Yves Barraquand – Chairman of the Board, Genoyer International – France
The chairman of Genoyer International, a global provider of piping solutions, evaluates prospects for international expansion and discusses strategies to cope with the current economic slowdown.
You were recently (October 30th 2014) appointed chairman of the Genoyer Group. What mandate has the board given to you and what is on the top of your agenda?
My top agenda priority is to adapt the Genoyer group, a world leader in supplying piping products to the oil and gas industry, to the increasingly competitive environment we are in. The current plummeting oil prices are compelling our clients to increase the pressure on costs. In regards to project and services, we deliver pipes, valves, flanges and fittings, packages to the main EPC players. My first decision has been to reinforce our office in Houston in order to strengthen our activity in North America. We have a historical presence in Houston and have won considerable projects with the major EPCs for international projects. We now aim at leveraging our ability to deal with overseas prefabrication and our very comprehensive and competitive network of suppliers to win more projects in North America. We believe that the North American market is rapidly evolving. For the upcoming projects in Texas, Louisiana and Canada, the size of the projects and the relative costs of prefabrication will inevitably make room for Asia sourcing and prefabrication.
The Genoyer Group has been present on the global stage since its foundation. What is your strategy for further international expansion?
At the moment Genoyer draws 90 percent of its turnover abroad thanks to a complete range of related services and technologies. In the last 50 years, the Group has developed its footprint in a large number of countries. Maurice Genoyer, our historical founder was selling flanges in Algeria in the 1960s, which has contributed to the first successful establishment in Africa. We have also subsidiaries in Nigeria, Angola, Congo and recently Mozambique. We will incrementally open warehouses, to target MRO projects. We believe in the tremendous potential of Africa in terms of oil and gas upstream / midstream / downstream projects. We need logistic capability there to win larges projects.
In South America we opened our subsidiary in Brazil four years ago; it has been performing very well in the subsea market on behalf of prestigious customers and projects.
Groupe Genoyer is today one of the leading players in the manufacturing and supplying of piping equipment. What do you think has enabled the company to achieve such a leadership position in its field? How would you define Genoyer’s major assets?
We have to distinguish our business between projects & services, and manufacturing. Our competitive advantage is to provide solutions for highly complex projects at a competitive rate. Follow-up, reliability, regular reporting and reactivity constitute our most valuable assets in this ever-changing environment. We also rely on our deep network of partners and suppliers in China, South Korea and Europe, Italy in particular. One key project we supply is Yamal, in Russia, where we deliver packages of pipes, flanges and fittings for YAMGAZ. Our ability to control quality in China and Korea and to deliver flanges and fittings in eight different locations has been key to winning the tender.
Genoyer key success factors are flexibility and reliability. This is why we were also selected by Dow Amanco for the Sadara Complex in Saudi Arabia for example in 2012. Sadara was the world’s largest petrochemical complex ever built in a single phase, with 26 integrated world-scale manufacturing plants that will produce more than three million tons of products every year.
On the manufacturing side, the group is producing flanges and pipes in different plants. We have a major facility in Romania, Vilmar, which employs a staff of 350 and covers more than 30 hectares (75 acres): over 100,000 square meters of covered floor space and 145,000 square meters outside. Vilmar site features a sizable inventory of raw materials (stainless steel, duplex, superduplex, inconel, alloys, etc.), allowing us to ensure not only the most competitive prices but on-time delivery as well.
As our new orientation consists in focusing on the subsea market and that our Vilmar facility produces not only flanges in all grades of steel, bur also wyes, connectors, cladded; we aim at becoming a leader in subsea market components. Major players in the subsea market trust us because we control all aspects of the manufacturing from forging to machining.
In 2013, you generated a EUR 351 million (approximately USD 380 million) turnover. How did Genoyer perform in 2014 and could you provide our audience with comments on the order book / backlog?
2014 was a rather challenging year due to the drop in oil prices. We reached revenues of EUR 291 million (approximately USD 314 million). However Yamal project is boosting our 2015 activity. For 2016 and 2017 our target is to win large projects in North America and Africa.
You currently possess 11 industrial bases spread across the globe. What is the rationale behind such a diverse manufacturing base and how would you describe your overall manufacturing strategy?
Theses production sites stem from a history of acquisitions. Today we want to foster synergies between our main site in Romania, Vilmar and our service companies in the US, Germany, UK and UAE. We are producing stainless pipes at BSL, which is a renowned and prestigious label. We are looking to enhance our production portfolio. Our customers are looking for cost-efficient solutions coupled with a high level of reliability in terms of quality, supply chain and delivery capacity. This strength enabled us to win big projects. Our main target for our manufacturing company will to diversify into systems for subsea projects.
In the upstream oil companies are looking for cost efficient solutions. Cladding of carbon steel pipe parts with Inconel / Stainless Steel overlay inside is one example fast growing technology that allows to decrease the cost of subsea programs; Vilmar has become a leader in the manufacturing of cladded flanges and connectors.
Vallourec, TMK and Tenaris dominate the piping market. Of course, Genoyer is not in the exact same segment, but what do you believe is Genoyer’s competitive advantage?
As you mentioned, we are not exactly operating on the same market segment because we don’t sell oil country tubular goods (OCTG). We do produce line pipes but our core business is process pipes for the midstream and downstream market. Furthermore, Genoyer has invested in its sales and distribution networks to become a leader in the management of international projects. We set up logistic facilities whenever needed in order to ensure the widest range of products are available, with compliant quality to our client’s expectations and specifications.
The 1990s were a period prone to external growth for Genoyer via a succession of acquisitions. What are the future prospects for this type of business expansion?
For the time being it is very early to assess the role that acquisitions will play in the future. People are expecting further consolidation in the PVFF industry of today, and in light of the business cycle, we are focusing on weathering the storm by redeploying our sales force and producing cutting our costs.
In 2005 you were again awarded a distinction for your strict set of ethical values. How does this commitment to high QHSE standards translate into your everyday activities?
The company has a strong focus on QHSE. We are committed to apply very strict rules of compliance.
In the last ten years, Genoyer has initiated a diversification strategy by introducing water-related activities into its portfolio. Which other fields are you planning on developing in the future?
Indeed, oil and gas does not represent 100% of our turnover. We have clients in the nuclear industry and in the mechanical industry and the defense industry. Our IPS branch is specialized in the global supply of all material for hydraulic infrastructure projects. Genoyer has developed expertise in areas such as surveys, customized logistic solutions and construction site supervision. We intend to grow these activities in Africa.
Your career comprised spells in logistics, the FMCG sector and now oil and gas. How have you benefited from this wide array of experiences? What do you like most in this industry?
I have experience in shipping, distribution and worked with Africa for seven years. I have also been in the metallurgy industry with experience in Russia and China. The oil and gas sector amazes me by its global implications; it encompasses different types of businesses, technologies and regional specificities. Overall the fast-paced nature of this sector is absolutely unique!