The construction of the Brasov-Bors motorway by U.S. corporation Bechtel has caught the eye of local companies, eager to get a piece of what has become known as the biggest deal of the past decades.
The contract with the Americans, worth more than 2.5 billion euros and secured by the State, is certainly on the mind of construction materials suppliers, especially those companies located close to the future motorway, which is set to "cut the Ardeal in half", spreading on 415km.
Once the project starts this summer (being scheduled to wrap up in eight years' time), it will create a gigantic construction site, employing 50,000 people in the first year alone, with their numbers set to go up to 300,000, close to the total number of people working in the entire constructions industry, according to certain consultants. Horizontally, the impact will prompt a surge on the constructions market, but also in the supplying industries: cement, concrete, aggregates, steel mills, petrochemical industry, constructions adhesives, metallic structures, auxiliary and maintenance services, and even the wood industry. Moreover, the project's size exceeds half the total value of the constructions market, worth 4.4bn euros in 2003. Although the motorway will actually take eight years to build, it will still account for a significant share of the market.
Companies such as Holcim (Switzerland) and Petromservice have said they are in talks to be appointed subcontractors by Bechtel, but the Americans have not picked any subcontractors yet, market sources say.
Still, the Americans wasted no time, despite the discontent voiced by the European Union when the Romanian authorities awarded the public contract with no prior tender. Bechtel is already hiring, its subdesigners Iptana and Search Corporation have already delivered the feasibility studies, whereas the U.S.-based company has established a branch in Cluj, to supervise the project, according to sources close to the general contractor.
Bechtel will split the Romanian project with the Turkish constructor Enka and, as general designer works with two subdesigners: Iptana for the Bors-Targu Mures segment and Search Corporation for the Targu Mures-Brasov segment.
"Search Corporation has drafted the feasibility study for the 160km-long Brasov-Targu Mures segment and we delivered it, on March 31, to the National Company of Highways and National Roads in Romania (CNADNR), which had ordered it. We are now supposed to draft the technical project. Our motorway sector starts being built in two years," said Ion Predescu, project manager of Search Corporation.
"Bechtel's London-based branch has hired some 16 engineers to oversee the beginning of works. They haven't got to the subcontracting part yet. I believe that more than 90% of the local operations will be entrusted to local companies," said Alexandru Dobre, who is on the Board of the Romanian Association of Construction Entrepreneurs (ARACO). Araco represents more than 1,000 companies in the construction industry.
"Romanian companies, such as CCCF and Contrasimex, are interested, naturally. According to certain calculations, some 50,000 people will work on the motorway construction site, if the works start in 2004 at the two locations - Turda and Bors. During the project's peak stage, which may be reached in 2006, the number of workers may go up to 300,000. Some 50-60km may be built every year," Dobre added.
Considering the motorway's route (Bors-Oradea-Targu Mures-Cluj-Brasov), there are several suppliers blessed with strategic locations: Swiss group Holcim, French company Lafarge, Germany's HeidelbergCement (all three companies produce cement, concrete and aggregates), Simcor Oradea - construction materials, steel mill Siderurgica Hunedoara, and Prescon Brasov (a construction materials business controlled by businessman Ioan Neculaie).
"Holcim has the best location for the Bechtel project, as it owns two cement plans in Alesd and Turda, and 3-4 concrete stations. We are still in talks with Bechtel, since this is a long-term programme," said Kurt Habersatter, CEO of Holcim Romania, the local branch of the Swiss group. According to Habersatter, the motorway will not significantly influence the cement market this year.
Holcim Romania accounts for 31% of the cement market, with rival companies Lafarge and HeidelbergCement holding similar market shares.
"We want to persuade Bechtel to build the motorway using concrete, not asphalt. We might supply the cement for this project," said Mihai Rohan, general manager of Carpatcement, the cement, concrete and aggregates producer held by HeidelbergCement.
"Petromservice is in talks with Bechtel to become a subcontractor for the Brasov-Bors motorway works," Petromservice officials have recently said.
The Romanian State has already found funding for the first two years of the project: the consortium comprising Bear Stearns (USA) and Raiffeisen Bank (Austria) will come up with 469m euros, of which 250m euros this year.
Battle of the cities
Companies, but also cities are vying for a part in the motorway project. The minister of Administration and Interior, Ioan Rus (one of the main supporters of the project) told Ziarul Financiar - the Transilvania Edition, that, by the end of April, a decision will hopefully be made about the Romanian HQ of Bechtel, which has to choose between Cluj, Brasov and Targu Mures.
Recruitment process
Bechtel has selected a villa in Cluj as temporary headquarters. Andrew Hornick, business manager with the American company, says the motorway will have a positive impact on the business environment. "We are now busy recruiting personnel. We will hire construction workers, we will sign contracts with companies, but also with natural persons. We feel that, besides hiring people, we also have to create a healthy working milieu, both for the people and for the environment," Hornick told Ziarul Financiar - the Transilvania Edition.
adrian.mirsanu@zf.ro
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