Paul Dits – Director, Kreber – Netherlands
Paul Dits discusses Kreber’s over 112 years of history as a designer and manufacturer of tailor made solutions, the new vision and impetus he has implemented since joining the management team.
What is Kreber’s value proposition today?
Kreber is an offshore machinery designer and builder that aims to relieve our customers of the burden of developing specialized offshore tools. Seawork machinery is how we like to describe our customized equipment. In essence, our value proposition comes down to tailor made machinery or modifications to machinery on board for specific jobs to be done at sea. At our large manufacturing facility we undertake conceptual and detailed engineering, high quality welding, machining, assembly, and testing, among other processes. Within this value proposition, we offer the major advantage to our customers of undertaking virtually all our work in house. Most of our customers highly value their intellectual property, so they want to keep the specialty equipment we produce for them a secret.
What potential did you see in Kreber when you initially decided to join the company?
Kreber is a family-owned company with 113 years of history. The company, however, never really put much effort in marketing or sales activities. It was a reactive organization that was sought out by customers, which means that many long-term relationships are still in place. Indeed, our oldest customer (one of the largest multinational companies the world) has worked with us for 100 years and returns to Kreber for machinery each time it has an investment.
Given the strengths of Kreber from its large manufacturing plant to its strategic location, and in-house engineering team, I believed that there was more potential for us in the offshore market and decided to invest in the company. Many of our current and potential customers are looking for an alternative to the many segmented activities available in the greater Rotterdam area. Few companies combine a breadth of services under the same roof, but Kreber can, and we will thus grow our presence as a one-stop shop for the offshore market.
In terms of resources, capabilities, and strategy, what is the importance of the Netherlands to Kreber?
Initially, Kreber serviced Dutch fisherman during the switch from sail propelled vessels to steam engines. Since this time, we have been through many crises from the Great War to the Great Depression and WWII. All brought specific challenges and requirements for the Netherlands to find design, manufacturing, and problem solving capacities during times of great shortage. Through these crises the company was strengthened, and our problem solving ability helped us to establish many long-term relationships.
The Netherlands is a small country but very present in the offshore (services) industry. Within a small radius we find many customers, but also many specialized companies and highly educated and trained people. Furthermore, the Dutch show a high flexibility in forming alliances on project bases as many companies are too small or too specialized to carry out large projects on their own. This is where Kreber plays an important role as a trusted partner for innovative projects.
Kreber’s location alongside the Vlaardingen harbor is now key to our continued success. We are in the heart of offshore Netherlands and have many clients present within a five mile radius of our offices. Furthermore, our facilities are only 15 kilometers from open sea, and we are located the first harbor you pass when entering the Rotterdam area. Many potential customers ask to moor ships next to our quayside, and we can thus work with clients for mobilizing and demobilizing of vessels. We are now redeveloping this quayside to add more value, and, in tandem, we will begin construction of a new office on our premises in fall 2015 to accommodate the substantial growth in terms of people and turnover that we expect in the coming years. We currently employ about 40 people and intend to grow this to approximately 60, most of them being engineers.
What are the most pervasive demands among Kreber’s current clientele?
All of our clients are looking to find lower operating expenditures, either via a lower purchasing price or a smarter solution. The Ampelmann system is a good example of how the Dutch equipment sector is offering this smarter solutions that can substantially lower opex. Without giving away our NDAs, we continually receive inquiries from clients on how they can improve their activities and efficiencies offshore thanks to a Kreber machine that has such or such capabilities. Most of the products we develop are the result of a specific client request for which we undertake a feasibility study, develop, and market the product. We focus 100 percent of our efforts on such tailor-made solutions.
How is Kreber’s portfolio currently structured across market segments and geographic regions?
We are active in the offshore, petrochemical, and food processing industries. The offshore and petrochemical comprise 60-70% of our portfolio with variations from year to year. Even with the current market downturn in the offshore sector, we plan to seize even more opportunities in this domain.
The remaining percentage of our activities is dedicated to the food processing industry, for which we produce powerful and high qualified offshore-like machinery, rather than standardized packaging or mixing machines. The food processing industry is another example of a long-standing relationship that we continually improve with knowledge gleaned from our two other disciplines.
In terms of geography, 70 percent of our turnover is exported all over the world from the Americas to the Far East and even Eastern Europe. We plan to expand our geographic footprint both by organic and inorganic growth. In terms of acquisitions, we are not looking for manufacturing plants but instead at companies that can increase our value proposition.
Given the trends we’ve seen in outsourcing manufacturing capabilities to generally cheaper countries in the Far East, why keep such capacities in-house in the Netherlands, especially considering that 70% of Kreber’s production is exported?
