Mr. Zhu / Fengdong Furnaces
We are very pleased today to be interviewing in person Mr. Zhu Wenming, Chairman of Fengdong Group based in Yancheng City, China.
Zhu I am very interested in how people get to where they are now. How did you end up in the position you are now in?
“I am originally from Yancheng and my background is electrical engineering. When I was 22 years old I was directed by the government to work for a furnace company by the name of Fengdong although I knew nothing about heat treating. I was trained in Japan for one year before returning to Fengdong which was 27 years ago now. I began with furnace manufacturing, designing, sales, then full management of Fengdong group.”
I know Fengdong by reputation but I know little else about the company. Could you please give myself and our readers an idea about the history of the company?
“Fengdong was officially registered in 1989, when it was partly state owned with Japanese company Oriental Engineering as a partner. It started in operation in 1990.
The first 10 years (1990-2000), it was a traditional Chinese state owned company in a poor economy with average sales of 10 million RMB (approximately USD 1 million) per year.
The second 10 years (2000-2010), it was transformed to a private company with the employees buying shares. During this period, average sales were 100 million RMB (approximately USD 12 million) per year. Since year of 2000, we took every opportunity to promote sales domestic and overseas and enhance the technical cooperation internationally. During this period, we had very fast growth in the company.
In 2010, we became public and Fengdong remains the only publicly traded company in China for heat treatment. Since we became public, we further grow our company and acquire other business. Our combined annual sales will be approximately USD 250 million in short time. Profit is expected to be USD 50 million.”
What products does the company offer?
“With the acquisition of Powermax Shanghai we now have 12 commercial heat treating locations, 11 in China and 1 in Korea with 5 manufacturing locations including Powermax. We are very proud of the fact that we can offer all types of heat treating equipment, atmosphere, non-atmosphere, induction and vacuum. Our commercial heat treating plants also offer all available types of heat treating processes.”
Several times over the years I have been told that Fengdong is the largest furnace builder in the world-do you believe this to be true?
“Equipment sales are approximately $100 million USD per year which puts us amongst the one of the top furnace builders in the world and certainly we hope to be the largest in China. Commercial heat treatment sales were about $30 million in 2017.”
Do you prefer the commercial heat treating side of the business or furnace manufacturing?
(Editors Note; There appeared to be a difference of opinion amongst management on this question.)
“There is no doubt that we will stay in the equipment manufacturing business, but we want to invest much more on high end heat treatment services in the future.”
What is your biggest concern running this business?
“We have set ourselves a very ambitious goal and this it to reach annual sales of $1 billion USD. My main concern is where will all this future growth come from? In addition, where do we find the good people necessary to achieve this goal?”
What drives you? Why do you work as hard as you do?
“Our goal is to grow the business and make sure that all our employees feel that they are part of the business, that they are contributing and that they are sharing in the success of the company. This is a large task which takes a lot of hard work. On average, everybody on our management team works 70 hours a week.”
Recently you acquired PowerMax Shanghai. Why was this company of interest and how will it fit in with your future plans?
“PowerMax was of a great deal of interest to us because of their experience with salt quenching and the ADI process. I regard this not as an acquisition but rather a collaboration. We hope and expect that with this collaboration Fengdong will become the leading company in the world for salt quenching. The Powermax name and location will remain. Fengdong has had great success over the years working with Japanese and European furnace builders and we believe that by working with Powermax with their US ties that it will again be a success. We have worked with Andy for over 20 years now. We have a very high opinion of Andy and regard him as a major asset to Fengdong.”
The company has come a long, long way in a relatively short period of time-how did this happen?
“There are several reasons but a large one is our close collaboration with foreign companies, to share technology. We also very seriously consider the customers needs.”
Does it pose a problem for you doing commercial heat treating and also building furnaces? In North America and Europe, a furnace builder would not be able to offer both as potential customers would see them as a competitor.
“This has not been a problem, we believe that commercial heat treating gives us valuable experience for our furnace building business. As a result, even though we are in same business, cooperation is still always possible.”
Where do you sell most of your products?
“85% of our products are sold and installed in China with 15% exported.”
I’m sure that there are a lot of furnace builders and heat treaters around the world that would like to know the answer to this question. Do you have plans to aggressively start selling in Europe and the Americas?
“We have looked at and considered opportunities in many areas around the world including acquisitions and will continue to do so. Geographically all areas are of interest to us.”
Several furnace manufacturers feel that the future of heat will be single part processing. In other words continuous furnaces that process the parts one at a time. Obviously this is not suited for large volume, small parts such as fasteners but more for parts such as transmission gears. Do you personally feel that this will be the way of the future?
“We learned that message from the market place and we do not disagree it is a good idea. However, we are more concerned with heat treatment quality and cost control. Certainly, we do things to meet a customer’s specific need.”
What else would you like to tell us today?
“I have a dream and that dream is for Fengdong to become a world renown company, a company that is an industry leader and where all of our employees feel that they are participating in the growth.
Hello the world- Fengdong have a dream about heat treating!”
Mr. Zhu I thank you for your time today. Gord Montgomery