KM Heavy Industries, Interview with Oğuz HULAGU

KM Heavy Industries, Interview with Oğuz HULAGU

Overview

  • Release Date: May 01, 2016

Oğuz HULAGUNBN:Before we introduce KHMI development in Turkey, could you introduce us some of your personal background information?

OH:I was graduated from Istanbul Technical University, Mechanical Engineering Faculty and worked for a private airline company for 7 years as an aeronautical engineer. But this is not my first job for sure. During my student life at faculty, I have worked part time for internet sector.

NBN:And when did you join KMHI?

OH:I joined KMHI at 2011 and started to rebuild the system.

NBN:What’s your actual position?

OH:I am working as an Executive VP right now.

NBN:Could you introduce us the history of KHMI?

OH:KM Heavy Industries was founded in 1962 for the purpose of manufacturing carbon and stainless steel equipment with 9 employees in a 150m² workshop. We are currently operating in our 7000 m² covered, totally 20.000 m² facility with our 150 employees in Corlu / Tekirdag / Turkey. Equipment up to 300 tons can be manufactured easily in our closed area. Today the company has grown into one of the largest manufacturer who is engaged in production of giant plants. Dozens of facilities which carries our signature are our proof to the world.

We are representing an innovative group of people that specialize in the custom manufacturing and fabrication of process equipment for various industries such as: Petrochemical, Nuclear Industry, Biodiesel Plants, Oil & Gas Refineries, Hydrogenation and Energy Plants, Cement, Waste Storage, Mining, Food Industries, etc.

Our strength lies in our focus, our experience and our staff. Since its inception, KM Heavy Industries has focused exclusively on carbon and stainless steel equipments. Doing so has produced a company and group of people uniquely qualified to solve tough problems.

In January 1962, Our company was founded under the name of “KM Heavy Industries“ by Mr. Sabri KURTUL, who was a draftsman. The first productions have started at Istanbul-Bakirkoy workshop. Mainly machine parts of PIRELLI and GOODYEAR plants have been manufactured for many years.
In September 1962, Mr. Resat KURU has started to work at our company as a master worker, who is still currently one of the Partners of our company.
In 1969, our company moved to Istanbul-Bayrampasa with 9 of its core staff, to its second workshop, which was 100 sqm and the productions of workshop has continued.

In 1978, with the untimely death of the founder and owner of the company Mr. Sabri KURTUL, his son Mr. Senih KURTUL came to the management of the company. The structure of the company changed to a partnership between Mr. Resat KURU and Mr. Senih KURTUL.
In 1984, the company structure has been changed to a limited liability company, in the name of KURTUL Makina San. ve Tic. Ltd.Sti.

In 1996, the company moved to its third workshop to catch the new technology requirements and to meet the growing size of the equipments. The company had continued its production in a closed area of 1,500 sqm with 35 of its core staff.
In 2009, the technological developments and the increasing demands caused our company to move its fourth workshop in Corlu/Tekirdag, which has a 4.500 sqm closed and for a total of 16.500 sqm area. The number of personnel was raised to 100.
Until November 2010, both Istanbul and Corlu workshops continued to their fabricating activities. At November Istanbul workshop was closed and the company continues its operations in Corlu/Tekirdag.

In March 2011, “KM Heavy Industries Engineering Commitment Limited Company” added to KM Heavy Industries to strengthen the existing engineering and construction services. And I joined the company owned by my father in law.
In January 2015, KMHI was established as a brand name.In February 2016 a collaboration MoU was signed with STF S.p.A.

NBN: So you are the third generation in this business…. Since you come from the Aerospace business, what were the main challenges you faced when you joined your father’s company?

OH: I have a quality and technology background. It was easy to adapt to KMHI. We first made the quality assurance and quality control department stronger, then applied for new certificates for the industry. We changed our safety point of view. But of course there were some other difficulties for adapting to the manufacturing industry. (understand the customer needs, learn new regulations)

NBN: What did you bring in the management and development of the company and did you have a vision of what markets you wanted to integrate and sub markets you want to lead?

OH: KMHI have been manufacturing according to EN standards since 1970. When I joined the company, we were mainly focusing on the oil refinery sector.

