.

Traditionally car rental customers fall into two broad categories, business and leisure.

Germany, having been more dependent on business travel than other countries, has been hit the hardest by the recession in Europe, but private rentals have remained surprisingly buoyant. “This year we are performing better than in 2011, and beating our own business-to-consumer targets.” This may be partly due to investment in direct sales channels and more flexible pricing, he says, but he suspects underlying customer behaviour has played its part.

Statistics show a fall in private car sales across the developed world. “The signs are that people are looking for mobility on demand rather than owning a car. So I think the onus is on the industry to bring out more flexible offers. We are certainly more accessible and customer oriented than we used to be.”

In 2011 Europcar entered a joint venture called car2go Europe, a business its partner Daimler has been developing since 2007. It’s a bit like Boris Bikes in London except that the vehicle members pick up or relinquish is a Smart Fortwo. The system combines swipe card technology with mobile apps to locate and book vehicles without reservation, and is currently available in Dusseldorf, Hamburg, Ulm, Lyon, Vienna and Berlin though there are plans to launch in 40 to 50 European cities.

Mobility by the minute is a concept unlike

Europcar

Europcar is increasingly accessible and customer oriented

any other, traditional car rental included, he believes. It’s already very successful where it has been in operation for a while, as in Hamburg where it launched in April 2011.

“People like the spontaneity and that it makes it so easy to move around the city. We believe it will grow as customers get used to the idea – the market will change over time, not overnight.” Now Europcar, car2go Europe and the Hamburg Hochbahn metro are embarking on a two year trial to join up services in a way that will accommodate both private and business users. Passengers could seamlessly

switch between train, underground, bus, spontaneous or pre-planned rental vehicles, and even bike, he explains. “All the modes will be connected via an app, and physically located at centres close to subway stations.”

Initiatives like this suit customer lifestyles, but are made possible through technology.

And investing in digital technology is one of his central strategies. A further example that is now streamlining the work of the rental stations across the Europcar group is a new fast-track service for business users called eReady. Registered customers who book

“The signs are that people are looking for mobility on demand rather than owning a car” BE Europe | 187

online can cut out the usual form filling, so at the dedicated Ready Service counter all they need to do is sign the rental agreement and collect the vehicle.

At the other end of the process eCheck-in will scan the vehicle and its inventory using a handheld device linked to back office software that controls the rental process from end to end. “All customers will notice is that the process is fast and paperless,” says Keppler. “People are coming to expect this level of service from our industry – after all it is very convenient to buy something from Amazon – one or two clicks and the item is delivered to your home. Invoicing, payment, delivery are all digital. This is what I think people now expect from our industry and we are preparing ourselves to meet these expectations.”

Operational excellence (the customer’s expectation that the process – and the car – will work) can’t be separated from customer focus. Europcar introduced its Promoter Score feedback system at the end of 2010 with the question ‘would you recommend us to friends and family?’ Respondents giving nine or ten out of ten are classed ‘promoters’; nought to six ‘detractors’. “When we started about 50 percent of respondents were promoters: we

are now up to 70 percent, well on the way to our target of 80 percent ‘convinced customers’ who would actively promote our business.”

The detractors were in for a shock too – senior managers were asked to pick up the phone to talk to customers about whatever issues they raised. Here Keppler leads by example, enjoying the reaction of people taken aback by a personal call from the CEO. “It was a learning experience for us too,”

“The buy-back model is one of the strategic pillars we have as a company.

We believe that in the long term it is more robust than the risk model” 188 | BE Europe

Europcar

Vehicles are repurchased by the manufacturer after around six months

he admits. “Suddenly head favoured by competitors, he office managers are talking believes, because it allows to customers where formerly Europcar to concentrate on they were making decisions its core business of selling mobility. The balance of value without much idea of what Target for was happening on the ground. between rental company and ‘convinced customers’ Now they are getting first manufacturer is a delicate one, depending largely on demand hand feedback and dealing with it, and that’s a cultural for new and used cars. change for the whole organisation!”

