UTTIS shapes up for EU-level competition

After expanding production capacity with the help of a Norwegian grant, UTTIS Industries, a Romanian manufacturer of industrial heating equipment, is looking to access the Russian market.

Ovidiu Posirca

“In 2008 UTTIS Industries was looking to build a larger production hall and heard the news about the Norwegian grants system, so we created a project with EFD Induction Romania, a Norwegian company that ranks top in Europe and second worldwide in the induction heating technology,” said Petruta Druga, the administrator of UTTIS Industries. The two companies jointly developed two production halls and two research-development buildings in Vidra, Ilfov County, near Bucharest.

The project also included the development of the Romanian Industrial Heating Center, which should become a significant heating technological center in Central and Eastern Europe in the long term.The cost of the project was EUR 5 million and the grant received from Innovation Norway totaled EUR 1.3 million, which was split between the two companies. Although the co-financing was not extensive, Druga said that the funds were made available very fast and with little bureaucracy from Innovation Norway, while the business relationship with EFD, the Norwegian partner, was also efficient.

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“The paramount condition for accessing the grants was a partnership with a Norwegian company in developing a project,” added Druga. She said that the absorption rate of Norwegian grants has been 90 percent in Romania, and this value could have been even greater, had it not been for the financial crisis.

The building works for the Vidra complex started in the summer of 2009 and were finished in spring of this year. Last year, UTTIS was able to start operating in a new production hall of about 1,900 sqm and a thermal heating R&D center that covers 1,300 sqm, while EFD, which occupies a similar surface, settled here this year.

UTTIS has at present 100 employees, half of whom work in the production hall. Another 10 are based in the R&D center. EFD currently employs 60 people. The company has also hired people from Vidra, where the partner companies are the largest investors.
Druga noted that the Norwegian grant had helped UTTIS remain competitive during the economic crisis and allowed it to maintain its turnover, which currently stands at EUR 2.5 million. The company will be looking to post the same turnover in 2012. However, UTTIS may see a decrease in business if demand from Western Europe economies reduces, Druga warned.

Outlining the firm’s main markets, she said, “UTTIS manufactures heating industrial equipment for local and foreign clients. In Romania we are working with multinationals in the automotive industry like Renault in Pitesti, Timken in Ploiesti and a subcontractor of Mercedes Benz in Cugir. We address the naval, automotive and metallurgical industry, while EFD induction manufactures innovative induction equipment. Our main export destinations are Germany, Austria, Holland, Finland and France.”

For 2012, the Romanian company will try to access the Russian market, where industrial sites are underdeveloped and budgets for equipment acquisition are more generous. While the local competition is not tough, at EU level it is challenging. Hence, the company is trying to drop its current business models, which involve the development of tailored equipment, and move towards standardized production.

Human capital is also an issue for UTTIS, as it constantly needs to employ experienced engineers to design complex equipment. However, Druga said that the company will focus more on developing the skills of young graduate engineers who could later be employed by the company.

At the same time, the firm will keep on searching for qualified professionals.
Norway, with support from Iceland and Liechtenstein, has offered grants totaling EUR 98.5 million in the last two years and the sum is expected to increase to EUR 300 million by 2014. The financial vehicles for this program are SEE and Norway Grants.

Company representatives say the grant allowed a constructive partnership between the two firms that helped contain the effects of the crisis and allowed the companies to focus on expanding their businesses. This resulted in the manufacturing of high-performance equipment with the efficient consumption of energy and brought employment opportunities for inhabitants of Vidra, where jobs are scarce.

ovidiu.posirca@business-review.ro