Pawel Wyrzykowski / Seco Warwick
I have to say Pawel that I have been looking forward to asking you a few questions about Seco Warwick and the heat treating world. To start off I have to say I have never been entirely clear about the structure of Seco Warwick. As an example you have a number of different locations around the world-are these all divisions of Seco Warwick?
“After a transformation period we have been able to finally create a clear corporate structure of the Seco/Warwick Group as of the beginning of 2013. So, right now we have a small industrial management holding company (S/W SA) which, on the one hand is listed on the Warsaw Stock Exchange, and on the other – holds all remaining shareholdings in our regional operational companies, such as S/W Eurpoe (Poland), S/W Corporation (USA), Retech (USA), SWR (China) and SWA (India). Apart from this we have 2 sales & service regional companies SWS (Germany) and SW Russia. S/W Holding employes 5 Vice Presidents globally responsible for our 5 technology lines (business segments) and some functional managers, who are globally responsible for purchasing, HR, finance and a few other functions. Apart from this we developed a legal and management framework which sets up the rules and relations of single companies with our global business segments and defines the principles of joint projects. ”
I have always been curious-where did the name Seco Warwick come from and when was the company started?
“Seco Warwick was originally the name only of the SW Corporation in the US, who had acted as our previous parent company. Then, in 2006 the so called reverse take over took place, where the Polish subsidiary took over its US parent company, which in effect became a subsidiary. Until 2012 some management functions were spread over 2 or 3 group companies. We decided to change it and right now we are proud to have not only a very transparent corporate structure, but also a structure which supports our strategy and the know-how transfer.”
How did you end up as the CEO of Seco Warwick?
“Until the end of 2011 I had been working for 13 years for a German industrial company. Firstly and I had the honor to lead the East-European business for 10 years and then the last 3 years I spent on the corporate level in Germany being in charge for all international activities. When I wanted to return to Poland, Seco/Warwick was searching for somebody of my profile, not necessarily with furnace experience. From the moment we met, it was a short way to agree on my assignment. I respect this opportunity very much, as there are really not too many truly global industrial companies with their HQ in Poland.”
When I think of Seco Warwick I think of vacuum furnaces first, aluminum furnaces second and everything else further down the list. Is this a fair assessment? Would you care to share with us a breakdown of the various types of furnaces you build in terms of a % of total sales? For instance are vacuum furnaces 50% of your overall business?
“Yes, apart of Vacuum and Aluminum, we have 3 further business segments which are: Atmosphere, Melting (Retech) and CAB (Controlled Atmosphere Brazing).“
What are annual sales for the company or group?
“For 2012 we ended up with sales of 120 Million EUR, which represents a 34% growth over 2011. The year 2012 was clearly the most successful year in our history, but we intend to keep growing in sales.“
I would venture to say that Seco has probably sold more single chamber vacuum carburizing furnaces than any other builder out there-sound reasonable? Continuing with vacuum carburizing I know a number of years back you designed a large multi-chamber vacuum carburizing system but I don’t recall ever seeing one in operation. Is this still one of your product offerings?
“SECO/WARWICK has been working on the low pressure carburizing systems for almost two decades. This is one of the success stories of close cooperation between the scientists and the industry. Together with our partner from Technical University in Lodz we have developed and patented a very unique carburizing technology, called a FineCarb. It is based on the special carburizing gases mixture, and jointly with a number of smaller solutions it enables our customers to run the process very efficiently and without the formation of soot and tar. Part of the package is a simulation software, that makes it very easy to build the process recipes. Because of the technical advantages, nowadays, practically all high pressure quench furnaces sold to the commercial heat treaters are equipped with this feature. Encouraged by the success we have reached with single chamber HPQ furnaces, we have developed new double and multi – chamber systems. The first unit build, the one that you are referring to, is working for the global heat treatment service provider. The experience gained with this unit has helped us in winning orders for other multi-chamber installations.“
Any plans on getting into the nitriding business?
“We’ve been in this business for a few years. More and more of our customers are looking to source the equipment and the technology from one company . This is why, a little over three years ago, we launched a nitriding technology called ZeroFlow. What is unique in our method, is the high efficiency combined with a very low consumption of ammonia.”