I wanted to expand on new markets, such as Oil & Gas and Petrochemical sectors. American Standards is a must in order to let us proceed. For this reason, we applied for U&S stamp and got them within a very short time period, 6 months, in 2012.

NBN: Could you give us an overview of KMHI in 2015, who are your main clients? And For which industries KMHI currently supply equipment?

OH: KMHI have been manufacturing for the important EPC contractors such as Saipem, GS E&C, Tecnicas Reunidas, Hanwha, Desmet Ballestra (since 1970) and many many others on Oil&Gas and Petrochemical sector. Additionally, AREVA is our main client in nuclear market.
KHMI 2

Regarding the domestic market we have been manufacturing for Tupras Oil&Gas Refineries Petkim and Socar (Star Refinery). Andritz Separation and MA’ADEN are the major clients of us in Petrochemical sector.

NBN: Are they mostly located in the MENA region or worldwide?

OH: No, most of the projects that we involved are in Europe and CIS region. We have also manufactured for such projects at Ecuador and Venezuela also. But for sure it does not means that we did not manufactured for MENA projects in the past. We have awarded by Saudi Arabian Mining company (MA’ADEN) and from the TTOPCO (Tag Tag oil Field at N.Iraq) in the past and will start a new project in S.Iraq and Iran in near future.

NBN: Since your arrival, which investments had you to increase?

OH: After my arrival we invested in the R&D department, QC department and expand the plant 30% more. On the other hand, we started to attend international exhibitions such as Achema, OTC and so on.

NBN: Let’s talk about nuclear, can you tell us about your initial involvement?

OH: we have been manufacturing for AREVA since many years and already been in contact with MHI and MHPS for their urea plant projects in the past. When the project Sinop came to the picture, they invited our company to participate those kind of nuclear bids.

NBN: What did you change in your factory to become a nuclear supplier?

OH: After we provided our offers to MHI, MHPS and AREVA, they came to our workshop for the related QA&QC audits. On the other hand, both SNTPC, Rolls Royce, Rosatom came to our workshop for audits because we have been in the list (created by the Ministry of Energy of Turkey) of manufacturer that has potential to become a nuclear equipment supplier. Following the audits, we have invested for a new separate manufacturing hall with new rolling&bending machines, a new passivation area and etc. only for nuclear purpose. It costs around 900.000,-€. KHMI 3

We divided the workshop in to hall (stainless steel & carbon steel). We hired more quality control engineers.

We invest into new machines, softwares and technology. We learn to work with keeping a clear documentation.

NBN: What were the main challenges you faced for the human resources?

OH: Since there is not any NPP in Turkey, it was not easy to find such professionals, who are experienced with nuclear equipment market. If so, we have started to give trainings to all our staff about nuclear culture. Afterwards we registered our QA&QC staff to nuclear related trainings abroad.

NBN: Since you are already exporting in nuclear market, have you opened your business to other majors companies such has MHI, Atomstroyexport, SNPTC…?

OH: Yes, this opened the door of the Sinop project and we have been invited to the tenders which are in the scope of MHPS and MHI. Additionally, regarding the Akkuyu and Igneada projects, Atomstroyexport (Rosatom), SNTPC and Westinghouse visited our company. As a brief information, SNPTC asked for such a technology transfer to us and we accepted.

NBN: When they come to visit your factories, what are the main point of discussion?

OH: The main discussion was the nuclear culture. That is why we immediately gave start to related trainings to our staff. Because we learned that it is a must to be 100% transparent and 100% tracebility and the higher expectations on documentation.

NBN: Do you feel these foreign companies are looking to localize or just to assess the domestic industry?

OH: We can say it can be for both. But according to our strategic geographical location (only 20km away from the international sea port, which is port of Martas, Marmaraereglisi, Tekirdag, Turkey) these EPCs knows that transportation costs can be reduced and make us be more competitive. On the other hand, since after the related meetings they understand that KMHI has an experience in manufacturing process equipment for more then 40 years period, they feel more confident to make such a collaboration and/or technology transfer with KMHI for their both short term and long term targets.

NBN: Does KMHI cooperate with foreign companies experienced in this field?

