Lessons Learnt in Toronto, 1991

Industrial Steam boiler sales story in Turkey, during 1992-1994 An important Iron & Steel Mills on the Turkish Black Sea coast opened a tender for purchase of a new 160 tons per hour (45 kg/cm2, 445C) output capacity steam boiler. The plant had two American and two Italian steam boilers burning fuel oil. The new fifth boiler would burn the waste blast furnace gas released during the process. Until that day, the blast furnace gas with a lower calorific value of 550 kcal per unit standart cubic meter was burned in the chimney and released into the atmosphere. Earlier all were wasted. The new boiler would burn as much of this gas as possible and the wasted gas would be utilized to generate high capacity steam output. The design license of existing American boilers belonged to our foreign JV partner. That's why we received our qualification certificate on behalf of our American Foreign partner. The other two boilers belonged to the Italian firm and they were boycotted as they never reached the desired steam capacity. We went to our American partner's engineering center near Toronto, Canada for the tentative design and pricing of the boiler. We were in December 1991. The surroundings of the Holliday Inn hotel we stayed in were almost under one meter of snow. Those who were not in a closed garage could not use their cars. We worked with the engineers of our foreign partner in the engineering and proposal office for a week. We designed the boiler that would burn maximum blast furnace gas, we made material and equipment lists. We have received general arrangement drawings, typical standard detail pictures of a similarly built boiler. Our foreign JV partner's proposal engineers have told us that their estimated own prices will be US $ 5.25 million, excluding site assembly. The next week, it was Christmas and new year holiday. We returned home. We estimated our own pricing. The price was 8 million US dollars without profit. 50% of the price was the material to be bought from reputable approved foreign vendors outside, steel seamless pipes, forced draft fresh air blowing fan, flue gas forced draft fan, feed water pumps, safety valves, level indicators, instrumentation and control devices, air heater, soot blowers, most importantly. multi-fuel burner burners and steam domes. Then, about 20% of the price for our factory had steel and boiler pipe wall fabrication. On-site assembly costs were 20%. The remaining part was holding license and engineering money that we would give to our foreign JV partner. We prepared the price at eight million US Dollars and sent it without profit so that we could get the job. It did not make a sound as the American partner would receive joint engineering and license money. Taking profit did not mean anything to us as employees. It was very important to get this job for a company that does not have a lot of references. The local partner decision makers are convinced that we need to take this business without profit. We attended the meeting in the meeting room at the headquarters of the buyer company with the British General Manager on the day the prices for the tender will be opened. Tender bid files were opened, the first price came from the Austrians, 23 million USD. Then the price of the Polish firm opened 16 million USD, Then the Japanese price 12 million USD. The Japanese were happy that they said "it's ours". Our last price would be announced. There was silence in the hall. Only we knew our price at that time. We tried to hide our joy. Our price was announced and we got the job. The buyer company was pleased with this situation. There was a supplier company where they could speak in their own language and express their grievances and complaints. The design was an American company that had proven itself and had a reference in its own facilities. Purchased equipment and materials would come from abroad with their approval. While in designing, we chose a larger steam boiler so that we would not be lacking in capacity. We got the job, we delivered it including design, manufacturing, purchasing and on-site assembly within 3 years, we performed temporary and final acceptance tests. We received our work completion certificate. Since 1994, our steam boiler has been operating in the facility by burning the blast furnace gas at the maximum rate and giving steam. We made similar steam boilers in domestic and international projects, manufactured and delivered them. As expected we had no profit. If our JV company had not participated in this tender, the buyer would have paid 50% more to the Japanese firm that offered the next lowest price. If our JV firm had not participated, the American joint would not have been able to get the job that would not be able to participate in the tender due to the Christmas New Year holiday. Had our company not participated, the local partner would not have been able to get a large manufacturing and on-site assembly job order. Experienced people who work, all engineers, designers, supervisors at construction sites are now retired. Our American partner has withdrawn from our market. Our JV company has closed. It was not replaced by a new one, unfortunately. There is no domestic company that will enter a similar steam boiler tender today. Intellectual capital, experience has disappeared. What a sad end we have reached. What fault did we do to deserve them? How did I tell this detailed story? As JV company, we published a technical artice and presentation on this subject at the Chicago American Power Conference in 1996. Also, my personal notes are still on my 5.25 "disks. Ankara March 10, 2021