Nevertheless, “The buy-back model is one of By and large Europcar operates on what is the strategic pillars we have as a company. We called the buy-back model – rather than being believe that in the long term it is more robust a long term asset, vehicles are repurchased by than the risk model.” the manufacturer after around six months and resold. “You could say we are a big producer For more information about of young used cars,” he jokes. “We buy around Europcar visit: 270,000 cars a year.” Buy-back works better than www.europcar.com the lease or outright purchase ‘risk’ scenario

80%

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Joerg Andriof talks about managing this complex and extensive network and returning the company to profit

written by: gay sutton research by: Jon Bradley

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DHL Express Network Management

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I

t’s interesting how many company names are acronyms of three letters. There is a satisfying symmetry in the way these letters look and sound: more often than not, their origins are lost and the acronym achieves a powerful brand status in its own right. In the case of DHL, the initials represent its three founders—Dalsey, Hillblom and Lynn of San Francisco—who came up with a revolutionary new concept in logistics and launched the world’s first genuine intercontinental express delivery service in 1969.

Today, DHL is recognised by businesses and householders around the world and leads the market for international express delivery services. Synonymous with service and reliability, it is a truly global organisation with an air and road network spanning more than 220 countries and territories in all corners of the world. “In fact,” says Joerg Andriof, global head of Network Management, “DHL Express services can be bought in more countries than Coca-Cola or McDonald’s. And our air fleet is currently comparable in size to Lufthansa, and larger than British Airways’.”

The latest chapter in the story of this remarkable brand began in 2002 when Deutsche Post, the rapidly expanding German postal services company, acquired 100 per cent of DHL shares. Retaining its formidable brand name and cultural identity, it was the German company’s first foray into the international express business.

The final step in the brand development took place in 2009 when Deutsche Post restructured its extensive business, integrating and bringing together the many

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Ground support staff on the deck of a DHL freighter

DHL Express Network Management

DHL Express Network Management businesses it had either Southern Air launched or acquired since Southern Air is proud to support DHL’s new round-the its privatisation in 1990, world service connecting Hong Kong, Los Angeles and and rebranding them to Leipzig, Germany daily. Thanks to a new fleet of Southern incorporate the DHL identity.

Air 777 long-haul freighters, the new route shaves a day Today the group is known as off shipments from Asia Pacific and the US West Coast and Deutsche Post DHL, which lowers fuel costs by as much as 25 percent, and extends cargo pick-up times for US suppliers shipping to Europe. better expresses the breadth As the world’s only aircraft, crew, maintenance and of the organisation and its insurance (ACMI) provider of 777 freighters, Southern Air global reach. is offering its customers the most versatile, efficient and Internally, Deutsche Post environmentally friendly cargo solutions in the industry.

DHL now has four divisions.

Southern Air supports DHL’s GoGreen environmental Mail is Deutsche Post’s protection program, which offers customers innovative, original core business and sustainable solutions. www.southernair.com the DHL Express division is essentially the original DHL business. The third division, DHL Supply Chain, is the old Exel Logistics, which became part of Deutsche Post in 2005.

And finally DHL Global Forwarding, Freight stemmed from a range of companies including the well-known Danzas Group.

In spite of its excellent brand reputation and global reach, DHL Express has not been without its challenges, and the last few years have been ones of internal change and improvement. “DHL Express has always been a successful international business, but it was never a very profitable

2002 Year Deutsche Post acquired all DHL shares Worker at the DHL Hub, Leipzig

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one,” Andriof says. A quick look at the history of DHL Express illustrates one of the difficulties it encountered.

The company began as an international express organisation and did so by overcoming many of the previously held beliefs about logistics, creating a new set of standards and business procedures. Developing a global network across many countries, it has always had a decentralised management structure.

