Successful stories and great potential

Meccanotecnica Umbra stands out for its various assets: sales, production, and distribution. However, what makes the difference is its cultural mindset and its determination to share a vision that bridges differences and specificities. Me Umbra strives to understand the cultural differences in each operational context, making an effort to systemise them, creating a two-way flow: transferring a vision and a method while absorbing new skills, knowledge, and unique characteristics from each context, contributing to the enrichment of the group. 

This way, the stories of Fugesco and Meccanotecnica Turkey become fascinating. By observing their development, understanding their true potential, and analysing their unique sales and production qualities, we can uncover the added value that both companies can contribute to their growth and that of the entire group.

PAOLO ZENONE

Fugesco has structural characteristics that set it apart from the rest of the group. These characteristics stem from the unique nature of the hydroelectric market, involving distinct production parameters, delivery timelines, and business relationships compared to the markets in which Meccanotecnica Umbra usually operates. This, in turn, gives rise to additional strategic implications. Now that Fugesco has joined our multinational group, we can observe its true potential, although not yet fully expressed. However, in the realm of great potential, the possibility of translating it into certainty is a fascinating, compelling, yet complex challenge. The first contact with Fugesco was highly casual. In 2016, a company for which we supplied standard applications contacted us for a tender regarding large pumps with shafts exceeding 700 mm. As we were not capable of manufacturing such a product, we started looking for someone who could do that. That’s how we found Fugesco. There are very few specialists who can manufacture such large pumps worldwide. The success of that project made us recognise a promising opportunity for growth in the hydroelectric sector. Since then, we kept collaborating with Fugesco until we acquired it in 2019. 

Today, the reason behind this decision is more evident. We strive to shift our energy production strategy in our current global context. Our goal is to opt for cleaner and more sustainable energy sources instead of heavily polluting fossil fuels. 

Hence, being part of the clean and renewable hydropower sector holds significant importance.

Most of the world's energy is still generated by fossil fuels. Hydropower is the first, and therefore the oldest, energy source. Not only is it less environmentally impactful than some alternatives, but its accessibility extends to all countries, albeit with variations based on water availability. North America is facing a challenge associated with the ageing infrastructure of its plants, many of which are four or five decades old. Although, the plants are relatively younger in Europe, they still surpass 40 years of age. Therefore, it's a market requiring the renovation, maintenance, and installation of new plants. In this context, major investments have recently been concentrated in Latin America and China, where the average plant age is just 15 years. The decision to enter this market was wise and forward-looking, as there are significant development opportunities.

Hydropower proliferation worldwide led us to imagine a collaboration with Fugesco that would go beyond its acquisition, setting the stage for profound integration.

The company was unable to completely intercept all prospective expansion scenarios, either because of its limited manufacturing capacity or location, which prevents it from serving remote areas with projects that frequently require complex logistics. Canada occupies almost half a continent, having a huge number of installations, lakes and rivers. It's quite natural that a significant portion of our business comes from there and the neighbouring US. These countries have a longer history with hydropower, but their markets are more or less saturated. Through Meccanotecnica and thanks to its multi-continental locations, Fugesco, which was established in Canada, has the possibility to reach Latin America, Brazil, Europe, India, Türkiye, or China, where the potential for growth is enormous. That’s why having local “antennae” that intercept opportunities is so important. It happened in India and Türkiye, and it’s happening in Latin America with excellent results. Hydropower can be produced through three methods: the traditional penstock dam, with pumped storage involving two connected reservoirs and a turbine. During peak energy demand, water moves from the upper reservoir to the lower one to generate electricity. Conversely, during quieter demand periods, the generated electricity is used to pump water back to the upper reservoir. Or with the run-of-river technique, consisting in weirs intercepting river courses that do not have geodetic jumps, with low head turbines. 

We are also delocalising our production to seize these opportunities, with Canada remaining our centre of excellence. Additionally, we've initiated an ambitious expertise-transfer program to provide project support from Italy. This approach offers advantages, including improved logistics, efficient management, closer commercial relations, and enhanced customer assistance. Moreover, thanks to the group’s strength, we can rely on local suppliers for components that are difficult to handle or transport. This way, we can participate in tenders that impose a percentage of local suppliers, such as in India. It is also true that the sector is quite conservative, thus it is critical to understand Meccanotecnica Umbra's new production and intervention capacity. This is especially important as many plants are becoming significantly obsolete, and the original equipment manufacturers are frequently inactive. Therefore, the challenge is reaching the plant’s technicians on a global scale. 

