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Friday, March 29, 2024

German group offers to help industrialize PH

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A German industrial group that has played a crucial role in the industrialization of Europe and survived two world wars is now looking at the Philippines as an area of growth, as the country attempts to reinvigorate its manufacturing sector.

Thyssenkrupp AG which combined the resources of Thyssen and Krupp—both steel makers and weapon producers in the 1930s that became controversial at that time for helping Germany become a conqueror of nations—wants to design factories, power plants, heavy machineries, infrastructure and elevators for Philippine companies.

“There are a lot of opportunities which we see in the Philippines where we can support and help and being a partner for Philippine industries. This is the reason why we are here,” says Jan Lueder, chief executive of thyssenkrupp Industrial Solutions (Asia Pacific) Pte. Ltd.

After surviving the war,  thyssenkrupp embarked on diversification and expansion globally.  Today, it  is an industrial behemoth, with 670 member companies producing products from tinplates to submarines, employing over 155,000 people globally and generating annual sales of nearly 40 billion euros.

The group, based in Duisburg and Essen, does not only produce engines and machines.  It builds the factories and production facilities that manufacture those engines and machines.

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INDUSTRIALISTS. Executives of thyssenkrupp AG meet journalists in Makati City.  Shown are (from left) Vivek Bhatia, CEO for Asia Pacific of thyssenkrupp Singapore Pte. Ltd.; Kevin Chui, country head of thyssenkrupp Philippines; and Jan Lueder, CEO of thyssenkrupp Industrial Solutions (Asia Pacific) Pte. Ltd.

Kevin Chui, country head of thyssenkrupp Philippines, says the group has been in the Philippines for more than a century, having delivered steel, engines, turbines, machineries, ships, power plants and even infrastructure to private companies and the government.

“We first came here in 1903 and we were providing rail, train, trucks and small engines to a small local company called Manila Electric Railroad and Light Company.  This became Meralco which is now one of the biggest and most successful companies in the Philippines,” Chui says.

The company also built ships for the Philippines in the 1930s to 1940s—Don Esteban and Don Isidro. “These ships played pivotal role during World War 2 where they transported Filipino officials including the vice president to safety during the Japanese invasion,” says Chui.

He says the German group supplied machinery and equipment for oil mills and cement plants and materials for mines, plantations and dams in the 1950s to 1960s.

It opened a regional office in Manila in 1995,  supplied key components for two complete cement clinker production lines in 1997, built a polypropylene plant in Bataan in 1998, built passenger bridges at the Ninoy Aquino International Airport in 2000 and supplied coal handling equipment and delivered boilers to a power company in 2015.

“We also built the biggest cement producing plant in the Philippines,” says Lueder, referring to the Teresa cement plant now owned by CRH and Aboitiz.  Thyssenkrupp also built the Apo cement plant.

Uhde Inc., a unit of thyssenkrupp, put up a polypropylene or plastics plant in Mariveles, Bataan for Petron Corp. in 1998.

“These are all large companies in the Philippines,” says Chui, referring to local clients. The group generates annual sales of 5 billion euros in Asia Pacific, including 32.5 million euros in the Philippines.

Vivek Bhatia, chief executive for Asia Pacific of thyssenkrupp Singapore Pte. Ltd., says the group aims to help Philippine industries and enhance their competitive advantage. 

Bhatia says the expertise of the group is engineering. “The fact is that the steel that we provide for the tinplates allow you to make thinner can.  For the same cost and less weight, that impacts your logistics. It is also a better gear for production process.  There is a bit of engineering that we are trying to bring in to this run-of-the-mill, conventional things,” he says.

Bhatia says the group sees strong growth in the Philippines because of its population of over 100 million with a young, dynamic labor force and an economy that is growing faster than most countries.

Chui says the development of infrastructure and power sectors will help the country achieve its industrialization program.  Manufacturing accounts for just a fifth of the Philippine economy—one of the lowest in the region, but the government aims to implement an industrialization program to keep up with Asian neighbors.

“The most important reason why it is the right time is what you are seeing in the infrastructure and what you are seeing in the power field. These in my opinion are the prerequisite for downstream industries to come to the country. You can only have other industries come in such as fertilizer, chemicals and petrochemicals once power is abundant and cheaper and once you have the roads, the ports and infrastructure in place,” Chui says.

“I foresee that in the next three or four years, there will be abundant power.  There are a lot of power plants coming online.  I think the time is right now.  There are a couple of things we will be focusing on.  One of them is the engineering, procurement and construction or EPC business.  We want to focus on industries such as mining, finance, chemical and petrochemicals, power generation especially clean power such as biomass and waste-to-power technologies,” says Chui.

“Just last three or four months ago, we established a local branch here.  And we want to use this as a means to continue to rev up the speed in hiring local employees and better serving the customers here locally,” says Chui.

Lueder says thyssenkrupp can become the partner of Philippine companies in building their production facilities, particularly in the sectors of cement, petrochemicals, renewable energy, fertilizers, sugar, automotive and manufacturing.

“Technology is one of our important topics. We have the capability to execute totally turnkey lump sum EPC [engineering, procurement, construction] projects.  We can also build plants around licensed technology,” he says.

“We have developed boilers and facilities [for sugar mills] which are capable of making use different fuel—coal, gas and other waste [aside from bagasse] which we could use as fuel. So energy production is 24/7 available,” he says.

Lueder says thyssenkrupp can help the Philippines establish its own fertilizer plants to boost the agriculture sector.  He says the country currently imports 95 percent to 97 percent of its fertilizer requirements.

“You cannot feed 100 million people if you cannot secure the food supply,” says Chui, while citing the need for the country to develop its own fertilizer industry.

Chui says thyssenkrupp is committed to stay in the Philippines.  “We have been here for over 100 years—helping the nation, helping the people, helping companies grow step by step through the process.  In the sense, we went through the transformation and the pain of growing together,” he says.

“We have a very wide, broad engineering capabilities.  With this portfolio, we are unique in a sense that we are here pretty much permanently,” he says. 

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