By contrast, the major competitors in the market, such as FedEx and UPS, originated as regional parcel service providers in the US, building up large delivery fleets. From this solid foundation they then began to widen their horizons and expand into an international express sector.

DHL’s growth took place in reverse order.

“Having developed a very strong base in the international express business, we then decided to expand into the domestic parcel delivery sector in countries like the US, the UK, France and China,” he continues. “This was not successful, and was not delivering profitable growth for the international express business.”

While recognizing the company has to focus on its core competencies, DHL Express embarked on a restructuring of the business at the end of 2008, beginning with a withdrawal from domestic delivery

services within the US (to focus on international delivery) and followed by an in-depth examination of the nature of the business. “We asked, for example, do we need innovations?” Andriof explains. “The answer was that while we do have small innovations, the nature of the business is the same as it was 40 years ago. The real improvements in profitability are likely to be achieved through business excellence: things like bringing the costs down, improving the

“The aim is to focus on what we’re good at and improve that, and deliver real value” 196 | be europe

DHL Express Network Management

Final checks before push-back and departure

IT systems, streamlining and The first logical step to standardising processes and increase profitability and creating a core discipline bring the company back to its throughout the operation.” core area of excellence was to The strategy to emerge divest the non-profit making Number of DHL Express domestic express services. from this process is called global air hubs Interestingly, not all the Focus, and it drives domestic services were loss improvement today. Focus is articulated in four pillars: making, so the company has motivated people, great service quality, loyal retained profitable services in India and other customer, and profitable network. “This is not countries such as Australia, Germany and a big long-term plan to build a shiny future,” Russia. However, others have been sold off. he continues. “The aim is to focus on what Customers in many of DHL’s operating areas we’re good at and improve that, and deliver will continue to see the familiar yellow and real value. We were not good at the domestic red liveried vans collecting and delivering business; however, we are extremely good at parcels, but these packages are in transit the international express business so that is between international destinations and not within the home country. where we will concentrate.”

three

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“We also restructured our global and regional head offices,” Andriof says. Over the last few years, the turnaround has been impressive: from loss making business into significant profitable growth (almost €1 billion in EBIT in 2011), and the improvements delivered by the ongoing drive for business excellence continue to become apparent. “We continue to operate as a very decentralised, matrix organisation. In fact I head up one of the very few functions that is centralised in planning, but decentralized in execution.

However, all those who report to me sit in the regions and I travel to them. The business doesn’t come to me.”

Andriof heads up the DHL Express global

network, and is responsible for its planning and day-to-day operations. It’s not difficult to see why this position should require a central identity: the sheer size, scale and complexity of the network requires a consistent overview and direction.

The global logistics network closely resembles a backbone with a complex and interconnecting nervous system radiating out to the customer. The backbone of the network consists of long-haul intercontinental flights linking three global air hubs located in Cincinnati in the US, Leipzig in Europe, and Hong Kong in the Far East. Over 100 aircraft, including new Boeing 777 freighters, shuttle exclusively between these hubs. Smaller

DHL Airbus A300 cargo aircraft takes off on an early morning flight

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DHL Express Network Management

“In all, we operate over 700 network flights a day around the globe. To do this we are currently operating a fleet of over 250 aircraft” aircraft then radiate out like the spokes on a wheel to 15 regional hubs which then serve over 500 local airports.

“In all, we operate over 700 network flights a day around the globe. To do this we are currently operating a fleet of over 250 aircraft, 40 per cent of which we own or have on long-term contracts. The rest

are on a mixture of short-term and midterm lease and they operate on a dedicated basis for us,” explains Andriof. “On top of that we manage more than 2,000 flights on which we buy capacity from the major airlines so that we can put Express cargo into the belly of scheduled passenger or cargo airlines. This combination of capacity gives us great flexibility.”

