Claus Nielsen, Betech Seals
Release Date: 2009-05-05
Betech Seals is part of a bigger group, therefore we would like to give you the opportunity to elaborate on the company structure.Nielsen: Betech Seals was founded in 1922 and is today one of the market’s leading suppliers of gaskets, seals, mouldings, bellows, vibration dampers, and sheet metal working. The company is part of Polymeric Soultions, which in turn is part of the Swedish listed company Addtech AB. The group’s mission is to be a technology provider, offering value-adding solutions that increase our customers’ performance. A large part of the group consists of trading companies. Betech Seals and Codan Tech are a little bit special because they have a high proportion of in-house manufactured products in their portfolio. Addtech’s corporate culture is focussed on decentralisation, resulting in a group of 80 decentralised companies, which on average employ 20 people and have a turnover of 50 million Swedish Kroner, which is about €5 million. Also in this respect Betech Seals and Codan Tech are somewhat special because each company has about 95 employees, To sum up, Betech Seals and Codan Tech are large, production oriented companies within the Addtech group.
Betech Seals and Codan Tech belong to the Polymeric Solutions business unit within Addtech. I am the President of this group as well as the Managing Director of Betech Seals, and Chairman of both Codan Tech China and Codan Tech Denmark. The main difference between Betech Seals and Codan Tech is that the Codan Tech is more focussed on the rubber moulded parts niche while Betech Seals has a wider range of polymeric products and as a full line supplier can serve a wider market. Codan Tech Qingdao was opened in the beginning of 2007. Codan Tech Qingdao employs about 45 people right now and is in the phase of expanding production as we are moving Codan Tech Denmark production to Qingdao in China. Of course, we will be working with direct customers in China in the future, but at the moment our main focus is to move part of the production from Denmark to China.
The wind industry very well illustrates the diversity of our product range. We supply parts for the nacelle, the seals that are used around the shaft, vibration dampeners, metal parts that align the gearbox, components for the tower as well as the gaskets for the transition piece. In short, we supply a complete package of solitions for the wind industry. For example, offshore wind turbines are mounted into the bottom of the sea and we supply the gasket for the transition piece that is used to connect the monopole, which is hammered into to the sea, with the tower. We have developed this patented solution in cooperation with MT Højgaard. We have product specialists for each product group to support the customer on technical development, and Carsten Folkersen is responsible of this division.
Numerous companies are involved in the supply of the different components of a wind turbine. To which extent are you able to supply system solution?
Folkersen: We don’t supply system solutions; we supply specific mechanical components that are distributed all over the wind mill. We often get involved when suppliers have critical problems or have to accommodate new specifications to meet market demands. For example, we have been involved in projects to seal off the hub to prevent oil leakages from being spilled onto the environment. The hydraulic system inside a wind turbine is very complex and depending on the type of hydraulic fluid that is being applied and several problems can occur in case of a leak. We enable our customers to control the leak until you until it is repaired.
The wide range of manufacturers, suppliers and designs must that requires a great amount of customisation for every different component. Are you moving towards increased standardisation?
Folkersen: Both standard and customized components are being applied. It is a little of both.
Nielsen: The customized seals that we developed for the first offshore wind farms serve as a good example. The offshore environment and its higher ozone concentration resulted in extra wear of the materials. To solve this problem we took a standard oil seal and applied a different material to the existing sealing to make it more suited for offshore applications. This is a simple example of how we customize a standard product to accommodate to the customer needs as they develop along the way.
When did Betech Seals start focusing on the wind industry?
Nielsen: About twelve years ago we took over the representation of vibration dampeners from a sister company in the group. We have been growing with the wind industry thanks to our wide product portfolio. Our products are not just delivered to the turbine manufacture but also to sub-suppliers such as the manufacturers of hydraulic systems.
Betech Seals claims to be the only European company in the field of sealing, vibration dampening, and sheet metal working with the product portfolio and knowhow to offer total solutions, however, there are other companies competing in the different fields. What sets you apart from the competition?
Nielsen: Compared with local and global competitors we are the only company that has this product lineOur competitors have a long way to go before they can fill this gap. Our integrated product portfolio combined with the fact that we are specialists in each area gives us a unique positioning.