Our clients face several constraints – particularly in terms of time and budget. In terms of costs, our clients understand that even though outsourcing to the Far East might look cheaper at the outset, all of the travel costs, quality control procedures, and project management expenses actually entail a final price that differs little from producing our scope of work the Netherlands, while time is of the essence to these clients. It is also becoming more apparent that Dutch companies with trained Eastern European workers are often more cost effective and efficient than Eastern European companies. Kreber delivers equipment in a timely manner with no need for long travel times. The protection of intellectual property is another priority of our clients, which we take very seriously and ensure via our in-house manufacturing.
Furthermore, most of our customers know how much they want to spend in terms of time and money, but they do not know exactly what they want in terms of end product. One of our unique selling points is that customers have the flexibility to modify their requests to Kreber since everything is done in-house. Being independent of any other parties allows us to accommodate client requests to the upmost.
In terms of manufacturing processes and procedures, how do you go about streamlining operations to minimize lead times and exploitation costs?
Many companies in the Netherlands offer a generalized manufacturing capacity. However, it is hard to be very good at anything if you try to do everything. Kreber, on the other hand, is very much focused on the specialized machinery we offer our customers, and we invest heavily in IT systems, logistics, and, most importantly, our people to offer the highest quality seawork machinery.
What type of R&D projects is Kreber currently undertaking to capitalize on future industry demand and help preserve its competitive positioning in the market?
In essence, every machine we build is an innovation because it is a tailor-made product and is used by clients to solve a problem that has been solved before. Most of the innovative machinery we produce for customers is covered by NDAs, so I cannot share details on numerous exciting projects. However, I can discuss more freely our own in-house designs. We manufacture, for example, 60 meter tall and 12 meter diameter wide prilling towers for the petrochemical industry that are used to produce fertilizer or BPA and contain all kinds of innovative machinery. We are now working on a solution to make different grains for the prilling machine based upon varying client specifications for the coating and size of the powder. With explosion and other hazards, we are constantly striving to improve uptime and reduce operating expenses and costs for this for this type of machinery.
How do you encourage a culture of innovation within the company?
It is a big challenge to encourage true innovation because you can fall for the seduction of constantly improving your manufacturing capability or your management processes in the name of innovation. But I think innovation is all about creativity. To be creative, you have to feel safe and safe to even exchange “crazy ideas.” The free thinking in these “crazy ideas” is essential. We specifically set aside time to discuss such ideas and foster a culture in which you are allowed to speak your mind.
Kreber is a customer-centric organization, as per Treacy and Wiersma’s theory in The Discipline of Market Leaders. We are thus curious about our clients, and we try to get involved in processes of our clients, think with them, and help them achieve their goals, while also achieving our own goals. Our clients thus experience us as if we were part of their company, which requires a lot of responsibility on a low level. All of our people have a big mandate, with customer contact across all lines in our company from service engineers up to myself. In the end, we of course try to make a profit but are more focused on fostering relationships. We are not a hit and run company trying to undertake one project with high margins with a client and then another. Instead, we target long-lasting relationships. Some projects may incur a small loss but always make sure to build a strong long-lasting relationship based on mutual gains. Overall, customer satisfaction is our main deliverable.
How does Kreber go about attracting and retaining the right people for this innovative culture you encourage?
In terms of retaining talent, we have less trouble as many employees come and only leave at the time of retirement. We have an average age between 38 and 42. However, it has been very difficult to attract people, especially engineers, in the offshore industry over the past few years, as offshore companies are fishing for limited talent in the same pond. Many engineers have a tendency to go to bigger companies, but most experience they are part of a big machine and have a small role. On the other hand, when they come in contact with other Kreber employees or myself, they hear what it is like to work with us and the array of responsibilities they are entrusted with, which has helped in our recruitment efforts.
In the end, a good company strategy should be focused around empowering people. Most of the people I have worked with throughout my career have a lot of capabilities that have not been used. I think you find the right people and get the maximum out of them by entrusting them with responsibilities and being very clear about the mission and strategy of the company. You must know the goal of your company and communicate this clearly with your employees to achieve maximum results.
Can you highlight one or two projects in which Kreber truly provided a client with tailor-made and value-adding solutions that ultimately embodied the company’s motto: “machines with a mission”?
Many offshore companies undertake their own basic engineering and then run unto problems. The old way of thinking was to create designs in-house and then have a manufacturing company produce your concept into either components or functional equipment. This often leads to problems with project and interface management. Kreber has thus helped many local offshore companies to reduce these strains, but I cannot share more specific details due to NDAs.
What motivates you personally to leader Kreber into its second century of service in the Netherlands?
I am intrigued by innovation, and I want to be tested to my limits every day. As long as I am able to keep learning from my colleagues and our customers, I will remain highly motivated. The technical side of the business interests me the most, and I believe our final financial success is simply the result of the value we have added based upon technical innovations. I thus want customers to think of Kreber in terms of quality, reliability, and continuity we deliver, now and in the future.