In Philippines, Dutch firm finds perfect factory fit

By: Germelina Lacorte, Inquirer Mindanao
Philippine Daily Inquirer

DAVAO City, Philippines—One of the first things that Onno Luitjes and his Filipino wife, Lyndy, noticed when they ordered certain machine parts for fabrication was that the workers in the small shop could not interpret their engineer’s drawings.

But when the couple showed a sample of the stud bolts they wanted, the workers found the job quite easy to do.

The experience made Onno, Dutch president of HGG Profiling Specialist Philippines Inc., and Lyndy realize they can actually trust and rely on Filipino skills when they opened the first overseas branch of the Dutch firm HGG in Davao.

The firm produces parts for its pipe-cutting Computer Numerical Control (CNC) machines for global export.

HGG stands for the initials of the first names of the three owners of a group of companies in Netherlands producing fully automated equipment that have serviced the world’s biggest construction, shipbuilding and offshore industries in the last 25 years, Luitjes says.

“About 87 percent of the parts of these machines are now being produced here,” Gil Dureza, chief of the Board of Investments (BoI) in Southern Mindanao, says.

Since starting its CNC production here in 2008, HGG has shipped out 28 pipe-cutting machines, including equipment that helped build the new airport in Hong Kong and a polo stadium in India.

Made in Davao

“To give you an idea of the technology we are doing in the Netherlands, the pro cutter is the most basic machine the HGG Group is producing,” Luitjes says, referring to the pipe-cutting machine called PC600, which is being produced in Davao.

“The smallest equipment that our company produces in the Netherlands is up to 6.5 meters in height, weighing over 400 tons, which is even bigger than this bodega,” he says of the nondescript warehouse in Bajada.

When HGG opened its Davao branch in 2008, its aim was to explore the growing demand in Asia.

“We are using these products to see the possibilities in the Philippines and to explore the market in Asia,” he says.

Near where he stood looms a yellow machine, the color of which stands out from among the blue ones in the room. He says the machine, which has Chinese markings, would be marketed in China, where people highly preferred bright colors, like yellow.

Closer to customers

By opening up the Davao branch, the company aims to come closer to the customers in terms of the delivery of the new equipment and servicing.

“There used to be a big time gap from Asia and our main factory in the Netherlands,” he says. “We are about seven hours behind but the Davao plant will address this gap because right now, we are operating on the same time zone,” Luitjes says.

HGG targets to service not only China and India from its plant here but also Brazil, the United States, Russia and South Korea.

Luitjes says the most promising Asian markets they’re planning to tap are the oil rig building in Singapore, which would need a lot of piping, the robot lines and angle bar cuttings in China, where the demand will surge because of the bullish shipyard construction in that part of Asia.

“Everywhere, where there are steel structures being produced, there will always be a demand for our machine,” he says.

To cut huge iron pipes, engineers traditionally draw the template, cut and print them out and fit them into the huge iron pipes to mark for manual cutting using hand torch, a process which is quite tedious and prone to human error, making the resulting product less accurate, Lyndy explains.

No room for inventories

Now, big shipbuilding companies use computers for precision cuts. Their main focus is to produce the machine and to dispose them just as fast.

“What gets in, should get out fast,” Luitjes says, leaving almost no room for inventories. Their existing factory can produce five machines at a time, almost half of the 10-12 machines they produce in a year.

When the company was still scouting for a factory site in Asia, Luitjes admits he had initially thought of Singapore, Malaysia and even China as potential sites. Later, he quickly ruled out China because of the language barrier, Singapore because of its high cost; and Malaysia because of its political condition at the time.

Luitjes says he had worked with a lot of Filipinos, whom he described as very facile with the language and who have the necessary skills and knowledge. He realizes it was easier to communicate with Filipinos so he decided to put up the project here.

“Language is very important,” he says.

“The knowledge and skills are also there for us to tap,” he adds.

Complete copy

The Davao branch, the only one they have in the Philippines, is not just an assembly plant but a “complete copy of what we are doing in the Netherlands,” he says.

Aside from tapping local skills, the company is sending Filipino software and electrical engineers and service people for a few months’ training in the Netherlands.

Except for the amplifier motors, which translate the language of the machine to other parts of equipment, most of the parts of the pipe cutter are already sourced in the Philippines, he says.

“They can actually copy it from existing samples although they have difficulty interpreting the drawings,” says Lyndy, pointing out to the stud bolts fabricated by Deco Shop in Davao. “These are little things that we need that we can actually source out here,” she says.

Luitjes says HGG hopes to produce “slightly bigger and more complex machine” than the PC600 model they are currently producing in Davao.