Berend Reinink – CEO, Hendrik Veder Group, The Netherlands
The CEO of Hendrik Veder Group, Berend Reinink discusses the on-going integration efforts with respect to the group’s recent formation and how this newly formed organization will help enable the company to provide unparalleled standards in the supply of wire and fibre rope.
As an introduction for our readers, please give an overview of where the Hendrik Veder Group stands today, and describe the focus of your current strategic initiatives as CEO.
The group is a product of five different companies that merged. The first three were bought by our majority shareholder in 2011, and eventually merged together with the remaining two companies in September 2012 to form one consolidated entity—the Henrdik Veder Group. Six months later we acquired the oldest family owned company in the Netherlands – Rope Factor Van Der Lee. That was April 2013, and at the end of December 2013, we agreed on a joint venture in Stavanger, Norway called Myhre Rope Services. About a year later, in March 2015, we acquired the remaining 50 percent in Myhre Rope Services, now called Hendrik Veder Norway.
Approximately 80 percent of our business is currently attributed to offshore and maritime. The other 20 percent is related to general industries such as agriculture, automotive, and industrial sectors where we sell wire rope as a wholesaler to companies who use wire rope in their own products. For example, we sell wire rope to Austria and Swiss companies who use our wire ropes in producing the nets that are attached to rock formations to prevent them from falling on nearby highways. Our strategic goal is to become one of the largest independent suppliers of wire rope, fibre rope, and all the encompassing services and solutions for the European offshore and maritime industries. We will do that through organic growth, and also M&A, in which we’re pursuing a buy and build strategy. To be the leader in our business, we’re aiming to be in all the main maritime capitals of Europe, with already existing operations in Rotterdam, Stavanger, and Aberdeen.
Although the group was recently consolidated, the legacy of each individual portfolio company spans decades, if not centuries, in the Netherlands. What is the continued relevance of basing your operations here?
Rotterdam is the basis of Hendrik Veder – an old company dating back to the 1800s that started in the production of equipment for sail ships. During the formation of the Rotterdam harbor, Hendrik Veder began to focus on steel wire rope. Rotterdam is now one of the biggest ports in the world, and a lot of our customers are based here. In line with our heritage, we believe that continuing to base our operations in one of the major offshore and maritime hubs of Europe gives us access to extensive resources, capabilities, and market opportunities that we wouldn’t otherwise be able to experience.
In terms of resources and capabilities, what type of strategic contributions do the individual companies bring towards the group’s overall business model?
In the beginning there were three companies when the group was formed. The first one was RopeQuip from Mordrect, which was a traditional wholesale provider to sling shops such as Hendrik Veder. The company also sold wire ropes for general industry like agriculture and automotive. The second one was European Rope Services in Mordag. Aside from its wholesale capacity, the company also provided extra added value from its wire rope production capabilities. Hendrik Veder specialized in heavy lift for customers such as Heerema and Saipan, where the commissioning and decommissioning of rigs often required our slings for the jobs. Only by combining those three, were we able to serve a broad range of customers spanning heavy lifting to light slings and all types of wire ropes.
Now in 2015, we’ve more or less completed the integration, now branded as the Hendrik Veder Group. We’re now looking at expanding our business in offshore and maritime, especially in these days where offshore is a little bit difficult considering the oil prices. Our business in Stavanger, Norway is growing on the maintenance and OPEX side. 50 percent of our business is wholesale related and the other 50 percent is end user production related—both primarily encompassed in offshore and maritime. Every year this composition has remained relatively constant, but we’re looking to shift slightly more towards end users. At the same time, we still see a lot of opportunities to market our wire rope and fibre rope in other general industries such as construction, agriculture, mining, and forestry.
How is the group’s focus segmented across various geographic regions?
For the heavy lifting business, our focus is Northern Europe. Looking at the competition, we are one of the three major players, next to Franklin Offshore and United Offshore. Among the three, we dominate the Northwest European market. For wholesale, we are covering all of Europe and parts of Africa, with sales offices in places such as Romania, Poland, Germany, and France to name a few. But I think there are still a lot of growth possibilities in the areas we’re currently active in, especially in Northern Germany, specifically Hamburg and Bremen, where there is a lot of maritime activity.
