For power conversion specialist Converteam, the last few years have been characterised by rapid growth into new markets and continuous improvement. TM talks to Duncan Johns, vice president of Converteam’s Systems Engineering and Drives division, to uncover the secrets of the company’s success.
Converteam is an engineering company specialising in power conversion, boasting more than 100 years’ experience in this arena. The company is derived from industry giants such as Alstom, Cegelec, Jeumont Schneider and GEC; in late 2005 a management buyout from French company Alstom produced Converteam as we know it today, and in the three-and-a-half years since, the company has gone from strength to strength.
Converteam prides itself on offering reliable, cost-effective and environmentally-friendly electrical solutions that are designed to suit the exact needs of any one particular customer.
Duncan Johns, vice president of the company’s Systems Engineering and Drives division, explains how the outlook of the company has evolved since the buyout process: “We are very focused on what we do,” he says. “We’ve been able to define what we are, who we are, where we want to go, which markets we should be aiming at and how we do it. We have the flexibility of being smaller and the drive that you automatically get from being a leveraged buyout (LBO) company,” he says.
And the company’s growth is certainly impressive. In 2005, when the company separated from Alstom, orders totalled €777m. Three-and-a-half years later, and the orders for the group as a whole have reached €1.3bn. Staff numbers have also increased substantially, in order to meet the requirements of the company’s rapidly growing order book, a large proportion of which is made up of contracts from the oil and gas industry. Last year, for example, the UK division of the company took on no less than 400 new recruits, most of them engineers, bringing employee totals in this area to 1500 and the percentage of engineering staff up to 51%. The total headcount for the group worldwide is 5300 and colleagues operate across 14 countries. Needless to say, production and output has swiftly grown alongside these numbers – the rotating machines plant at the Rugby headquarters for the company’s Northern Europe division, for example, was making less than 40 machines per year four years ago; this year, however, it will manufacture over 200.
A global impact
Converteam’s global span is no less impressive. Worldwide, it boasts 22 sales offices, 10 engineering offices, 4 rotating machines facilities, 8 drives facilities and no less than 40 service centres. Through the latter, Converteam is able to offer hotline assistance, remote diagnosis, customer training, technical support, consulting and other services.
The organisation is split into four regions – Northern Europe; North America; Southern Europe/Middle East/Africa and Central & Eastern Europe/Russia. Headquarters for each of its regions can be found in Paris, France; Rugby, England; Pittsburgh, USA; and Berlin, Germany. In addition, there are three manufacturing plants in France, three in the UK, two in the US, one in Brazil, one in Germany, and one – soon to be two – in China. There is also a major engineering centre in India and a large office in South Korea, as this is where the majority of LNGs and drilling rigs for the worldwide market are now being built. There is also Converteam presence in Austria, Russia, Singapore, Norway, the UAE and Canada. Johns estimates that around 90% of the company’s products are exported all over the world.
The company’s expertise lies in power conversion, which means either taking mechanical power and converting it into electrical power; or taking electrical power and converting it into mechanical power. This involves motors and generators on a large scale, as well as the electronics and conversion systems that accompany them. More broadly, Converteam’s capabilities encompass consulting, manufacturing, design, system integration, installation and commissioning.
“We are differentiated by our specialist skill as a system integrator,” Johns explains. “The overall expertise of the company is not as a product manufacturer – though we do manufacture our own products – it’s as a systems engineer, to design complete systems that integrate our products, to adapt our products to particular needs,” he says. “So we are not a serial manufacturer; we are a bespoke manufacturer of systems that we design ourselves. We are far more specialist and would claim leadership in certain areas where we specialise.”
The company as a whole can be said to serve four major markets – marine, oil and gas (including offshore), energy and industry.
Within the marine market, the company provides solutions for merchant vessels (including tankers and LNG ships), cruise ships and naval combat and research vessels. For these customers, it provides a range of solutions, including electrical power and propulsion systems, ship automation, power management systems, dynamic positioning systems and auxiliary on-board solutions. From its UK plants for example, it provides electrical power and propulsion for both the Royal Navy and the US Navy; from its French plants, the company supplies the French Navy.
In the oil and gas exploration market, Converteam works within refineries, extraction and pipelines, offering high speed motors, motors and drives for compressor pumps and drilling systems, energy quality and management systems.
The company also has a strong presence within the process industries. Broadly, this covers aluminium, steel, cement, glass and paper; solutions include systems for steelmaking, hot and cold rolling mills and processing lines. It also offers solutions for material handling and water treatment, as well as test benches for the automotive and other industries.