In this context, engaging with institutional partners and publicly-owned companies becomes essential. This approach responds to diverse policy frameworks in each country, naturally fostering significant collaboration in the pursuit of synergies. The ultimate goal is to make each project flow better.

It is as if water is forcing us to work together, leading the way to a brighter future.

ZEUDY BIANCHI

The integration (or migration) project in Italy started in June 2022 to add a design area to the headquarters. This project aims to unleash Fugesco’s full potential, consolidating its central structure (design and production) to address a vast, ever-evolving market. It implies the immediate transfer of knowledge and design and process engineering expertise, despite the inevitable technical times. The distinctive aspect of Fugesco's seals for hydroelectric turbines lies in the split. This involves separating the sealing elements into multiple segments, thus facilitating the assembly and/or maintenance of machines like turbines, which are typically challenging to disassemble. These shafts range between 100 mm to 4 or 6 metres, which cannot be dismantled, except for small machines (100 mm). MTU’s Italian design team has already been in the industrial sector for years, intercepting 80 to 150 mm applications. Therefore, it’s not that different from the small-hydroelectric one (100 mm). The migration project focuses on larger or more powerful machines (>400 mm), sealing design difficulties with bulkier, segmented components complying with complex technical specifications, estimated allowable losses, design of safety pneumatic systems, and the definition of auxiliary water filter and flushing systems. 

This migration of expertise is not immediate because it goes hand in hand with the regular workflows of the people involved. This process involves two steps: general training and on-the-job training, where we handle preliminary projects for quotations in Europe, Asia and Africa. These are the areas where the Italian team will focus, whereas the USA will be managed from Canada. Besides being educational for the team, working on preliminary projects has also a commercial goal. Moreover, for each project, we analyse the possibility of producing near the client, using Meccanotecnica’s structure and potential, while trying to expand Fugesco’s production capacity.

This involves the acquisition of new technical skills especially if Fugesco’s development demands quicker response times and

increased proximity to diverse geographical markets, especially given the importance of technical assistance in such large projects. We're referring to a distinctive product with unique requirements for both initial installation and maintenance. Its average lifespan significantly differs from the other products we typically handle. Moreover, it adheres to distinct commercial principles, closely tied to the policies of individual countries. Thus, in this regard, it deviates from Meccanotecnica Umbra’s usual logic. 

Therefore, it’s crucial for Meccanotecnica Umbra to operate in the renewable energy sector on a global scale, as it’s becoming increasingly strategic.

This industry interacts with political and hybrid settings combining public and private spheres, where decisions are influenced by governmental objectives and a variety of management techniques. Moreover, we are not used to handling intervention or engineering requests in this context, due to the particular time frame of the projects, with systems that must last decades. Even the type of systems is different from what we were used to, as we are asked to regenerate them instead of producing them from scratch. In the realm of green energy, where an ethical approach should take precedence, a mindset focused on cost-cutting often hampers projects and hinders the construction of new, more efficient plants. For example, we find ourselves working on outdated design drawings, a form of industrial archaeology that might not be expected in a contemporary setting like this. In brief, even in Europe it’s common to deal with projects focusing more on saving money than energy. Integrating Fugesco’s know-how involves exploring various contexts, engaging with different stakeholders, reconciling conflicting logic, and uncovering unique operational mechanisms that might not be immediately apparent from an external perspective. 

Meccanotecnica Umbra is a group with adaptive, solid capacities that integrates multiple realms, united in a vision that allows us to cease and acquire.

On the one hand, it absorbs technical and productive knowledge while returning the possibility for expansion and a vision that goes beyond the company’s manufacturing characteristics and relationships in the business, political, and administration spheres. Another factor that makes this project crucial, even in terms of industrial development, is that Canada and North America have massive plants that require extremely large seals.

Europe, and Italy in particular, have much smaller plants since hydropower accounts for more than 40 % of renewable energy production and, thus, lower capacity for hydropower development. Meccanotecnica Umbra manufactures small seals, while Fugesco is an expert in hydroelectric plants with technologies rarely applied in Europe. This collaboration has resulted in the development of a micro-hydro system, which is more compact and features smaller turbines and seals, thus addressing the intense competition in this product segment. Similar to numerous instances in industrial culture, prior knowledge is reconfigured to suit a different context, leading to an overall increase in capacity. The challenge is now to understand the market trends in the various scenarios, while balancing regeneration and new developments.