Flexibility is one of the foundations of DHL’s ability to deliver a reliable and efficient express service. If, for example, there is an unexpected increase in demand that can’t be met with the regular fleet capacity, then extra space can be found at short notice by negotiating with an airline partner. This flexibility has been achieved over many years, and is managed through close long-term relationships with more than 300 carriers and national airlines.

For DHL, maintaining a close relationship with its hub airports is crucial to ensuring continued excellence of service. Candace McGraw is CEO of Kenton County Airport Board at Cincinnati/Northern Kentucky International Airport (CVG), and has witnessed the many benefits that the airport’s partnership with DHL has brought. “We have established a very good partnership with DHL,” she says. “They account for about

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Delivering your freight

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KALITTA AIR Kalitta Air, based in Yipsilanti, Michigan, is a US-based and US-certificated FAR 121 air carrier with worldwide operating authority.

Kalitta Air provides scheduled, ACMI and on-demand cargo services over a worldwide network. Scheduled service lanes include HKG and PVG to the US, and Europe to the US, as well as various destinations in the US to the Middle East and Afghanistan. Our fleet consists of 22 B747-F aircraft (15 B747-200Fs and seven B747-400F freighters). The company has a diverse customer base encompassing DHL, over 500 multi-national freight forwarders and agents, as well the United States Postal Service and United States Department of Defense.

To ensure the highest level of schedule reliability, Kalitta Air performs all aircraft maintenance and engine overhaul in-house at its own maintenance facility in Oscoda, Michigan, which is staffed by 850 mechanics.

The company was awarded the FAA Diamond Award for excellence in maintenance training. Kalitta also keeps crew training ‘inhouse’ with B747-400 and B747-200 CAT III Flight Simulators. It is our commitment to maintenance and crew training excellence, coupled with our knowledgeable and dedicated operations staff, that we are able to maintain the highest level of dispatch and schedule reliability.

Kalitta Air has been fortunate to partner with DHL for the past eight years in an exclusive contract with the US Post Office, transporting mail from the US to US troops in Afghanistan.

In 2011 alone, the two companies combined delivered 38 million kilos of mail to various bases in Afghanistan. For the duration of this program, Kalitta and DHL have never received a

performance rating less then ‘Excellent’ by the US Post Office.

In addition, Kalitta currently operates four B747400Fs on an ACMI basis for DHL, logging in excess of 20,000 flight hours in 2011 over DHL’s extensive international route structure.

Fortunately, Kalitta’s strong reliability and ondemand flexibility have proven to be a perfect fit with DHL’s global time-definite requirements and we are honored to be part of its team.

Kalitta Air looks forward to continuing to provide DHL and our other customers with the high level of service they expect and deserve.

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DHL Express Network Management

Monitoring shipments at Leipzig

40 per cent of our landed weight here now, so they’re a huge partner for us and we want to do everything we can to help them grow and prosper here.”

DHL is currently embarking upon a $47 million investment into expanding its package sorting facility at CVG, and has been considering other opportunities, too. “We have a lot of land here that’s ripe for development and we have been talking to DHL about some end-of-runway development opportunities to establish complementary businesses that will

help them grow their business here at the airport,” says McGraw.

The two organisations also work together on issues such as the environment. “For example, DHL has a state-of-the-art de-icing system that ties to our own system to reclaim all the spent glycol, which we then treat.

We’re also going to be rehabilitating some of our facilities and we thought if we can team together at that time looking at certain sustainability initiatives, we can probably achieve greater ‘bang for our buck’.” It’s a

“DHL is currently embarking upon a $47 million investment into expanding its package sorting facility at CVG” be europe | 203

DHL transport vehicle

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mutually beneficial relationship, she says, very much a partnership.

Alongside the air network, DHL Express has an extensive collection and delivery network that reaches out by road to customers in all four of the operating regions—the Americas, Europe including Russia and Turkey, the Middle East and Africa, and Asia. The service is delivered by a fleet of more than 30,000 vehicles that shuttle between the customer and the local DHL service station facility. Here, pick-ups are consolidated and then transferred by truck to the airport Gateway, and deliveries are sorted and loaded into the vans.

