VAST
& accurate

BUSINESS REVIEW 2013
SGS IS THE WORLD’S LEADING
INSPECTION, VERIFICATION, TESTING
AND CERTIFICATION COMPANY.
SGS IS RECOGNISED AS THE GLOBAL
BE...
INTRODUCTION

>80 000

>1 650

1

employees

offices and laboratories

global network

OUR VISION

OUR VALUES

We aim to b...
INTRODUCTION

CHRISTOPHER KIRK
Chief Executive Officer

AN
OPPORTUNITY
IN EVERY
CHALLENGE

SGS spans the globe and this re...
10 REGIONAL
CHALLENGES
& 10 unique
opportunities

STABILITY
& technology

CONTINUITY
& expansion

NORTHERN AND
CENTRAL EUR...
4
STABILITY
& technology
NORTHERN AND
CENTRAL EUROPE

5
NORTHERN AND CENTRAL EUROPE

INFORMATION GIVES DIRECTION
technologies for growth
DIRK HELLEMANS
Chief Operating Officer,
N...
ONE TEST
F TS LL
GLOBAL PROVING GROUND
Since 1995, the Institute for
Interlaboratory Studies (iis) has
conducted interlabo...
NORTHERN AND CENTRAL EUROPE

SEISMIC
SGS HORIZON
PROVIDES
UPSTREAM
CUSTOMERS
WITH SERVICES
IN EXPLORATION
GEOSCIENCE,
PETR...
 SHIFT
LIFESPAN
SOLUTIONS

AREAS OF
OPERATION

OIL AND GAS
UPSTREAM TALENT

•	 Fully integrated subsurface
solutions

•	 N...
NORTHERN AND CENTRAL EUROPE

ARIADNE
THREADS
L GIC
INT
IT
ARIADNE, an information
technology solution
developed by SGS
Ben...
FLEXIBLE FUNCTIONALITIES FOR
CREATING FILL-IN FORMS OR
INSPECTION REPORTS

CUSTOMISABLE USER SETUP
AND MAINTENANCE

ONLINE...
CONTINUITY
& expansion
EASTERN EUROPE AND
MIDDLE EAST

12
13
EASTERN EUROPE AND MIDDLE EAST

EXPANDING VISION
strength of character
TEYMUR ABASOV
Chief Operating Officer,
Eastern Euro...
ASSET
MANAGEMENT
CENTRE
serves as the hub for services
to customers worldwide

8 STEP STRATEGY FOR
1 UNLOCKING POTENTIAL

...
EASTERN EUROPE AND MIDDLE EAST

WEAVING ADDED VALUE
EXPANSION
OF SGS’
CONSUMER
TESTING
SERVICES HAS
PROVIDED A
WORLD-CLASS...
500
laboratory
employees

6 000 m

GC & LC

2

of laboratory
floor space

gas and liquid
chromatography, along
with other ...
EASTERN EUROPE AND MIDDLE EAST

>3 600
employees

17 Mio km2

50

cities covered
by a network
of 50 offices

makes Russia ...
20
FLEXIBILITY
& collaboration
SOUTHERN
CENTRAL EUROPE

21
SOUTHERN CENTRAL EUROPE

STRENGTH IN NUMBERS
teamwork for business advantage
LADISLAV PAPIK
Chief Operating Officer,
South...
A TALE OF TWO
LABORATORIES
Getting cost-effective efficiencies
out of laboratory services is a
top priority for SGS in Sou...
SOUTHERN CENTRAL EUROPE

The Czech Republic
is considered to be
the crossroads of
Southern Central
Europe. With motorways
...
ŠTERNOV TO PSÁRE
Before any work began on Section 5,
the Construction Supervision Services
(CSS) of SGS evaluated the plan...
26
ECONOMICS
& creativity
WESTERN EUROPE

27
WESTERN EUROPE

NEW THINKING
excellence in mind
PAULINE EARL
Chief Operating Officer,
Western Europe

UNCERTAINTY
STILL
UN...
ENVIRONMENTALLY
DRIVEN EXPANSION

INDUSTRIAL
BUILT VISION

The acquisition of County
Durham based MIS
Environmental in Sep...
WESTERN EUROPE

30
ROAD
ON THE

In Spain, as in many other
countries, the government
requires all car owners to put
their vehicles through an...
WESTERN EUROPE

STREETSMART

F R LIFE
The statistics for deaths and
injuries on Irish roads have been
improving every year...
STREETSCAPE
CHARACTERS

LOOK LEFT,
OR RIGHT?
Children are
quizzed on a range
of common road
safety issues,
allowing the SG...
REGIONALITY
& transparency
AFRICA

34
35
AFRICA

CONTINENT OF COMPLIANCE
changing expectations
FRED HERREN
Chief Operating Officer,
Africa

