Classic Foundry Turned into Modern Component Supplier
In the last year, the Čakovec-based company operating within the Austrian Preis Group has been transformed into a manufacturer of components with higher added value for the European industry. It already possesses the world’s most environmentally friendly and currently most efficient smelting technology
Author: ALEKSANDRA BRZIĆ
While returning to Zagreb from Čakovec early that afternoon, I had the urge to eagerly exclaim: “People, they’ve been lying to us that there’s no industry in Croatia! There sure is, and then some – there’s heavy industry here!” to anyone I encountered on the way. I visited the Ferro-Preis factory, the former Čakovec Foundry, soaking up images of furnaces, smelters, hot cast iron, workers in silver protective suits and visors servicing machines as if I had stumbled onto the set of the movie “Armageddon”. Smoke was rising into the air, it was unbearably hot, drops of iron melt were flying around, it was loud, cranes were carrying glowing boilers hung on large iron chains that ended in even bigger hooks. I was so excited I was unable to focus on the production process; I was looking around in wonder as if I had fallen into some parallel universe of some reality that I did not know existed until that moment, at least not in Croatia.
I feel a certain admiration for production, when the ideas of creative individuals, just like Plato described, descend from the world of ideas into the real world, when they are given form, value and meaning. I remember everything, stepping into the facility, the helmet and protective suit, which didn’t bother me at first, but towards the end of the tour it got hot and I could hardly wait to get out in the open air and take off my protective clothes, albeit it was hot even outdoors, even though it was mid-September. And then I remember the fact that twenty percent of foundry employees are women, whom I also saw with my own eyes, and I think about what it’s like for them to be in full combat gear and work for eight hours, not to mention the workers who are in the immediate vicinity of furnaces where iron melts at 1500 degrees Celsius! And my job, which everyone in the world considers to be stressful and tiring, seems like a fairy tale I want to stay in forever.
A Diverse Product Range
Ferro-Preis General Manager Marijan Nöthig and his closest associates took us on a tour of the facilities, during which Lider’s photojournalist and I were constantly taking photos, him with his professional equipment, for the needs of the press, and me with my mobile phone, to have something to remember this by. So, I had to call Nöthig once again after leaving to hear about the production process for a second time. It all starts with the smelting of iron, raw materials used are pig iron, i.e. iron ore, and scrap industrial iron, most often from shipyards. After smelting it for 45 minutes in two furnaces, each with a capacity of four tons, the melt is poured into pots that are transported along production lines. One produces pipes, the other smaller castings up to 15 kilograms, the third castings up to 150 kilograms, and the last one makes small batches of products weighing up to two tons. The castings are poured into sand moulds, after which they are sent for grinding, where machines apply the final touches. Afterwards, they are sent to subcontractors for further processing and painting, i.e. surface protection.
It all started in the 1960’s, in the facilities of what was then the Čakovec Foundry, which operated as part of the Varaždin Foundry. Since 1991, at the beginning of the Croatian state transition, the company has been wholly owned by the Austrian Jägersberger family and thus a part of the Preis Group based in Pernitz, Austria, and has been continuously growing and developing ever since.
- “In the old days, the most important products were electric motor housings. We have gradually expanded our range, constantly investing and modernizing, so that today we produce an entire range of products, i.e. components that are installed in the final products, whether they are parts of electric motors, bearings, pumps, railway vehicles, whether for the machinery industry, in medical technology, technology applied in renewable energy sources, and it is precisely this diversity of the range that is a strategic determinant of our business”, Nöthig points out.
Relationship with the Owner
One third of the production program of Ferro-Preis relates to the production of cast pipes and their fittings, which they sell under their own brand throughout Europe, from Portugal to Siberia and from Iceland to the Middle East and North Africa.
- “These are drainage pipes in various buildings, they are used because of their fire-retardant properties, in cases where plastic pipes can’t be used, and they are used in museums, schools, hospitals, prisons, hotels, stadiums and all buildings of public interest”, Nöthig explains, and adds that while on business trips, in Germany, Poland, Finland, they often see products of their own brand, for example, a hotel garage equipped with products branded under the name PREIS® Drainage Systems, which gives them immense satisfaction.
When asked how much they depended on the Preis Group, Nöthig answered that, until ten years ago, they functioned more as a production plant than an independent company. After that, in agreement with the owners, the Group was organized in a more modern way and all locations became more independent and in charge of their business and profit.
- “We are almost completely independent in terms of operational business, which means that we are responsible for production, sales, finance, procurement and development. We perform activities related to IT and human resources in synergy with the Preis Group. We produce a part of the drainage products for the construction segment, which is under our own brand, through a sister company in Austria. We prepare the company’s annual budget ourselves, subject to the final approval of the owner, and we monitor its realization and objectives on a monthly basis. Also, Čakovec is where the development strategy is defined, and it’s subsequently coordinated with the owners’ views and the vision of the Group”, Nöthig replies.
