Relocation, relocation, relocation

Rafał Ostrowski, ‘Eurobuild Central & Eastern Europe’: You have disassembly contracts for huge industrial plants in your portfolio and have already dismantled huge pulp mills and power plants. Could you give us some idea of the scale of these projects?

Bartosz Świderek, deputy CEO, Pol-Inowex: Moving a pulp mill from Norway to Vietnam was the largest disassembly project in Europe of 2015/2016. The dismantled parts filled 1,300 containers and five full ships on top of that, which also went to Vietnam. Elements measuring 2.5 by 2.5m were loaded onto containers, while all the larger parts had to be transported separately. Before that we moved a 300-MW power plant from Austria to Turkey. Can you imagine a boiler in a building measuring 100m – the same height as the Warsaw Marriott? These contracts certainly stood out in terms of their size.

Where do you work most often?

95 pct our work is carried out abroad. In 70 pct of cases, the machinery is transported from Europe outside the continent.

What is the reason for that?

When a new plant is built in Europe, often there is no real concept for what to do with the older, less effective, but still productive one. The company tends not to want to sell it locally, because they don’t want local competition. However, there are parties interested in such facilities in other parts of the world.

And what are the most popular directions taken in Europe? Are many companies moving to Eastern Europe?

Poland and the Czech Republic are more and more often being regarded as European countries you opt for not just because of the lower costs, although I wouldn’t say that such attitudes are completely a thing of the past. Salaries in Poland are higher than in Romania, Ukraine, Turkey or Vietnam – and will continue to grow. If someone invests in industry, they do not do so for just the next five years, but for ten or fifteen. And I think that in the next 20 years wages in Poland will be higher than in Portugal. We are not fighting a losing battle. Our location between Germany and Russia, which has historically been our curse, is nowadays generating advantages. A significant amount of our work involves dismantling plants in Germany.

Companies are often reluctant to inform the public about moving their locations.

Large corporations do not want to antagonise their employees, the trade unions or their local clients. Let’s say that a German company moves its factory to Poland. Theoretically it could announce its plans to move its production plant. But it will not do so because information circulates too fast and it would reach the ears of the public in its home country as well as its employees. Therefore they want to keep such information confidential for as long as possible. When I’m invited to a factory in order to estimate the costs of transferring it, I have to go along incognito so that nobody, apart from the narrow circle of people in the loop, knows about the purpose of my visit.

And are you seeing any impact on your operations due to Brexit?

Before Brexit we were receiving a lot of inquiries. There was a great deal of uncertainty among companies: what will we do, how will we do it, are we moving out or not? They prepared feasibility studies that were then abandoned. We were going to move a large plant to Poland for a large company, but this will probably not happen because the local authorities promised the company tax exemptions. When the UK is out of the EU in the future, it will simply be able to subsidise such companies.

And what about the return of enterprises from Asia and the reindustrialisation of Europe?

This is a different phenomenon and one without our involvement. New plants are being opened in Europe and these are highly automated. They mostly employ IT specialists and robots rather than cheap blue collar workers, as is the case in Asia. This reindustrialisation does not involve the physical relocation of factories from Asia to Europe, but moving the production elsewhere and opening completely new facilities, which are very modern.

What is your annual turnover?

I would not like to go into the precise details, but it does tend to fluctuate. Sometimes it can be two or three times more than the previous year. The values of contracts also vary. One might be worth USD 20 mln, while others could be worth USD 100,000. We try not to take on the smaller ones and focus instead on the bigger ones.

How many contracts are you busy with at the moment?

Three from Germany: one to Poland, one to Ukraine and one to Vietnam. Two from England: to Italy and India. There is also a project from the Czech Republic to Egypt and from Italy to Turkey, and we will be bidding for a project from France to Sweden.

How many people do you employ in your company?

We have more than we need right now. We employ around 200 people and 60 others work for us in subcontracting firms. But there have been times when we have had 150 people and there were others when half of the team was sitting around with nothing to do. So the situation varies.

Is there a lot of competition on the market?

Not really. Because only a few companies have our experience. To tell the truth, we prefer heavy industry, steelworks, cement plants, power plants, refineries, heavy chemistry – because the more complicated the project is, the less competition we have. There are only a few companies in Europe that can take on such large projects.

What is it that makes disassembly so difficult?

For example, a certain Russian company recently bought a paper machine that was dismantled by non-specialist companies. So although they spent USD 40 mln instead of USD 100 mln on the project, they now have to replace many of the components of the machines that were damaged during a shoddy disassembly process. So their costs are now going to be higher and they will also lose a lot of precious time.

What should the client do in order to minimise such risks?

Sometimes it is worth paying more for the dismantling and transport while paying less for the reassembly.

Should the assembly always be carried out by the company that dismantled the machine or plant?

No, we have to draw up ‘fool proof’ documentation. We have to provide notes that would be understandable for a moderately educated technician. So we use colour coding, 3D scans and we make entire 3D models as well as take thousands of photos – this is the most important thing for clients. Equipped with all this they should be able to put everything together like Lego.

Do you expect to have a lot of business in the future?

There is a lot of business now and this will certainly continue. I expect that the demand for European petrol products will fall in the near future and that 10 pct of the capacity of the refineries in Europe will have to be shut down over the next few years. I’m sure that some of these refineries will be transported to some other part of the world and we will be involved in this process.

Family business guy

Bartosz Świderek, the deputy CEO of Pol-Inowex, set up the company in 1991 together with his father Jerzy Świderek (CEO). The company initially operated exclusively on the German market and specialised in the dismantling of sugar plants built in the communist era, which became abundant after German reunification. Pol-Inowex eventually extended its operations to other countries and sectors and now it is one of the largest dismantling and relocation companies in Europe.