It is clear that the company has a wide global reach, with a comprehensive range of solutions for application within the most demanding of markets. But perhaps the most significant area of growth for Converteam, now and for the future, is in the renewable energy market. Providing solutions for onshore and offshore wind turbines, wave and tidal energy and power-generation auxiliaries, it offers a range of solutions that includes generators, power conditioning systems, and electrical drives for pumps and fans.
“We expect to expand in all our current markets but the big area of expansion for us in the future will be wind power and the manufacture of generators for wind turbines,” confirms Johns. “We’re already a pretty substantial supplier of the power converters that go with the generators, but the offshore market – which is the market that will see massive growth over the next five years – will require a different type of generator and we believe that we’re extremely well-placed for that with some of the new technologies that we have. To be specific, [the offshore market] requires a generator without a gearbox, which means you need a low-speed machine. We have, with a permanent magnet generator, a very, very effective answer to that problem.”
The company’s firm foothold in the renewables sector has further heightened its awareness as an environmentally-conscious organisation. With strong environmental policies already in place, it is accredited to ISO 14001, and is currently looking very carefully at a number of methods by which it can further reduce its carbon footprint, and therefore its environmental impact. One way in which it is doing so at the moment is by finding ways to reduce travelling to meetings, by investing in new technologies that allow remote or virtual meetings to take place. “We’re attempting to reduce our carbon footprint all the time,” confirms Johns, “and we have a major initiative at the moment to reduce the amount of international travel we do by replacing that with net meetings, processes and using new telecommunications media, rather than getting on an aeroplane every time. [The initiative is] just starting but I think we have potential to reduce our travel budgets significantly,” he says.
With such a vast range of offerings and solutions for its customers, it is hardly surprising that one of the areas of its business in which Converteam invests most heavily is research and development (R&D), where the true cutting edge of innovation at the company is beginning to reveal itself. Exciting new technologies are being researched and are coming to the fore. “As far as technology is concerned, we do put a lot of money into R&D,” confirms Johns. “In the UK we’re doing the most fundamental R&D in the group; even to the extent where we’re working with cryogenics and superconducting materials now for our next generation of products.”
Such exciting developments are helping to propel Converteam ever-higher within the marketplace, thus enabling the company to attract an extremely high calibre of staff. Johns believes that, combined with other factors, it is this – the quality of the staff – that places the future of the company in an extremely firm position. “We have some absolutely world-class, worldleading brains now and we believe that this is really securing the future growth of the company,” he says.
The fruits of Converteam’s investment in R&D are also evident in the company’s relationship with its customers: “Certainly, when we allow customers a glimpse of some of the new technologies that are coming along, they get very excited by it,” Johns confirms. “So even though times are tough [due to the global financial crisis] and we’re being cautious with any money that we spend this year, for obvious reasons, we’re not reining back at all on what we spend on R&D. We see this as a fundamental differentiator for Converteam in the future.”
People are power
With such highly skilled and talented staff in place, it is clear that Converteam sees its people as its greatest and most valuable asset. To this end, every individual has a training programme which is reviewed each year during an annual assessment. The company also has its own in-house academy – the Converteam Academy – that runs specific training courses covering a diverse range of business skills including quality, leadership and sales. Some of these courses are delivered in-house and some using outside training agencies, but whatever the method, Converteam sees them as a crucial ingredient to success. Just like investment into its R&D programme, the company does not hold back when it comes to investing in its people.
“This is somewhere where we are prepared to invest,” confirms Johns. “These are week-long courses and we see them as being among the best investments we could make. They help our staff adapt to the changing markets, as well as giving them new skills, or upgrading the skills that they’ve already got.”
With such cutting-edge technologies at the heart of its success, Converteam sees skills as vital to enable the effective development and delivery of its highly bespoke solutions. “We are a company that relies on the skills of individuals,” emphasises Johns. “In some of our manufacturing plants, we rarely make the same thing twice, so there’s not much room for automation.”
The company believes that to underscore the skills that have been developed and nurtured, lean must also play a key role in day-to-day operations. It has therefore implemented lean companywide and places a firm emphasis on its importance, both as a driver to the company’s success thus far, and to its future development. “The development that we see in our manufacturing plants is allied to improving efficiency through our lean activities,” confirms Johns.
The company has ensured that lean is not something that is dipped in and out of; rather that it is a robust process firmly embedded in Converteam’s processes, with everybody taking it on board. “We started on our lean journey about three years ago,” explains Johns. “It’s something we’ve done very much ourselves, and see it as being a way of life rather than a management system. We’re very, very pleased with some of the results that we’ve achieved from it.”
