Alexandros Ignatiadis (photo), CEO and majority stockholder at Octagon Contracting & Engineering, tells Business Review about the company’s major achievements over the last decade and its plans for the future on the local and international market.
What has ten years of presence on the Romanian market meant for Octagon?
We can only have a view of the development of Octagon in the context of the market on which we have operated during the last decade. From this perspective our presence was a constant fight in a hostile environment, dominated by multinational companies, corruption, political interference and an acute crisis that generated a contraction of about 40 percent in construction industry turnover. If we were to sum up this period we could say that it was a “Montagne rousee” journey with fewer survivors.
What have the company’s most important achievements been over these ten years?
Consolidation of the management team and human resources – a crucial factor for any construction company – and creation of both a portfolio of significant projects and experience needed to position us on the market have been two of our major achievements. Plus we won the trust of some significant customers – local blue chips and international companies. So we managed to earn the reputation of a quality constructor and as a result customers came back to us to sign contracts for new projects.
How would you describe the development of the business environment in your ten years of presence on the Romanian market?
We can say that the business environment has grown in the past ten years through an increase in the volume of foreign investments and the emergence of local entrepreneurs that are independent from the political environment and businesses with the Romanian state. We can also notice a pattern of accusations against the whole business environment. We see every day arrests, raids of firms and announcements of cases against major businessmen. Without speaking about the merit of such cases I would say that the spread of this phenomenon paralyzes the whole economy, as lenders don’t have the courage to finance businesses because they are afraid that their reputation might be damaged. In addition, state institutions are paralyzed and the whole economic environment is poisoned because some businessmen are considered no better than thieves.
How would you describe the development of your industry throughout this period?
From 2005 to 2015 the construction industry has faced a complete cycle of “boom and bust” that included things like the unhealthy and rapid growth of companies with uncontrolled corruption, unsustainable real estate investments, legal flux and a negative political involvement. The “bust” part was characterized by the de-capitalization of local companies and many bankruptcies with the number of companies halved. To sum up, the construction industry is now on its knees.
How do you see the Romanian economy now compared to 2005?
If we look at the Romanian economy in its European context, we can say that it is in a better position now than ten years ago. The economic downturn and the massive collapse of economies in Southern Europe along with the problems that countries such as Greece, Portugal and Spain have faced have improved Romania’s current economic perspectives. At the macroeconomic level, Romania is in a better economic situation than these countries.
What have been your company’s most important projects in the last decade in Romania?
All the projects we were and still are involved in are important in terms of professionalism and the great attention we pay to our customers. Octagon is a “service contractor” not a “litigation contractor”. I will mention three projects that have had a special significance in our evolution. First, the infrastructure developments for Sky Tower – Floreasca Park, the highest building in Romania, developed by Raiffeisen Evolution. Second, the execution as general sub-undertaker of the civil developments at the 867 MW cogeneration power plant for OMV-Petrom, under the GE-Metka consortium. Third, the construction as general building contractor of Building B from the Hermes Business Campus office complex for the Belgian developer Atenor Group.
Octagon develops projects both in Romania and Iraq. When did this expansion abroad start and what was the reason behind it?
During the crisis and in the context of the European economic decline we decided to look for new markets that offer perspectives for growth and resources to finance infrastructure developments. This was the idea that led us to Iraq back in 2012. Unfortunately, despite correct economic analysis, the volatile political situation in the Middle East restrained the predicted evolution. We are seriously analyzing the possibility of extending our activity on mature EU markets like France, Belgium and Germany.
How do you see Octagon ten years from now from the development perspective? What about the local economy?
We intend to put Octagon in the top ten construction companies in Romania. Capitalization through an IPO on the Bucharest Stock Exchange is another plan and we aim to extend on other European markets. As for Romania’s economic future, there are very good conditions for this country to grow within the European Union if we manage to protect the economy from direct political interventions, reach political and legal stability and get an independent and professional justice system.
Octagon Contracting & Engineering
Field of activity: civil and geotechnical constructions
2013 turnover: EUR 19.6 million
2014 turnover: EUR 12 million
2015 estimated turnover: EUR 24 million
Number of employees: 178 (in Romania), 26 (in Iraq)