THE AFRICAN
CONTINENT,
...
BALANCING THE
HEAVY COST OF GOODS
TRANSPORT IN KENYA
LEGAL ROADS
“Vehicle and road safety is another
area where SGS has be...
AFRICA

SGS

MAURIT US
Taking a market-by-market approach led the SGS team in Mauritius
to identify a huge local opportuni...
STAY HAPPY – BEACHCOMBER HOTELS
Recognised as a pioneering hotel group at the forefront of the Mauritian luxury
tourism se...
TRAFFIC REPORT

AFRICA

TANZANIA HAS SEEN
PHENOMENAL GROWTH IN
THE TELECOMS INDUSTRY
OVER THE LAST 10
YEARS. WHILE THE FIX...
EMPOWERING
KNOWLEDGE
In South Africa, unemployment
is estimated at 25 percent but
the mining, energy, engineering
and cons...
42
EVOLUTION
& innovation
NORTH AMERICA

43
NORTH AMERICA

AN UNCONVENTIONAL PATH
energising the future
JEFFREY McDONALD
Chief Operating Officer,
North America

IN TH...
FAILURE
PREVENTI N

and terminal operations for barge
loading/unloading and railcar switching
which create further opportu...
NORTH AMERICA

WATER
TESTING

SERVICES AT
THE WELLHEAD

UNCONVENTIONAL AND CONVENTIONAL CAPABILITIES

SGS is innovating ev...
•	 SGS has introduced laser scanning to
measure external corrosion and dents
•	 SGS performs radiography
examinations and ...
SGS PSC is responsible for all types
of product handling services, including
loading and unloading railcars and
trucks, sw...
MAIN US SHALE
PLAY LOCATIONS

BAKKEN SHALE
North Dakota

MARCELLUS
SHALE
North/Central
Pennsylvania

HAYNESVILLE
SHALE
Nor...
50
SYNERGY
& realisation
SOUTH AMERICA

51
SOUTH AMERICA

CULTURE, CHANGE AND CHALLENGE
meeting potential
ALEJANDRO GOMEZ DE LA TORRE
Chief Operating Officer,
South ...
stations, one of which is the biggest
project of its kind for SGS anywhere
in the world, with 17 lanes of testing.
Similar...
SOUTH AMERICA

560  000

830  km

barrels per day pipeline
capacity for Ocensa

total length of
the Ocensa pipeline

OIL
F...
6

major oil pipelines
cross Colombia

services sectors from its headquarters
in Bogotá. With over 50 project offices
thro...
56
COMPLEXITY
& expertise
CHINA AND
HONG KONG

57
CHINA AND HONG KONG

FIRST IMPRESSIONS
lasting relationships
HELMUT CHIK
Chief Operating Officer,
China and Hong Kong

DUR...
103
different offices and laboratories
operate in the SGS China and
Hong Kong network

20

years of success for SGS
in Chi...
CHINA AND HONG KONG

Manufacturing in,
distributing from,
or importing into
the People’s Republic
of China is one of
the m...
quality
assurances

for customers
on incoming
materials and
chemicals
used in the
manufacturing
process. The
certification...
62
COMPETITION
& differentiation
EASTERN ASIA

63
EASTERN ASIA

REGION ON THE RISE
high-growth potential
DENNIS YANG
Chief Operating Officer,
Eastern Asia

EASTERN ASIA
IS ...
FOOD
TESTING

Flour, rice, ice cream and
cooking oil have all recently
hit the headlines in Eastern
Asia. Why? Food safety...
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
SGS 2013 Annual Report Business Review
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SGS 2013 Annual Report Business Review

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SGS spans the globe and this report highlights the openness and willingness between our geographies to share information and turn regional challenges into global opportunities.
Successfully navigating the challenges of today’s rapidly globalising marketplace led us to once again redefine the line between service partner, technological innovator and solution provider. I pushed each of our 10 operational regions, comprising a multitude of countries, industries and businesses, to seek out and deliver an impressive array of new services in 2013. The vision has helped SGS remain at the forefront of developing cross-industry synergies: unique offerings that ease the increasing pressures on businesses.

Throughout the year our 80,000 employees and 1,650 offices and laboratories around the world continued to exceed the expectations of our customers, and kept SGS known as the industry ‘best in class’.
Read on and discover for yourself the imagination, drive and determination of SGS and how we remained as the world’s leading inspection, verification, testing and certification company during 2013.
- Christopher Kirk, CEO

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SGS 2013 Annual Report Business Review

