We had the chance to catch up with Mr. Pierre Verreet while in Shanghai covering bauma China and discussed the company’s current state of affairs, as well as its future (in relation to wire ropes).
Pierre Verreet, Managing Director of verope AG (right) and Travis Buck, CEO of LTI Steel Wire Rope (Shanghai) Co., Ltd.
LRW: What is the business concept of verope?
Pierre Verreet: The company’s target is to be competitive as a manufacturer of wire rope in different sense, in technology and service.
Firstly, for technology, it means we continue working on upgrading our existing products, working with alternative material, verifying that we have continuous good quality. Wire rope is used in the crane, it’ very important for the crane. The rope as a system must be safe.
The second thing what I am talking about is service. verope has established service centers in different countries throughout the world. With the service network operated by our own company, we have product available at various locations. In addition, we have machinery for processing the product, to cut the product, to put end fittings to product for the final customers. Moreover, we have testing installation in different locations in the world. We sell not only the rope, but the rope as a package to the final customer.
My concept is when you buy a verope product, it is not just the wire rope, it starts with consultancy business. So we work very closely with crane manufacturers, already in the prototype phase. We have influence on the reeving system possibly, to make sure that the rope has compatible reeving system which can lead to high service life. At the same time we can calculate the rope diameter given the parameter required, we calculate also the whole rope drive.
And then when we are in the business, we accompanied the sales, dispatch of the product, also during the total life of the product, with our technical after sales service. And that is very important part of our concept.
So we have that service and logistics center in China. We have also establishment in United States, for the North American market, likewise, also in Europe, in Germany, in South America, and in Singapore. We cover the world with all these services.
verope – rely on
LRW: How is the Chinese market different from others in the world?
Pierre Verreet: I think the Chinese market is very interesting with a lot of potential. What I have seen over the years in China is its enormous development, of course in construction industry. There Enormous built up of capacity in the crane business. But I think we are now under the situation where there is over capacity of cranes.
It’s the time we are talking about after-sales services and the replacement business. Because now the cranes are used a couple of years, that need to replace rope. So we all take our sales today in China on servicing and for the after-sales the customers. That is what we see is the change.
Of course in China I am a little bit worry about some developments such as the deficit spending in Chinese government also. The inflation, the price development, but that’s not part of our business yet. But these may create some issues for the future.
Backup-customer service office in Shanghai
LRW: Is verope expanding fast in the fast few years?
Pierre Verreet: Yes, the company is expanding over the years. Today the Chinese entity is the largest one verope has. We have about 100 people working in our Chinese entity. And as you see, these 100 people are not manufacturing wire ropes, but processing wire ropes and servicing. So if you take the number of people involved in processing and servicing, this is quite a big company.
As for example, we have in Germany only 50 people involved in our service sector, we have 20 in Switzerland, 25 in the United States, so Chinese is the biggest entity and shows the importance market for us.
Guarantee- long-term stock reserves in Shanghai
LRW: What is your expectation for the coming few years for verope?
Pierre Verreet: This all goes along with the general development of verope, we are striving for increasing our innovation force. We need to use more efficient methods to achieve our company’s potential. We would come up with rope solutions which we are going to create new markets. That’s the target for us for the future.
At the same time we have all to work on our competitiveness. Our competitiveness is on services, price and everything. I see a further good development tear but on the higher quality level.
LRW: I know verope is concentrating on ropes for cranes, do you have any plan to work on other industry, such as oil & gas offshore?
Pierre Verreet: The market segment offshore as we speak right now may be the most difficult market. Because the recent over capacity in oil exploration at the very low price, so there’s no further investment right now in the world. Say, installation for the exploration part, have over capacity already.
The political situation worldwide is also not very helpful in the sense. Because we have a new president elected in United States, which supporting the fracking procedures, which means we already have a lot of oil available, and explore, and now here comes the fracking, that brings even more products into the market. And the price will further go down. So I do not expect in the next two years, this market segment will cure.
You see in our Jointed Venture with Kiswire, we have a production for large diameter rope, but as any other manufacturer of large diameter rope, they all have a difficult times because of offshore. That’s for sure not our orientation for the next two years.
If you want to talk about the crane business, the other segment where we are looking at, is mining business, where we are working intensively with the mining group of people in the markets like Australia, South Africa.
Guarantee- long-term stock reserves in Switzerland
We also intend here in China, to explore the mining business. Because we have technology, also from our parts of experience for mining business. They need more efficient solutions for the installations. They need more advanced products, because an advanced product is also possible to reduce exploration cost. As we know, the mineral exploring companies are under price pressure, so if we can help them to increase service life, and in the end verify our product can be used more efficient, then we will have a good market. It’s giving and taking to say, but I see this market, for the time being, quite difficult, but it will be cured, and will pick up again. This is our target.