This delivery service plays a vital role in DHL’s brand awareness and is important from both the customer loyalty and service excellence perspectives. “In most normal business environments the customer interface is generally with the commercial team,” Andriof explains. “In our business, that primary interface is our operational people, the drivers who pick up or deliver to the door.” As the public face of DHL, the drivers tend to leave the greatest lasting impressions on the customer. For this reason, collections and deliveries are made primarily by DHL’s own personnel, while the truck transfer from the service station to the airport can be safely outsourced to other local logistics partners.

The DHL training programme is the foundation upon which DHL builds company-wide excellence in customer service. “One of the unique elements of our training programme, which helps us standardise everything we do across the business, is that the course material is the

DHL Express Network Management

Overlooking DHL aircraft at Leipzig

same for everyone regardless of where they’re working around the globe. It’s just translated into and presented in the local language,” Andriof says.

“We have roughly 100,000 people globally and we train every one of them through our Certified International Specialist programme,” he continues. The training is designed to give the staff all the necessary skills and tools to perform well and do justice to the brand. While reinforcing corporate best practice across the business, it also has

to be engaging and fun. “They even carry a passport which is stamped as they pass the test for each element.” This initial training includes the history of DHL and a corporate overview of the business. The training then hones in on the country in which the person is working, and then focuses in more closely on to the details of the operational role, including specific processes and applicable aspects of management.

After qualifying as a Certified International Specialist, staff then have access to a wide

“We have roughly 100,000 people globally and we train every one of them through our Certified International Specialist programme” be europe | 205

IAI-BEDEK CONVERSIONS BEDEK Aviation Group - acknowledged worldwide as a leading Full Service Provider and Cargo Conversion house.

The BEDEK Aviation Group is the senior group of Israel Aerospace Industries (IAI) and one of the six groups, has more than 3,000 skilled engineers, technicians and supporting personnel in its four specialized divisions located at the Ben-Gurion International Airport, Israel. Being one of the largest one-stop maintenance centers in the world, BEDEK is licensed by virtually all major civil aviation authorities, including the US Federal Aviation Administration (FAA), European Aviation Safety Agency (EASA) and the Civil Aviation Authority of Israel (CAAI).

BEDEK provides under one roof, comprehensive maintenance services for aircraft, engines and components, including heavy maintenance, modifications, upgrades, conversions and development programs, all at minimum down time. BEDEK’s extensive, modern facilities provide the full spectrum of maintenance and overhaul services, handling both wide-body and narrowbody aircraft, 160 of them annually, including Airbus, Boeing, and Lockheed aircraft.

BEDEK’s world-leadership position in passenger to cargo conversions of the B747, B767, and B737 families of aircraft is based on its ability to provide customers with the full spectrum of services. BEDEK is a leading worldwide cargo conversion house with more than thirty-five (35) years of experience (More than 160 different aircraft redelivered). The growing list of BEDEK’s satisfied customers around the world testifies to its commitment to excellence.

BEDEK has developed, received STCs (Supplemental Type Certificates) and produced an extensive line of passenger to Special Freighter conversions. Since the modifications these freighters have accumulated more than 2 (two)

million flying hours with no ADs issued (relating to BEDEK’s conversion).

The current BEDEK conversion lines include: • 737-300BDSF (Bedek Special Freighter) and BDQC (Bedek Quick Change) certified in 2003 • 737-400BDSF - certified in 2009 • 767-200BDSF - certified in 2004 • 767-300BDSF - certified in 2009 • 747-400BDSF - from PAX and from Combi certified in 2006 BEDEK is experienced at Design-to-Cost and Design-to-Weight efforts. All of BEDEK’s conversions have met its customer’s design weight goals.

