A strong business partner
2009-10-02
The international Industry Europe is continuosly representing renowned European firms from 1990, and the magazine has 35,000 issues every year. The undermentioned article illustrated with photos was published in February 2007 in the magazine.
The Hungarian company OVIT ZRT, based in Budapest, is involved in the design, construction, maintenance and renewal of high and extra high voltage power lines and substations. Laszlo Fodor reports on its wide range of products and services and its plans for future growth.
Founded by the state in March 1949 OVIT started its operation under the name of Távvezetéképítő Nemzeti Vállalat (National Company for Powerline Construction). The new company was established by merging the Hungarian subsidiaries of well-known European firms including Siemens and Brown Boveri with some of the employees of companies in Hungary with similar activities (Ganz, Magyar Dunántúli Villamossági Rt.). After the Second World War the primary focus of the company was the reconstruction and revitalisation of damaged and destroyed Hungarian power plants, but later on OVIT became responsible for the extension, maintenance and operation of the national power lines.
Before the political changes of 1989, in Hungary, the company had already been operating a much more market-oriented way, so after the changes it was quite easy for it to change its status from a government-owned to a public company in 1991.
At the time OVIT was founded the company employed only a few hundred people, but due to the vast expansion of the Hungarian national grid the number of employees had risen to more than 2000 by the mid-1980s. During the 1990s, due the modernisation of its technology, the company had to reduce its number of manual workers. It currently employs 1130 people. According to the annual report of 2005: “By considering the expectation of the owner the number of the employees participating in the activity of the organisation developed according to the human resource needs necessary to the implementation of tasks.”
Organisation and core activities
OVIT is headquartered in Budapest, where the commercial, technical and economic divisions are located. It also has six other permanent locations in Hungary, and 10–15 temporary locations attached to different projects.
OVIT is engaged in four main areas of business activity. The first is the construction of new power lines and the maintenance, repair, reconstruction, modernisation and standardisation of existing power lines. The second is the construction of new substations (including design, building and electrical mounting and replacement of high voltage equipment) and the maintenance, repair, reconstruction enlargement and diagnostics of existing substations. The third is the manufacturing of steel constructions, including one-off and small series, welded and screwed steel constructions and surface protection. And last, but not least, the transportation which includes the transportation of heavy and long machinery by special vans, railway, ship or air; crane lifting and loading and moving of heavy goods. Above all this, Ovit also carries out the maintenance and renewal of its industrial customers’ power systems.
In the last 20 years, the development and the expansion of the new Information and Communication Technologies (ICT) has played a significant role in the life of OVIT. Managing director István Somogyi explains: “The ICT technologies supported our work as a consumer very well, but we were also part of this technological revolution as we were participants in the transformation process. We developed and established the planning of ADSS and OPGW optical cable network systems for high voltage networks, which were indispensable for the explosive growth of data transfer capacity.” OVIT was the forerunner for these technological developments in Hungary, as there was no other company in any sector that could have built up such a complex and expensive system. For example, the company developed diverse technologies for transmission lines, such as those for hot line maintenance.
The market situation
OVIT has intensive business relationships with many suppliers, mostly in the electric power sector (such as Siemens, Schneider, ABB and AREVA), and with customers, who are usually active in the power market (such as E.ON, RWE and Paks NPP). Mr Somogyi explains: “Our philosophy is to be reliable on the market, therefore we only want to have business relationships with companies who have a similar philosophy, adequate technology and a fair price.”
The changes of the past 15–20 years have opened up great prospects for Hungarian companies, but many of them were unable to take advantage of these opportunities and could not keep up with the intense market conditions. OVIT progressed in these years by using the opportunities presented by the German reunification and the European economic boom. During this time OVIT won numerous contracts for large-scale projects in many countries, including Emirates, Kuwait, Turkey, Greece and Germany.
The intense modernisation of the Hungarian grid began in the mid-1990s. During this time OVIT retreated slightly from the European grids and substations market and participated in building a new Hungarian transmission line net, although it still worked abroad occasionally to keep up its image. For example, Ovit provided Croatia with hot line maintenance to repair its damaged power line net.
But the company never really gave up the European markets for steel constructions and heavy transports. It exports around 60 per cent of its steel constructions (about 6000–7000 tons per annum) to the European markets.
Throughout OVIT’s activities, the areas demanding the most energy are its production workshops for the fabrication of steel constructions and heavy machines for field work. In the past 10 years its technologies and machines have been replaced by new, more energy-efficient models, in order to minimise the environmental impact.
There are environmental regulations concerning field work, as large tracks from heavy machinery can cause a great deal of damage to fields, forests, private properties etc. Therefore, OVIT has to use technologies with minimum potential for damage and plan very carefully before starting work. “It is crucial to organize each of our projects in such a way that activities are not duplicated during the process. We are responsible for the allocation of large, heavy equipment therefore any repeat or unnecessary process would increase our financial burden in terms of fines, compensation and revitalisation. Last but not least, public opinion would turn against us.” says Mr Somogyi.
For OVIT, the biggest advantage of Hungary’s membership in the European Union is that many investors now come to Hungary and their activities require energy supplies. For example, when a big company like Audi relocates part of its automobile factory to Győr, its energy demand is very high. Power lines and substations must be built and maintained, which means more projects and more market stability for OVIT.
Mr Somogyi adds: “It has become extremely important for us to keep an eye on which companies plan to invest in Hungary, so that we can offer our products and services at the right time. We had to adapt to this situation by modifying our marketing strategy.”
Future plans
OVIT has a number of aims and strategies to ensure its future growth. For example, it is determined to keep its information network at its current volume, so that the market potential over a period of five to eight years can be adequately monitored. Also, due to increasing production costs, the company wants to carry out its projects more rationally and cheaply and plans to improve its logistics to help with this aim. It plans to look for more long-term business partners, especially subcontractors, so that when orders are increased the work can still be done on time. In the next two to three years it will be orienting more towards the foreign markets again, and in the next three to five years it must make a decision as to how far its production and service capacity can be expanded.
Mr Somogyi concludes: “It would be nice if we could keep the status quo, but a responsible manager cannot be satisfied with that. The manager is required to look ahead to find new business opportunities. Therefore, I hope we can operate with an increased production volume of 15–20 per cent on the European markets with larger revenues and profits. That is my dream.”
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