OH: As a kind reminder, KMHI have been manufacturing for a Belgian engineering company, called Desmet Ballestra since 1970 on biodiesel plants and oil refinery sector. In other words, KMHI staff get used to work with European norms. For this reason, we think that it is time to make a new collaboration with another European company, which is designing&manufacturing specifically in the nuclear market.

From this point of view we attentended 2nd INPPS in March 2015 at Istanbul. We met with a nuclear specialized consultant company, namely Dynatom. We have started to discuss our strategy. Then we met second time at Frankfurt during an exhibition with the CEO of Dynatom. Afterwards, their team in Turkey visited our head office&workshop in order to understand our needs and to assess partnership possibility/capability with a foreign nuclear supplier. Following this visit, they arranged a meeting with STF S.p.A. in Italy.

As a result, after STF’s QA&QC, manufacturing department visits to our workshop, two companies decided to work together on mainly nuclear market and also for the Oil&Gas and Power market.  The target of collaboration of the partnership is to be more competitive in all kind of work and increase the nuclear capability of KMHI in the long run.

NBN: Since you are now cooperating with a strong European nuclear equipment manufacturer, what are the benefits you can bring on the table?

OH: First of all, we would like declare that it is pleasure for us to be in collaboration with STF. We do believe that we will have fruitful results in the end regarding mainly Sinop NNP project and so on. But our collaboration is not only focused on nuclear market, also on Oil & Gas, Petrochemical and Power markets. The key point is to be competitive in all kind of works with our lower labor costs and erection capabilities at site not only for Turkey, such as at Iraq, Iran and CIS region.

NBN: What are the main expectations from your side with this manufacturer?

OH: Our main expectation from STF is developing a nuclear manufacturing culture and engineering scope of view for our company. Because there will be 3 NPPs constructed in Turkey within coming 15 years period and we do want to be awarded as much as we can together with STF. As I mentioned before, the NPP projects in Turkey is not the only target of us, for the next step we would like to enter MENA, Africa and for sure European NPP projects together with STF.

NBN: Do you have business relation with Akkuyu and Sinop operators?

KHMI 4OH: Yes we have. We have already provided our offers for Sinop to MHPs and MHI for the related high and low pressurized process equipment and the heat exchanger packages. The clarification meeting was held at our workshop at the end of 2015 and now we are waiting the green light and the last RFPs from the operators at the beginning of 2017.

Regarding the Akkuyu project, Rosatom team visited our company but according to the recent situation of our country with Russia, we are expecting to receive the related RFQs not before the Q3 of 2016.

NBN: Since the visit of SNPTC, have you moved forward with their commercial department for the Igneada project?

OH: Not yet, they have offered technology transfer and machinery investment to us and we accepted. We shared all our layout plans, investment plans (for the coming 10 years period) By the way, we have met with the president of SNPTC at Ankara and also with their business department during INPPS. We will keep following.

NBN: Recently the industry created the Nuclear Industry Association of Turkey (NIATR), have you joined this group?

OH: Yes, our VP of Sales, Mr. A.Murat Engin is the Head of Marmara Region of NIATR and as a company we are one of the first member of this association.

NBN: What are the main hurdles you see that NIATR can help you with?

OH: In order to get the most trustable information from the governmental and operator sides, being a member of NIATR is a must. On the other hand, it also helps companies to act together as a group and overcome the challenges.

NBN: Do you perceive this association as an asset for KMHI or do you have other plans?

OH: Of course, we saw that big nuclear countries have such kind of association are one step forward from us. Their industry benefits of their supports on the global markets. As an example, once they participate with country pavilions to the nuclear exhibitions, it will definitely impresses the operators, EPCs and etc. in a positive way.

NBN: As several countries in the region are planning to start using nuclear power, do you already expand your business to other markets?

OH: Yes, we have signed an agency agreement with a company at UAE and start following the nuclear market at Middle East.

NBN: What’s your future development strategy in MENA region?

OH: Since we have been manufacturing for Oil&Gas refineries at MENA since many years, we know the cultural differences very well and know how to proceed without any problem. From this point of view, it is obvious that we will achieve good results once we are able to win a tender on nuclear projects.

Tags: MENA

About Author

Arnaud Lefevre

Arnaud Lefevre is the Chief Executive Officer of Dynatom International. Arnaud is in charge of the international development of the business portfolio.

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