EMANUELE MINCIARELLI

In the spring of 2020, we covered Meccanotecnica's journey to Türkiye for MTU#5. It was a particular period, given the global pandemic that coincided with the conclusion of a lengthy and intricate acquisition process, significantly influenced by the historical and socio-political context. While the acquisition was being completed, another phase was started with the integration of Megaseal into the group to align the company with Meccanotecnica Umbra’s standards. This process turned out to be particularly lengthy as it had to be managed remotely, given the global situation. The commercial integration was more gradual and straightforward. Since it is well known in the Turkish market, we initiated all the processes and paperwork to merge Megaseal into the group while keeping it alive. Furthermore, the product manufactured under the Megaseal brand was unique, with no directly interchangeable counterparts among Meccanotecnica Umbra’s products. Thishelped us make the company's economic management sustainable. Nevertheless, the political and financial uncertainties hurt our growth. Our projections for the second year were contingent on stabilising the Turkish currency, which did not happen. This influenced decisions regarding investments in personnel and machinery, which were gradually reduced to cope with the negative exchange rate conditions.

Obviously, even the war in Ukraine did not help us, given Türkiye’s particular position regarding the conflict. For sure, our expectations were more ambitious. So far, our role as an intermediary with the Middle East has been fairly limited, owing principally to the strong exchange rate, which has hampered our ability to compete successfully with Asian or local competitors. The increase in personnel cost doubled within a few months, forcing us to adopt different policies regarding workforce development, review our initial plans, and adapt our sales strategies to the evolving scenario. 

The war has placed us in a special, ambivalent situation. Türkiye is an important bridge to Russia. That’s why we had to filter many requests received over the last two years. Sensing that some of our products might find a market in Russia, we made the difficult yet necessary effort to ascertain their final destination. The Group was aligned in avoiding involvement in sensitive sectors, such as energy and aerospace, even at the cost of potential profits. Looking back, we made a wise decision even
if we had plenty of opportunities. 

Today, several customs and agencies ask us for documentation, and we are happy to share it because we know the proper intended use of our products.

The Group's strength and maturity surfaced in this delicate aspect: it's easy to say not to make sales in Russia, but in practice, it's not so straightforward. We went through times when making a hundred thousand euros more in sales would have made a difference. Nevertheless, we avoided ambiguous situations, especially in borderline sectors, such as aerospace, where it was difficult to predict whether our product would end up in civil or military aircraft.

The hope is to overcome this situation in the near future. In the meantime we seized the opportunity to think outside the box. We’re using Meccanotecnica Turkey as an intra-group component manufacturer, integrating Megaseal products (intended for the Turkish market) with our City Line range (City Line is our brand dedicated to spare parts and distribution). This way we can be more than just external suppliers. We can also develop Meccanotecnica Turkey's export business, driving growth throughout the group with good results that we expect to see as early as 2024.

Therefore, Türkiye's intermediary role in the Middle East could serve as an additional factor for developing

and establishing new intra-group trade relationships. Since 2020/21, Türkiye has been the sole market where we could introduce new projects in both the hydroelectric and aerospace industries. Thanks to its solid understanding of the industry and the support of Meccanotecnica Umbra, Meccanotecnica Türkiye has successfully engaged in meaningful discussions with key institutional partners, benefitting the specific sectors involved. Although, local production capacity remains limited, this is not a cause for concern, as we have taken significant strides in addressing this issue.

We will have to wait a few years to reap what is being sown now, but the perception is that we are moving in the right direction. There’s so much hard work behind all this that we love to share because of its enormous potential. In Türkiye, MTU is turning a fabulous potential into something concrete and tangible..

In 2020, when we finalised the acquisition in Türkiye, Megaseal was a small family-run company operating in a 100 sq.m industrial shed. In brief, there was a lot to do. First of all, we optimised the offices to improve the workers’ quality of time. Then we focused on enhancing safety. We renovated the facility to convey the integration of the previous family management into a multinational context, while preserving the family spirit. Our goal was to align with the practices and unique characteristics of the new management and ownership. Before starting working with new people in a different cultural context, it’s essential to get to know and respect their culture. This is what our president taught us. We tiptoed in, striving to enhance every possible aspect while respecting the culture of the people involved, without introducing any changes. As for the management, we adjusted the top leadership, optimising roles and processes, while ensuring solid continuity. The previous owner still works in the company, whereas his son-in-law has become General Manager. We also brought in additional professionals to contribute to the company's growth. This strategy guided a transition that avoided the disruptions often associated with multinationals, such as cost-cutting, restructuring, and dismissing key personnel like CFOs.