The company opted not to use external lean consultants during the implementation process, choosing to employ instead several staff members from the automotive industry – including Johns – who already had a good working knowledge of the subject area and how best to implement it. “That has helped us a lot,” Johns explains. “Of course, our environment [at Converteam] is completely different in that we’re a project rather than a volume manufacturing environment, so what we’ve had to do is take the basic principles of lean – that is, the elimination of waste – and look at how we apply them within our environment. But we do use standard lean tools like value stream mapping and we have got huge benefits out of that.” By way of example, Johns cites a product that Converteam manufactures in Glasgow. Before ‘going lean’, the product took 156 days to manufacture; now it takes only 19.
Converteam has been bold and forward-thinking enough to apply lean in areas of the workplace where other companies fail to appreciate its true value and thus often fall short of complete conversion. “We started off in the plants and lean has now spread into the engineering areas and into the offices,” Johns explains. “We’ve even leaned our finance organisation and got benefits out of that so, yes, it is applied across the whole company. And really, if lean is to be a way of life then it has to be everybody’s way of life,” he adds.
The company has been careful to be prudent with its investments in technology and IT, to ensure that they do not clash with its lean ideals. “Our philosophy now is that MRP is a very useful tool but it shouldn’t be the only tool,” Johns emphasises. “If you’re going to work in a lean environment – if you’re going to work in an environment where you’re daily reducing your manufacturing lead times – then actually it is very useful to still have some manual systems within the context of the plant itself. What MRP will do is to bridge the plant and ensure that you’re ordering the materials you need from your suppliers; once those materials are in the plant, the actual daily workflow is better defined by individuals with pieces of paper on the shopfloor than being instructed to do something by a computer,” he says.
Despite this, Converteam still sees the value in investing in highly sophisticated and often cutting-edge technology – if it is appropriate for the needs of the business: “Within the design area, we have a vast range of tools, a lot of which have been developed in-house. A lot of our design work is done on 3D modelling and we now have the capability to do 3D printing, where you get a facsimile 3D object made straight out of a drawing,” Johns enthuses.
Recognition of success
Being so forward-thinking in its outlook and being able to boast such rapid growth over the past few years, the company has – perhaps unsurprisingly – graced the stages of several awards ceremonies over the past year alone. Among those recognising its achievements was The Manufacturer itself, awarding Converteam’s Kidsgrove plant with the highly-coveted World Class Manufacturing award at The Manufacturer Live Awards ceremony in London last October. Converteam’s Glasgow plant was both a finalist and commended in the Manufacturing Excellence Awards, run by the Institute of Mechanical Engineers. Two additional awards that Converteam is particularly proud of are a gold award from the Royal Society for the Prevention of Accidents (known as ROSPA), which was awarded for a fourth consecutive year, and a recent International Award from the British Safety Council (BSC).
Such glowing achievements and industry recognition are surely indicative of impressive achievements in difficult financial times: as the world tightens its belt, Converteam is continuing to perform successfully. Johns has a positive outlook: “Of course it’s no secret that the world is in a financial crisis, and I don’t imagine that there are many businesses that are not affected by that. For our business, it is not so much that there are not the projects out there, but that the projects that we would supply into – such as new wind farms or new vessels being built – are being delayed. But we’re in the happy position that we went into the year with a very strong order book, and we’re still taking orders. Eventually the vessels will get built, as will the wind farms. We are not so much ‘suffering’; but we are aware that the market itself is suffering from lack of capital. Once that capital is freed up, then our business will go back onto a very strong growth pattern,” he confirms.
This growth pattern will no doubt be supported effectively by the systems and processes that Converteam has taken great care to implement and refine, including lean. “When the markets come back, people will be wanting fast delivery on their orders and lean is going to help us to do that, by reducing manufacturing lead time and increasing our flexibility,” Johns emphasises.
It is clear that Converteam has achieved its current levels of success through a firm commitment to continuous innovation, investment and improvement. Doing so has allowed it to secure contracts from major customers – its biggest in the UK, for example, is the Ministry of Defence.
Having just secured the contract to provide power propulsion systems for the Royal Navy’s new aircraft carrier, which will involve supplying the generators, switchboards, motors and much of the electrical architecture on the boats, it is clear that Converteam has no time to sit back and reflect on its success thus-far. Instead, it will keep moving forward, adapting, looking ahead and innovating.
“Due to the nature of our business, each project is a new challenge and we adapt to that. We’re continuously refining and adapting our offer to the market,” Johns concludes.