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Interview

with Hakam Bergstrom, Director, Atlas Copco

30.01.2008 / Energyboardroom

Although Atlas Copco generates 60-65% of its revenues in Europe and the US, now much of the world’s growth is in emerging markets, particularly in Asia. Based on your long experience with the company in different parts of the world, do you see a shift in corporate focus towards these expanding markets?

You are right to note Atlas Copco’s shift in focus. Asia represents a considerable portion of the sales of our company. Over the last 15 years we have been more focused on this continent. Our global strategy is divided into thirds, between Europe&Africa, Americas, and Asia. The main driving region today is Asia, where Atlas Copco has 11 factories in China and 3 in India. So far, the company has invested mostly in China, but also considerably in markets such as India and Japan.

How does Indonesia, as a country with a population of over 220 million, abundant natural resources, and an economy growing at 7% annually, fit into Atlas Copco’s Asian growth strategy?

I believe that Indonesia is the next country that Atlas Copco will be focusing on in Asia. We look forward to high levels of growth in the country, along with the expansion of the mining, oil and gas, and raw materials sectors. Some of our more traditional industry markets such as textiles and compressors have also been very strong in Indonesia, although still below levels seen before the Asian crisis, but now on the rise again.

If you take the oil and gas industry, and the energy sector more broadly, how important is this sector to Atlas Copco in terms of current and recent growth?

Atlas Copco took over the previous owner of AIRINDO SAKTI in Indonesia in 1999. At the time, our focus was more in the industrial sector; oil and gas was not part of our main strategic sector due to the very strict requirements and specifications. For several years the O&G sector went through many ups and downs and so did our business with it, but starting in 2006 the company decided to focus on this market and in 2007 it became an even more important part of our strategy. Our vision is to offer our products to this demanding and sophisticated industry in compliance with its highest standards, making any necessary adjustments to meet specific requirements. We are already a well-known company in the worldwide O&G market, in Indonesia we have and are working with major oil companies like Chevron, ConocoPhillips, CNOOC,BP and Total of France.

Are you providing these types of specific requirements in-house here in Indonesia, or do you need support from other R&D centres within the company?

There are several lines of products in Atlas Copco, so it depends on the needs for a given application. In general, we offer clients custom design for special requirements through collaboration with our engineering centres. To cope with some demands, the company collaborates with other local engineering companies and we are increasing the number of our local staff to meet the increased demand form our customers. In the context of our focus on the O&G sector, Atlas Copco now has a specialized site for this sector.

Within our offer for O&G clients, I would point out Atlas Copco’s special rental service division which are moving from the common market to more sector-specific niches. This shift is driven in particular by the division of our Air Power special rental models in areas like the US and also through acquisitions of other companies working in this field. In Indonesia we are following this transformation and offer new products and services to the market as they become available. In order to respond to customers’ high demands in terms of quality and mobility, Atlas Copco Indonesia works closely with the regional team based in Singapore covering all of Southeast Asia.

In terms of Atlas Copco’s projected growth, are you looking at organic, through acquisitions, or both?

Atlas Copco’s overall strategy combines both organic and external growth. Where the market is big enough, such as US, Brazil, India and others to come, we are establishing local engineering offices to be close to our end users. The company strives to keep everything related to its core business in house, this to ensure highest level of quality in our doings. Atlas Copco has also been quite active making strategic acquisitions of other companies which are quickly integrated into the corporate culture. When it comes to non core business, we often find it convenient to outsource such activity to specialized partners.

With your new focus on oil and gas, which is your approach to develop partnerships which will allow Atlas Copco to become leader in the market?

We can enter a market either through local or foreign contractors. In Atlas Copco’s case in Indonesia, our products are already well known in the international O&G sector and our achievements in terms of quality and environment are acknowledged. This is not yet the case completely in Indonesia O&G industry where we are relatively newcomers, so our chances of success with contractors are higher among foreign firms. However, the compressor market is very competitive and many companies are capable of offering good products and services. What makes Atlas Copco the world leader in compressor technology and a preferred partner is that we place our brand name and responsibility behind every single action we make, moreover we can always count on the backing and resources within the Atlas Copco Group. This is quite a unique approach to this business, however, we will as always keep our long term commitment into this market and remember the Atlas Copco Group is more than 100 years old so I sure we will be in this market for many years to come.

As you were mentioning it’s a very competitive market, with many local and foreign companies involved. What would you say is the main source of your competitive edge?

You have to look at it two ways. First is the Atlas Copco brand which is well-known in mining, as a leading manufacturer of compressors and equipment for the mining industry. Everyone in the industry knows about us and our brand, and the quality that it stands for. As we say, we will be ‘first in mind and first in choice’ and that is true. Being well known and acknowledged is already in itself an important edge, and although we may be more expensive than some competitors our customers choose Atlas Copco because we represent quality and long-term commitment.

Our main challenge today regarding the oil and gas sector is to live up to our reputation already obtained in other industries through decades of satisfying customers. An additional difficulty comes from the fact that Atlas Copco’s presence is not limited to several European countries and North America like several decades ago. In fact, the company is now active in all major markets around the world, so we must maintain our culture and high standards regardless of where we are, all while adapting to the specificities of each country. Two other great challenges today facing not only Atlas Copco, but all companies in the sector, are finding the right people and being environmentally minded. In Indonesia we have a total of 160 people working for Atlas Copco in six branches. Implementing a culture of quality and aligning everyone to the corporate values is an ongoing task.

You have only been in Indonesia for six months, and looking towards the future you have many challenges ahead. Where do you want to take Atlas Copco over the next three to five years, and what kind of growth and positioning do you want to establish during your tenure?

I repeat that the time for Indonesia to be in the spotlight is here. For Atlas Copco this means we need to really focus on this country and be prepared to meet our customers’ requirements in terms of people and quality. We still have some hard work to do to before can claim our position as the number #1 service provider in Indonesia, so our challenge is to be there within three years. We have all the planning and processes for upgrading staff and everything we do in order to meet those requirements coming from the market. Atlas Copco is serving our customers in all industries and in respect of laws, regulations and environmental considerations. It’s not always clear how to do things right in Indonesia, but there are many opportunities which we are ready to turn into reality.

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