We focused on the operational aspect after aligning safety standards and corporate directives. We significantly invested in CNC machines and replaced manual lathes with automatic ones. This shift not only allowed our long-time employee, who held the secrets of operation and maintenance, to continue but also enabled younger operators to use them effectively. Moreover, we created a work centre and updated existing machinery. We also implemented software to standardise and adapt the accounting system, making it accessible and manageable remotely. This initiative aimed to align our internal requirements with business needs.

We added more efficient machines, optimising the testing part. Then, we strengthened the IT security protocol with procedures that fulfilled our legal obligations and complied with our internal standards. The next step was to develop the company’s structure. Since Meccanotecnica Umbra acquired Megaseal in 2020, it passed from a turnover of 8.7 million Turkish lira to 33.6 million in 2023. 

Every year, we doubled the turnover and increased the number of products, from 5,000 to 12,500. That’s how we turned a fairytale into reality. After the acquisition, Megaseal started capturing the attention of our clients, 

even Turkish ones, who began to see the company as a reliable and improved company both aesthetically and environmentally.

Meccanotecnica Turkey is shifting from products with low added value, sold to small clients, to selling an increasing number of products with high added value. With these figures, we can start thinking about exporting them as well. Moreover, Meccanotecnica Turkey has become an outpost for the whole group. The significance of having a company with a rich history in this country cannot be overstated. It ensures a seamless interaction, particularly when collaborating with a multinational entity, thanks to a team proficient in managing meetings and visits, effectively communicating in the local language and embracing the shared culture. Since then, we have initiated significant projects in collaboration with other subsidiaries such as Fugesco. These projects involve connecting the production of hydroelectric pumps with large local power generation and distribution groups, as well as joint ventures in the household appliance and aerospace sectors. Meccanotecnica Turkey now supplies the other subsidiaries with components necessary for the production of single features. 

Over the past three years, we have taken significant strides towards consistent and well-structured growth,

improving the company's performance and achieving high-value production with increased margins and satisfaction. Now, Meccanotecnica Turkey has a big challenge: manufacturing high value-added semi-finished products at prices that are much more competitive than the purchase costs of external suppliers.

This is the story of a small company from a suburban area of Istanbul, which is gradually growing thanks to the Italian talent for creating beautiful things. I appreciate our ability to embrace a culture of beauty and foster empathetic relationships worldwide. It allows us to establish connections and empathy across all cultures. It also gives life to a virtuous cycle that brings out the best of each person in every circumstance. We could define it as “the cultural question”, which encompasses managerial, strategic, productive, and commercial aspects, and it tends to be closely linked to the activities of a multinational company. In day-to-day operations, one of the key strengths lies in an element deeply embedded in Meccanotecnica Umbra's DNA. This allows the company to immerse itself in various cultures and facilitates a seamless blend with Italian culture. The process involves the exchange of practices, ideas, work methodologies, and approaches. 

Usually, these acquisition processes are much slower. This is a wonderful story of how a company can achieve excellent results.

And this is just the beginning. We could consider it a small incubator of good practices, a clear example of an organic acquisition and migration of knowledge.

WHAT DOES IT MEAN TO TRANSFORM A FAMILY BUSINESS INTO A MULTINATIONAL COMPANY?

This question can be analysed from several perspectives based on two main concepts: changing habits and trusting the process. A family business is more result-oriented. It requires sudden decisions, which can lead to mistakes, sometimes. In multinational companies, results are achieved by following the rules, adapting to the changes accordingly. There’s less room for errors. However, I believe that the biggest change in this process is the concept of trust. Being aware of our strengths and trusting the process are extremely important. Being part of Meccanotecnica Umbra enhances this trust. 

HOW DID YOU TAKE ON THE CHALLENGE OF CHANGE WITH THE NEW PROCESSES AND CLIENTS?

Honestly, the first transition stage wasn’t easy at all. The biggest challenge was explaining the transition to clients, addressing their concerns, often based on price or working methods. However, we managed to create an area where we can move freely. I can say that changing the company's internal process is more difficult than getting the client to overcome his doubts. Change requires time, but we are approaching the fourth year of transition, feeling part of the company. And our clients perceive that.

CAN MECCANOTECNICA TURKEY BECOME A BUSINESS FACILITATOR FOR OTHER MECCANOTECNICA UMBRA’S MARKETS, SUCH AS AUTOMOTIVE AND HOUSEHOLD APPLIANCES?

Yes, of course! We have worked on this matter for the past two years. Regarding the household appliance market, one of the group’s major clients is in Türkiye. And we have other clients and prospects outside this country. The same applies to the automotive sector. We can effectively support the headquarters in production or technical processes. And communication can serve as a bridge in processes that need quick solutions.