As part of the conversion to cargo aircraft, IAI provide aircraft operating weights upgrade – MTOW, MLW and MZFW. BEDEK also has been involved for over 30 years in the design, development and implementation of air refueling solutions on various platforms (B707, C130, IL78 and B767) and has successfully delivered more than 35 tankers in a wide variety of configurations to more than 12 Air Forces world wide, including the Israeli Air Force. Other BEDEK military conversions include SIGINT, COMINT, ELINT and AEW among others.

Quality Control and Quality Assurance are built into every aspect of BEDEK’s operations and activities. The most stringent system of checks and inspections, performed by highly qualified personnel utilizing state-of-the-art test equipment ensures reliability, peak performance and complete customer satisfaction.

BEDEK Aviation Group Ben-Gurion International Airport, 70100, Israel T: +972 3 935 3090 E: bedek@iai.co.il www.bedek-iai.com

range of further training courses, all of them designed and delivered in-house using modern motivational learning techniques.

Standardisation across the business is reinforced continuously. At its heart lies the company-wide IT system which was in place before the company became part of Deutsche Post, but continues to be developed both in-house and with major IT partners.

The system automates all transactions that take place worldwide, monitors performance, tracks every package in transit and enforces standard business rules. “There will always be human error, that’s inevitable. But if you can standardise and automate processes and procedures then the likelihood of error is

Packstation in Frankfurt am Main

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much smaller,” Andriof explains. “And by implementing this system at a global level, we can be sure everybody in the organisation is heading in the same direction, achieving the same targets and abiding by the same business rules.”

These business rules are enshrined in a set of Global Standard Operating Procedures (GSOPs) which encompass all major business processes. The GSOPs are documented and monitored online. “They’re what we call our ‘Idiot’s Guides’ which provide a handy pocket overview. And we have staff who look at those processes and make sure they are properly implemented.” Staff working in Germany, for example, can transfer to Hong Kong, and

DHL Express Network Management

“If you can standardise and automate processes and procedures then the likelihood of error is much smaller” know exactly what to do, how to do it, and what is required of them.

The IT system also interlinks with the systems of the various carrier and airline partners, a level of integration that is both complex and time consuming to set up.

However, it delivers accurate and essential data to the DHL system, right down to the details of exactly where a container is loaded into the hold of an aircraft and the identity

of its contents. This in turn assists with planning for forward movements, and keeps the customers informed of the location of their package.

Development of the IT system is an ongoing process, and the latest addition is a capacity management tool, which will assist with management of the fleet. “We manage our fleet very carefully and one of the reasons is to increase utilisation as much as possible,” Andriof explains. “An aircraft can only deliver maximum value when it’s flying as many hours as possible and when it is full.”

The first step in planning and managing capacity is to predict how many shipments are likely to be moved between the different locations in the network. This is done by the DHL forecasting system. Then, the entire supply chain can be planned in advance, including scheduling shipments for specific flights. However, this process is far more significant than simply cost cutting: it’s all about ensuring the business is able to deliver the service it has promised to the customer, and about building customer loyalty.

Delivering great service quality is one of the four key elements of the Focus strategy, and an imperative in everything DHL’s staff do. However, with a logistics network of this size and complexity, this can be quite a challenge. It is inevitable that issues will creep in regardless of the standardised IT

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driven processes, and problems will occur.

An aircraft may develop a fault or be delayed due to bad weather, for example. “Our customers understand this,” Andriof says.

“The important thing is not that we have a problem, but how we handle it. If we have promised to deliver in two days then we have to do it, there’s no excuse. So if we have an aircraft grounded for any reason, the first thing we aim to do in many markets is to pick

up the phone and talk to the customer. We then look for the fastest alternative pick-up that will deliver those packages on time, or perhaps very slightly later. And this might be spare capacity of our own, or with one of our partner airlines. We find that it’s by keeping the customer informed, and working quickly to find a solution to the problem, that we develop customer loyalty.”