- “One part of our process of transformation into a modern foundry is also our new investment cycle that we have just initiated, the first phase of which is worth 45 million kuna. Therefore, at the beginning of September, we ordered a new production line for the production of castings weighing up to 250 kilograms. It is the most modern line in this segment, which will undoubtedly ensure our competitiveness in the coming decades.”
Annual production capacities vary, but mostly amount to 15 thousand tons in terms of smelting, whereas the production of castings of grey and modular cast iron is 10 thousand tons, and the production of pipes three thousand tons per year. When it comes to the segment of iron pipes and drainage fittings, they are one of only three manufacturers of such systems in the whole of Europe.
Ferro-Preis exports more than 90 percent of its production, which percentage varies depending on the year and the contracted projects.
- “Since a significant part of the range sold in Croatia consists of components that we produce for export-oriented industrial companies such as Končar, we can say that our nominal exports almost always amount to more than 95 percent of production, and we export to more than forty countries. In terms of industrial components, our markets are mainly located in Western and Central Europe, and we are currently negotiating with some American customers.” Nöthig, an experienced manager and a graduate electrical engineer, who has been working at Ferro-Preis since 2011, and since 2019 as its General Manager, proudly states: “Our drainage systems are installed in a variety of buildings – from hotels in Portugal to stadiums in faraway Siberia, from concert halls in Iceland to shopping malls in Dubai or skyscrapers in Doha.”
The company’s key customers are the world’s major corporations, including ABB, General Electrics, Sulzer, Schäffler, Liebherr, Siemens, Knorr-Bremse, and other leading companies in various industries – bearings, electric motors and generators, pumps, machinery, railway vehicles, medical technology, construction machinery… Although they have already gained a worldwide reputation and often reach new customers through word-of-mouth, contracts are often concluded at specialized fairs where they regularly appear or directly approach companies which they think might be interested in their products.
- “If we take into account the fact that we produce up to three million pieces of different products a year and that most of them end up as a component in a wide variety of products, I would dare to say that our products could be found in all countries of the world. This year, we delivered one demanding project of 30 large bearing housings, each weighing more than 1.5 tons, which have already been installed in mines in New Zealand”, Nöthig remarks.
Their 2019 revenue amounted to 125 million kuna and was record-breaking. In 2020, they expect a revenue of more than 120 million, which is at the level of 2018 and which, given all the circumstances and the situation with the pandemic, they consider to be an excellent result. Profits in recent years have ranged from three to six and a half million kuna and are being continuously reinvested. Production takes place in two shifts, and on Saturdays if needed. Ferro-Preis has about two hundred employees, of which more than 170 work in production and departments directly related to production.
- “Every employee is free to put up a note on the visual boards located in various departments stating a problem in the production process or a suggestion on how to improve a process at any time, and we bring up the issue at daily meetings and try to solve it. We talk openly; everyone can ask their superior or the Management Board anything they are interested in, we are trying to abolish the culture of accusations, and develop a culture of problem-solving and cooperation, and I think we are on the right track”, Nöthig says.
As a comparative advantage, the CEO of Ferro-Preis states that there are few foundries in Europe that can deliver machine-processed and anti-corrosion protected castings from 300 grams to two thousand kilograms from a single production facility in a dozen different alloys and produce pipes of various sizes. They work on anti-corrosion protection and machining of castings in cooperation with more than 30 associates and subcontractors, and they have been cooperating with some of them for decades.
When asked what their long-term development strategy is and whether they plan new investments, Nöthig answered that they are not and will never be the largest and most sophisticated foundry in Europe, but are certainly one of the most agile and flexible, which is precisely their main business strategy.
As Nöthig explains it, “We are prepared to offer customers various ways of logistical monitoring in order to ensure just-in-time production in their factories. Customers appreciate this because they can get a wide range of components and products from a single supplier, which they subsequently need to merely incorporate into products in their factories.”
New Investment Cycle
In recent years, they have been working on the transformation of the old classic foundry into a modern supplier of higher value-added components for the European industry, which operates according to the principles of Industry 4.0.
- “A part of our transformation into a modern foundry is the new investment cycle that we have just initiated, the first phase of which is worth 45 million kuna. Therefore, at the beginning of September, we ordered a new production line for the production of castings weighing up to 250 kilograms, which is the most modern line in this segment and is bound to ensure our competitiveness in the coming decades”, Nöthig concludes optimistically.
Instead of coke, the material previously used in production, nowadays Ferro-Preis uses an environmentally friendly and currently the most efficient melting technology in the world, using medium-frequency induction electric furnaces that operate on the principle of electromagnetic induction, thus completely eliminating emission of harmful gases.
And judging by such orderly processes, solid business results, a dispersed customer network and continuous investments in production modernization, a secure and successful future for Ferro-Preis lies ahead.
“Lider”, 25 September 2020