Sales wise what is your largest geographic area and do you see this changing in the future?
“Currently it is still the US and Europe. But we are very happy seeing our development in Asia. SW Allied is already the biggest furnace producer in India. The year 2012 was the first full year of operation of our new factory in China and we are proud about our achievements there. We hope also to increase our activities in some other interesting markets in the future, like Brazil, Russia and Germany.”
With all due respect to yourself and other new furnace builders my opinion is that basic furnace design has changed very little in the past 50 years. Granted the controls have changed dramatically but beyond that the design is largely the same. Do you see this changing any time in the near future? Does Seco have any radical new ideas which you can mention?
“Generally I agree with your observation. However keeping in mind the purpose which each furnace should serve, Seco/Warwick constantly improves the design of our equipment. The biggest changes, that we can see, are in the quenching systems. This has always been a strong feature of our furnaces. We have come out with the new class of HPQ furnace, whose quenching rate is close to the one, reached in medium cooling oil. Our customers also operate in very competitive markets, especially in USA and Europe. We have realized that and we are offering the systems that can work in fully automated mode. New, three chamber furnace, displayed at last Thermprocess, armed with PreNit technology can reduce the cycle time, by halve, when compared with traditional carburizing technology. We are all becoming more and more environmentally conscious. SECO/WARWICK is investing in the new technologies that reduce, or virtually eliminate the emission of greenhouse gases. Another interesting design concept is our EXPANITE project which has created very good market feedback already.“
Do you have any plans for acquisitions within the furnace manufacturing industry that you can share with us?
“End of December we announced our aquisition which was a service company in Germany, which has been renamed for Seco/Warwick Service GmbH. We are confident that this move, in combination with our innovative product range, will fill in a gap in our offer for our German speaking customers. Now we concentrate fully on making our new corporate structure work, so we can transfer easily some of our significant local strengths to the global dimension. This task we regard as our biggest potential. In 2012 we could see our first success on this field, after having transferred our Vacuum know how from Europe to the US, or after having established a 16 employees Retech division in Poland. Both moves brought as some more satisfied custoersa significant growth of sales in 2012 already. In April we took over the controlling interest of S/W Allied in Mumbai , India. Now we have started the process of a full integration of SWA into our global structures.”
Pawel earlier this year you introduced a new product for heat treating of stainless steels, if memory serves me correctly this would be in competition with other processes currently being offered . Has this been a success for you?
” Yes, at the end of last year we came to an agreement with Expanite A/S from Denmark. This is a great team who has developed and patented processes for the surface hardening of stainless steel to achieve superior surface and material properties. A few days ago we launched a show room with dedicated equipment to run an Expanite and Superexpanite processes. When you consider the advantages of applying this technology: surface hardness up to eight times that of the normal base alloy, enhanced fatigue and load bearing properties, corrosion resistance (up to 400 hours in salt spray chamber), we are expecting a breakthrough successes.”
What are you forecasting for sales in 2013? Better? Worse? About the same?
“As a stock listed company we are not allowed to publish any official forecast. End of 2012 we published our strategy. The financial dimension of this strategy would be reaching 1 Billion PLN of sales in 2016 (ca.235M EUR).”
The new furnace business is a crowded arena these days with an estimated 183 companies around the world. The past couple of years have been good ones for the industry but in the event of a slowdown do you expect to see a number of your competitors disappear? While we’re talking about competitors do you feel that most are good, respected companies?
“Yes, I am sure there are some very respected competitors of ours out there, on the market. My take is however that we should expect some consolidation in the midterm. I am sure that some smaller, local furnace makers will always find their niche, but the trend should definitely speed up and go towards bigger, R&D oriented companies. The new material applications in our key customer industries, such as aerospace, new energy or automotive will further require new heat treatment solutions, which can be generally reached only by the technology leaders in the furnace production. I think this growing R&D burden can be carried mainly by bigger players, who can afford it from the financial perspective, but also from the point of view of the efficient management. The consolidation trend against smaller furnace makers will further be emphasized by growing environmental standards and some customer expectations in this respect, which again can be better met by bigger furnace companies with broad international base of experience.”
I thank you for your time Pawel and thank you for your insightful, candid answers.