Two important services have been

“We find that it’s by keeping the customer informed, and working quickly to find a solution to the problem, that we develop customer loyalty”

Shipments being sorted

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DHL Express Network Management

Workers in action at the Leipzig Hub

established to provide this degree of customer relationship management: the global quality control service and the customer service desks. Firstly, the company has four global quality control centres located in Bonn, Leipzig, Cincinnati and Singapore, which monitor shipments in real time from pick-up to final delivery. Within each of the four regions, there is also a network for further quality control centres and these are manned 24/7 by a service quality team who monitor the shipment movements, identify delays or breakdowns in the supply chain, source solutions to the problem and offer those solutions to the customer.

The centres are equipped with large screens and media walls displaying in real time all the traffic in their catchment

area. The displays are simple and effective and follow a standard traffic logic. When a flight is on time it appears green on the screen. If there is a short delay the flight goes yellow, and once the delay reaches an hour or more it goes red. This simplicity and accuracy is only possible because the displays are powered by the company’s IT system which houses continuously updated information about the location and content of every shipment along with its predicted location. If the two diverge then there could be a problem.

A very complex set of operational definitions also reside within the system, and these are unique for each location. For example, part of the delay calculation might include the amount of time it takes to transport a

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DHL Express Network Management shipment to the airport, load it into a container and deliver it across the airport and into the aircraft. Each airport is different, and DHL agrees a unique set of operating criteria with every one of its operating partners, and these are embedded into the IT system.

The service quality teams not only find solutions for delays as and when they occur, but they continuously monitor the company’s performance for large customers, and also for new customers during the two or three month period while they are being implemented into the system. “Once everything is working well for new customers, and they are integrated into the system as a standard process, they then become the responsibility of the customer service desk, which manages the relationship on a day-to-day basis,” Andriof says.

The company has a reputation for delivering this level of service not only in stable and prosperous regions, but also in some of the world’s most troubled places including Afghanistan, Syria, Bahrain and Algeria. “We try to remain there as long as possible so that we can continue delivering a reliable service for our customers. But we have rules in place to judge how long we can continue to operate without jeopardising the safety of our employees. And our top priority

DHL Brussels sorting unit

is always our employees’ welfare.”

Under these difficult circumstances, security, which has become a primary concern for governments, logistics companies and their customers, becomes even more critical. DHL has globally embedded a raft of thorough security measures, including investing heavily in scanners at each of its facilities. “Security is one of our few global functions. It’s only by enforcing a global set of standards that we co-ordinate security across the organisation.”

With the direction, drive and investment coming from the corporate level, the company has ensured that it has installed the right competence and expertise within the regions to carry the initiatives forward.

The world is also prone to natural and man-made disasters, and these are a good

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“In the case of the Japanese tsunami, we put on extra charter flights to bring water and food into the region�

DHL Express Network Management

Parked aircraft at Leipzig

test of character, stamina and staff morale.

“You probably remember the earthquake and tsunami in Japan last year. On the Monday following the disaster our people were in the office very early in the morning, cleaning everything, and taking care of our first flight and the delivery to our customers,” Andriof says. The company runs a crisis command centre at its head office in Bonn, from where it monitors world events and how they may impact on global operations, shipments and employees. And in times of crisis, the quality control centres also take on some of the crisis management role. Whenever disaster strikes, though, it’s not only the business DHL takes care of.

The company also marshals its logistics capabilities to bring in essential first aid and disaster relief supplies. In the case of the Japanese tsunami, for example, “we put on extra charter flights to bring water and food into the region.”

Having refocused the global operation on the core international express delivery business, DHL continues to deliver improvements in customer service and operational efficiency. With the four pillars of the Focus strategy guiding future development, best practice across the company is being achieved through standardisation of operational procedures, company-wide training and staff motivation.

For more information about DHL Express Network Management visit: www.dhl.com/en/express

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