Wednesday, May 30, 2007

Castration Effect!

Dear Colleagues

A “Castrato” is a male soprano, mezzo-soprano, or alto voice produced either by castration of the singer before puberty or one who, because of an endocrinological condition, never reaches sexual maturity. Castration is non-reversible.
In business world, we have a similar feeling in the market, but that is reversable if cared properly.

One day in late 2006, an International Company from FarEast has internally decided to come to Turkey, to capital city Ankara in order to meet with reputable local companies private and public for future cooperation and partnering in local Turkish energy market. Through an international business colleague, they asked your writer to help them in local networking. At first we asked appointment from top management of public companies, Ministry, EUAS, TEDAS, and TEIAS etc.

Our Public companies have the similar attitude these days. They say "Since we should get 3- offers and evaluate for almost 3-months for each bolt we need, we cannot finalize any investment in the modern times in a reasonable short period of time. Therefore we ask private investors to make the investment. We expect the maximum rental fee for our treasury." Good point, good thinking, very logical.

We also asked appointment from private companies for mutual meetings for future cooperation. Most of them accepted and invited us to their head offices. That was almost no cost for them other than some business time to allocate

On both sides, we had almost similar presentations. At first, our visiting foreign Company introduced their colorful hardcopy documentation, their home country references of various thermal power plants, as well as nuclear. Documentations were beautiful but they had no meaning in content. Anyhow that was something other than nothing. They had pictures of their international experiences, reference plants in the Middle East and elsewhere. However these documentations were explained with relatively poor verbal English.

In response our local companies explained how wonderful work they do in local and/or international environments

Surprisingly Turkish scope covered only civil works and site installation, plus maybe some construction of administration buildings / some catering. That was all. It is a pity. Most of our companies don’t have courage to exceed these simple activities. These activities are simple, hard work with minimum cost, almost with minimum value added value. It is so sad to say that our companies cannot handle basic engineering, they cannot handle overall leadership.

So we all handle the hard work, whereby our international partners get the biggest portion of the scope and profit.

These FarEast Companies have the same software and hardware available as elsewhere, and they purchased the necessary technical license to handle design works of all types’ thermal power plants. They sign license agreements with reputable USA companies to construct CFB boilers to fire all types of poor quality with low LHV local lignite.

In the international markets, today US or UK companies, German/ French/ Italian companies are too expensive. They can not receive any order in our local market due to their high market prices. On the other hand China, Indian, Korean companies are relatively cheaper in turn key EPC contracts

Other than Indians and Cheneese, Koreans were at the lowest life style in 1950s in the Korean War and at that time we sent our troops to save them. After 50 years, their GNP is almost twice of ours now. Korean Companies had turnkey engineering and complete project leadership capability. They constructed all their thermal power plants by themselves. Similarly they constructed many nuclear power plants in Korea under license.

If we do not show our engineering expertise, our market will soon be dominated by these Eastern companies and as a result our local companies will be doing only the simple hard work with lowest profit margins.

We visualize a sort of “Castration Effect” in our local contracting companies. Are these local companies sort of “Castrato”?? That situation is unfortunately created by our public companies over the years while looking for only international foreign companies.

All we need is courage, at least within our own environment. We should start to construct our own thermal power plants by ourselves. Foreign companies cannot design; construct power plants to fire our special local indigenous lignite. Only Turkish engineers can do it, since we live all our life with this local fuel.

Our local private companies are to decide if they will continue to have simple works all the time, and vanish, or make drastic change and start doing new investments on engineering talent by supplying the engineering staff with appropriate software and hardware, plus necessary technical licensing, to enable their companies work as turnkey EPC contractor as leading company. That is the most important key decision now.

Finally we have good news for you. A local investor company built its own 3x60 MWe Combined cycle power plant in Aliaga through its own engineering capability. They are now planning to build new coal fired power plant.

One other local contracting company has completed their local lignite fired CFB steam boiler in Konya Cumra sugar plant. It is in successful trial operation for last 2-years.

We are very happy to learn that another leading Turkish energy company has built their combined cycle power plants in Ankara Sincan and Kayseri Organized Industrial zones based on their own local engineering capability. They received recent orders for construction of similar plants in Israel and Russia.

As the old saying goes, “If you think you can, you can.”
Your comments are always welcome


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