Speaking more broadly to industry dynamics, the sector is currently experiencing a slump in oil prices, forcing many players to look at more internal cost-cutting initiatives in hopes of unlocking value. To this end, why is Hendrik Veder the ideal partner for wire rope solutions, as opposed to what some of your competitors in the market can offer?
One of our main competitive advantages is the fact that we are independent of any steel wire rope factory. Our inventory spans a diverse array of different diameters and lengths amounting to almost 13 million euros in stock levels—allowing us to maximize availability and offer 2-3 day delivery times to the majority of Europe. Although costly, this was a strategic decision based on the fact that 75 percent of all steel wire rope we sell comes from the Far East spanning a 3-month lead-time from production to delivery. So having a substantial stockpile enables us to better serve our clients and their demands at any given moment.
In addition to the group’s CEO, you’re also assuming the position of Managing Director for the oldest family-owned business in The Netherlands – Van der Lee. What is the significance of this acquisition to the company’s overall business?
Van der Lee is small family-owned company dating back to 1545 that we bought two and half years ago. We did not buy it in order to compete against the big fibre rope companies like WireCo or Lankhorst Ropes. Instead, we’ve leveraging the company’s manufacturing capabilities, using the factory to make smaller, customized products in combination with steel wire ropes and serve those customers with more tailored specifications in lieu of the boilerplate reels of polyester rope. Although the company is relatively small in scale, approximately three and a half to four million euros per annum, the Van der Lee Rope Factory boasts very high quality handiwork in natural and synthetic fibre products, especially given the company’s heritage in this particular craft. Now that Van der Lee is a part of the Hendrik Veder Group, we’re beginning to penetrate new segments of the market such as large shipping companies from the Netherlands and Belgium.
From a management standpoint, how have you preserved the core values and principles of the company’s longstanding heritage, while modernizing the designs and production capabilities to accommodate contemporary industry demands?
We’ve left the company in a way that preserves the knowledge and quality of the company’s legacy, especially on the production side. That being said, however, many of the company’s operating practices were relatively antiquated. We’ve appointed a new sales team to employ a more proactive approach and re-invigorate the company’s business development initiatives, in addition to cross-selling the encompassing products and services that the overall Hendrik Veder Group offers.
Common for all players across the oil and gas value chain, investments in R&D are the lifelines for a company’s continued success. In this respect, what type of R&D projects is the group undertaking to preserve its competitive positioning in the market?
At Van der Lee, we spent significant resources in developing new products including a fall protection device made of fibre rope used on lifeboats. On the other side of the business, considering the recent consolidation of the group, we’re not currently undertaking any major R&D initiatives for wire ropes, but that’s an area we’re looking to heavily pursue in the coming years. That being said, however, we’re always in discussions with our clients to gauge current and prospective demands in the market and assess the areas in which the Hendrik Veder Group can add value.
What are your proudest milestones or achievements since assuming the position of CEO and where would you like to take the company in the next five years?
The biggest milestone has been perhaps the successful creation and consolidation of the Hendrik Veder Group. It’s taken a lot of time to seamlessly integrate the cultures and operating practices of acquired companies, let alone companies that have traditionally competed with each other in the past. Statistics have commonly placed an 80 or 90 percent failure rate for post-mergers due strictly to cultural differences. But against the odds, we’ve been able grow annual turnover from 45 million euros back in 2012 since the merge to a projected 65 million euros this year, and looking to double that by the time we reach 2020. We’ve also managed to expand our facilities here in Rotterdam by 15,000 sq. meters to accommodate the growing scale of our business and better serve our clients, while also reducing overhead and streamlining operations in places such as Stavanger. A lot of people that knew Hendrik Veder as it was before the merger are simply astonished at all the changes we’ve made, including the newly refurbished facilities.
Moving forward, in addition to evaluating new expansion opportunities that will allow us to further grow and diversify, we will also focus on building upon our current client base; I’m convinced that we’ll be able to capitalize on latent value by doubling our sales force in places such as Germany and France. There’s a huge difference from Hendrik Veder four to five years ago, now with a newly formed culture and a new ambitions for the future. But, perhaps the one consistent success factor that has persisted through the years is our intent on building long-term sustainable relationships. We were recently presented a letter of acknowledgement from a previous client, Saipan, praising the quality of our work. It is my hope that in five years time, we will be able to present 25 more of those letters.