IRN Editor Murray Pollok talks to Bredenoord's general manager Jaap Fluit about the company's power rental business.
By Murray Pollok28 September 2010
Netherlands power rental company Bredenoord is unusual in that it likes to develop and build its own gensets, including some rather special designs. Murray Pollok visited the company's Apeldoorn facility.
Sitting in his modest office, Bredenoord managing director Jaap Fluit is happy enough to answer all of IRN's questions. However, it is outside when giving a tour of the company's Apeldoorn headquarters that his enthusiasm and attention to detail fully reveal themselves. It is easy to see why he was appointed general manager while still in his early thirties.
Moving through the facility, Mr Fluit points out the special design of the flat bed transport trucks that allows generators to be pinned to the trailer, eliminating the laborious process of strapping them down; he explains that all equipment should be ‘rental ready' within 12 hours of returning to the depot; and describes how the truck drivers are trained to understand and even repair the products they deliver.
If that makes Bredenoord sound like a very well run power rental company, then consider that it is also a manufacturer of gensets and a pioneer in developing ‘clean' power using new technology such as fuel cells.
This rental/manufacturing double life is clearly a fundamental feature of the business. Mr Fluit explains the benefits; "There is a particular philosophy behind the gensets - they are very reliable, very easy to service, and very flexible", he explains, "We don't want to be dependent on sub-suppliers...Because we come from the construction environment we have extra demands for quality."
More to the point, he says this manufacturing capability gives Bredenoord a competitive advantage in the rental market; "Within three months we can develop a new generator."
This dual nature flows naturally from Bredenoord's history. Founded in 1937 by Jan Bredenoord (who started the company at the same Apeldoorn site used today, located an hour's drive east of Amsterdam), the company was initially a local carpenter/contractor with a sideline in power generation - he sold to local farmers the power he generated by burning wood chippings. From that he moved into buying and selling diesel engines, and by the 60s his sons, Jan and Nico, had started to produce their own gensets and make the first moves into rental.
The rental business grew gradually in the 70s as Netherlands' contractors needed mobile power to help build massive barrages and dykes as well as upgrade the country's road infrastructure.
However, Jaap Fluit remembers that the rental business began to take on a greater importance from 2000 onwards, when the company invested in many units as back-up rental power for firms concerned about the impact of the Y2K computer problem (which turned out to be something of a non-event).
"That gave us a boost to the fleet", says Mr Fluit, "we produced between 100 and 200 extra units, and with large outputs. After Y2K utilisation stayed the same. That's when I came in."
Mr Fluit, an electrical engineer, joined the company in 1997 and became the manager of the rental business in 2000, at which time he also took a seat on the board. By 2003 he was group commercial director, finally landing the top job in 2005. He is still only 38.
The rental operation now comprises around 2000 gensets ranging from 15 to 2000 kVA, rented from a single location in Apeldoorn, one in Denmark (opened last year) and two in Germany.
The focus is very much on ‘local' rental business, with construction representing around a third of revenues and events also being an important part of the operation.
"It's an intensive business", says Mr Fluit, "but we're very good at it." He says Bredenoord likes to take centralised control of transport from Apeldoorn, and the company has its own 20-strong transport fleet.
The international projects power rental market - which is playing such a prominent role in Aggreko's success - is not Bredenoord's forte, although it does carry out a few major projects in Europe each year, sometimes on a re-rental basis with competitors like Aggreko.
"That kind of [major project] business takes a lot of investment and carries a lot of risk", says Mr Fluit, "We see the time will come when a lot of units will become available on the market....that's not a problem we want to worry about."
Instead, Bredenoord will focus on developing its business closer to home. "For the local business, North and western Europe are where we want to be. Our rental concept doesn't allow us to step far away from that."
He says France, Poland and the UK are all possible targets. "We've always looked at the UK as very interesting, but somehow the sea between us has stopped us from hopping over...who knows?"
Although a significant move this year in unlikely while it is dealing with a general slowdown, there is every likelihood of geographical expansion in the coming years.
Acquisitions are not its preferred route. Instead, Bredenoord likes to find good local partners to work with, combined with its own locally trained people: in Germany it works with four partners to help develop the rental market, and these companies are not necessarily rental companies. "We are a very technology oriented company", says Mr Fluit, "we fit well with other technical companies."