As a small and flexible company we have the flexibility to adapt quickly to the customers’ needs. Carsten has the global responsibility in this segment and we have a salesperson in China, located in the Codan Tech office. We have decided to continue operating under the Codan Tech name in China. In Denmark, Betech Seals is selling a wide product range and Codan Tech selling a smaller selection. On the other hand, in China the Betech Seals portfolio will be offered under the Codan Tech name.
Are you expecting local Chinese manufacturers or international players to be your main competitors in the Chinese market?
Folkersen: It is difficult for a foreign company to establish contact with Chinese customers. There are two incentives for us to move into China. On the one hand, we will move established production from in Denmark to China in order to cut cost for distribution and sales here in Europe. On the other hand, large customers like Vestas, GE Wind and Gamesa have a demand for parts that are manufactured in China. Due to the acquisition of Codan Tech we are now able to serve them in China, which is a big advantage. As the turbine manufacturers move from Europe to China, we need to move with them.
Nielsen: In some sectors European manufacturers are producing products according to different quality standards for the Chinese and European markets. Fortunately, we have not really seen this lowering of standards in the wind industry (at that time no – but now Vestas has a low-tech plant in Mongolia). The components for wind turbine have been developed over a long time, so it is not easy to find a Chinese source that offers critical components of similar quality. Steel components are easier to standardise whereas in polymeric products the different additives make a big difference. Our challenge is to make our offer competitive to ensure that our customers will not choose a local Chinese supplier. This will be done by exporting products from Europe, producing in China and finding Chinese partners. We will have a combined portfolio of trading and own production.
Folkersen: Our package consists of both standard parts which are readily available off the shelf for many sealing manufacturers, and customised parts that are manufactured to customer specifications.
Nielsen: Both in Denmark and China our value proposition is based on the logistic package and the technical package. We distinguish ourselves through our complete product range that enables customers to streamline their supply chain while adding value by developing high quality products. Our experience can also support Chinese wind turbine manufacturers in their ambition to develop good and long lasting wind turbines. At the moment we have not really felt a pressure from local Chinese companies on our customer base because we are primarily working with Chinese manufacturers with a strong quality focus.
Keeping up with growth pace of the Chinese market will undoubtedly be a challenge. What is your strategy to prevent production capacity from becoming a bottleneck?
Nielsen: Capacity is not an issue for us. Our production facility on the west coast has a lot of capacity and our mindset is not restricted to in-house production. It might be an issue for certain products at certain times. It has happened in the past and we have solved that and moved on.
Folkersen: That is not a problem for us. Just keep the orders coming.
Nielsen: Our idea is to produce as much as possible in China. Critical parts, which are also more value adding parts, will be manufactured in Denmark. It is our goal to stay flexible. We do not need to build a new plant in order to serve this segment.
Are you looking forward to spending a lot of time in China in the coming years?
Folkersen: Yes, very much. China is immensely fascinating. The rate of change, the flexible mindset of the Chinese people and their adaptability to change makes China a fascinating country. We could certainly learn a lot from that.
We would like to enable Chinese wind turbine manufacturers to raise the competitiveness of their wind turbines and subsequently exporting their products to USA and Europe. We can help them become competitive, which is in line with our mission “Improving your products”. That would be a very important factor.
Do you think that the rise of these manufacturers in China will change the rules of the game for your company?
Folkersen: The power has already moved gradually to the suppliers. For example, at the moment Chinese manufacturers are selling 1.5 MW wind turbines below the cost price of externally purchased parts from their European manufacturers. The labour cost of assembling a wind turbine is relatively small in comparison with the cost of control systems, mainframe cast, bearings, gearboxes, and generators. Therefore, European wind turbine manufacturers are very eager reduce the cost of parts that they source. They are applying a lot of pressure on suppliers in order to stay competitive with the Chinese wind turbines. That is a big challenge right now. What one could be concerned about is suppliers cutting corners when they quote something. We are good at producing high quality polymeric products and we have to educate our customers about the importance of quality and the service factor. Turbine manufacturers are basically not selling wind turbines, their core product is really the cheap KWh manufactured, uninterrupted with very few service intervals. That is their sales argument.
Nielsen: Their primary sales argument is uptime, and we are very good at making seals, vibration dampeners, gaskets and other parts. Our main message is our commitment to “Improving your product”, to make both Chinese and European turbine manufacturers more competitive.
| Company: | Betech Seals |
| Position: | CEO |
| Country: | Denmark |