He's not wrong about the technology, because with decades of experience of assembling generators Bredenoord is continuing to innovate. Last year it surprised many by introducing a prototype 5 kWA fuel cell generator using hydrogen as the fuel.
"We think the diesel generator will be ‘one of the last Mohicans' [of the diesel engine world], because there are no immediate alternatives", says Mr Fluit, "You need to get power somewhere quickly - the concept of the mobile generator will still be there."
"But what if in 20 years there is no diesel available? We came to hydrogen as a good alternative, which you can make in a sustainable way. We took the idea to Nedstack - a Dutch company known worldwide for its fuel cell technology - and we said, ‘Let's try to build the generator of the future, with the same quality as our other gensets.'"
The end result was the Purity, a prototype that uses a bundle of 12 hydrogen cylinders as its power source. The unit incorporates a stack containing 60 fuel cells that are each half a centimetre thick. The fuel cells facilitate an electrochemical reaction between hydrogen and oxygen, and the end product is electricity, heat and water, without any of the undesirable side-products of conventional engines.
"It's just 5 kVA", says Mr Fluit, "but we overcame all the technical problems." It is expensive, of course, but Mr Fluit says it has to be seen as a prototype; "It will become interesting in time, when the fuel price gets too high" and when the price of components comes down. The prototype has already been successfully used at an outdoor event in the Netherlands last year.
Following that, Bredenoord is developing a larger 14 kVA version, called the Uniflex, which is different in that it has an integrated reformer that processes bio-ethanol to create the hydrogen used in the fuel cells.
Finally, the company has developed a soot filter that reduces by 99.9% the amount of particulate emissions. In the past, Bredenoord has used traditional paper filters to help reduce soot, but these stop working after a while and need replaced regularly. Bredenoord's new Clean Air soot filter has a patented ceramic design and is self-cleaning, with an operating life closer to 3000 hours.
The company has developed a filter pack that can be fitted (or retrofitted) as an option on its gensets from 50 to 400 kVA. Bredenoord sees particular applications for this technology on events jobs, where, as Jaap Fluit puts it, "everybody wants a ‘green' aura about them...events people are very interested. We have to see how it works in this year's season."
The planning ahead does not stop there. "We see that fuel consumption is the next step that we have to look at carefully. We're looking at more efficient engines", says Mr Fluit, "We think our customers are better served by solutions that consume as little fuel as possible."
Mr Fluit is realistic about the impact that the new fuel cell generators will have in the market. But for him, it's about "showing that we do more than just supply gensets. We think it's important to keep one step ahead, always coming up with something new."
Staying ahead of the game technically is one part of the equation. Equally important has been adjusting to lower levels of demand over the past 18 months. Mr Fluit says the last decade has seen the company regularly grow at annual rates of between 10 and 20%, so last year's 10% drop in revenues was a rare event.
"It was a pause in growth - especially in construction", says Mr Fluit. He thinks this year will be similar to 2009 and says matching last year's revenue figures will be a realistic target. At the same time, the search for new customers and markets continues; "Our marketing effort went way up last year, and it brought in new business", he says.
This slowdown has also impacted on the company's fleet investment. It would be normal over a year to replace around 200 units, but the lower running hours will let the company age the fleet slightly.
There have been inevitable pricing pressures. Bredenoord has responded not necessarily by cutting prices, but by being more flexible; "We have adjusted the way we set rates", says Mr Fluit, "we now build in new intermediate steps in the running hours [tariff] to help customers."
The recession has had a wider impact, too. In Denmark, for example, its partner went bankrupt, forcing Bredenoord to make the decision to leave the market or keep going on its own. "The demand generators, we found, was still there, so we started from our base", he says, "It's going well, although at the start of the year it was very tough."
Throughout, the Bredenoord family has remained both as owners and active participants in the business. Of the second generation brothers, Nico still works on used engines - "Dutch engines are his life", says Mr Fluit - and Jan represents the company with customers in Netherlands-linked territories like Surinam and the Dutch Antilles. A third brother, Willem Bredenoord, still drives one of the delivery trucks two days a week.
The third generation is also now in the business: another Jan Bredenoord is on the board and runs the used engine department. Jaap Fluit says the welcome continuity provided by the family is unlikely to change any time soon; "It will remain a family business - that's the way they like it."