  1. 1. VAST & accurate BUSINESS REVIEW 2013
  2. 2. SGS IS THE WORLD’S LEADING INSPECTION, VERIFICATION, TESTING AND CERTIFICATION COMPANY. SGS IS RECOGNISED AS THE GLOBAL BENCHMARK FOR QUALITY AND INTEGRITY. WITH MORE THAN 80 000 EMPLOYEES, SGS OPERATES A NETWORK OF OVER 1 650 OFFICES AND LABORATORIES AROUND THE WORLD. WE ARE CONTINUALLY PUSHING OURSELVES TO CREATE NEW SERVICES THAT DELIVER LIMITLESS BUSINESS OPPORTUNITY FOR OUR CUSTOMERS. Innovative technologies and integrated thinking keep SGS as the best-in-class provider of solutions for overcoming today’s market challenges. From establishing trust across the grain trading routes of Europe, to developing cutting-edge technologies for the oil and gas industry, we strive to provide independent, sustainable and valued services that go beyond our customers’ expectations.
  3. 3. INTRODUCTION >80 000 >1 650 1 employees offices and laboratories global network OUR VISION OUR VALUES We aim to be the most competitive and the most productive service organisation in the world. Our core competencies in inspection, verification, testing and certification are being continuously improved to be best in class. They are at the heart of what we are. Our chosen markets will be solely determined by our ability to be the most competitive and to consistently deliver unequalled service to our customers all over the world. We seek to be epitomised by our passion, integrity, entrepreneurship and our innovative spirit, as we continually strive to fulfil our vision. These values guide us in all that we do and are the bedrock upon which our organisation is built.
  4. 4. INTRODUCTION CHRISTOPHER KIRK Chief Executive Officer AN OPPORTUNITY IN EVERY CHALLENGE SGS spans the globe and this report highlights the openness and willingness between our geographies to share information and turn regional challenges into global opportunities. Successfully navigating the challenges of today’s rapidly globalising marketplace led us to once again redefine the line between service partner, technological innovator and solution provider. I pushed each of our 10 operational regions, comprising a multitude of countries, industries and businesses, to seek out and deliver an impressive array of new services in 2013. The vision has helped SGS remain at the forefront of developing cross-industry synergies: unique offerings that ease the increasing pressures on businesses. Throughout the year our 80 000 employees and 1 650 offices and laboratories around the world continued to exceed the expectations of our customers, and kept SGS known as the industry ‘best in class’. Read on and discover for yourself the imagination, drive and determination of SGS and how we remained as the world’s leading inspection, verification, testing and certification company during 2013. Christopher Kirk Chief Executive Officer
  5. 5. 10 REGIONAL CHALLENGES & 10 unique opportunities STABILITY & technology CONTINUITY & expansion NORTHERN AND CENTRAL EUROPE EASTERN EUROPE AND MIDDLE EAST 06 14 FLEXIBILITY & collaboration ECONOMICS & creativity REGIONALITY & transparency SOUTHERN CENTRAL EUROPE WESTERN EUROPE AFRICA 22 28 36 EVOLUTION & innovation SYNERGY & realisation COMPLEXITY & expertise NORTH AMERICA SOUTH AMERICA CHINA AND HONG KONG 44 52 58 COMPETITION & differentiation DIVERSITY & connectivity BENEFITS & industries EASTERN ASIA SOUTH EASTERN ASIA AND PACIFIC SGS OVERVIEW 64 70 78
  6. 6. 4
  7. 7. STABILITY & technology NORTHERN AND CENTRAL EUROPE 5
  8. 8. NORTHERN AND CENTRAL EUROPE INFORMATION GIVES DIRECTION technologies for growth DIRK HELLEMANS Chief Operating Officer, Northern and Central Europe AS NORTHERN AND CENTRAL EUROPE CONTINUES TO TRY AND FIND THE STABILITY IT SO DESPERATELY NEEDS FOR ECONOMIC RECOVERY, DIRK HELLEMANS, COO OF SGS NORTHERN AND CENTRAL EUROPE, KNOWS INCREASING OPERATIONAL EXCELLENCE REMAINS AN ATTRACTIVE PROPOSITION IN THE EUROZONE. He has worked closely with customers in the region to deliver new technologies that improve efficiency and productivity. HOPE ON HORIZON “The eurozone is slowly recovering, or at least stabilising to some degree, but the region is still a long way from returning to any significant growth,” begins Dirk, commenting on the persisting economic outlook in Northern and Central Europe. We have looked to build on our ability to innovate new technologies for customers “Considering this market environment, we have been focusing on building new technologies for customers. In upstream, our investment in SGS Horizon has increased revenues significantly, which gives us great hope for the future especially as there is plenty of scope for expansion.” TECHNOLOGIES MEETING POINT “Taking technologies and adapting them for cross-business purposes is our approach with SGS Horizon,” explains Dirk, “which gives us the potential to introduce new technologies to other customers within the Group. For instance, in unconventional hydrocarbons like shale oil and gas, we are combining SGS’ analytical capabilities such as QEMSCAN analyses (SGS ARQS), with CT-scan (SGS Institut Fresenius) and micro-mechanical properties testing (SGS Intron), and adding these to SGS Horizon’s expertise in geoscience and reservoir engineering. Our collaborative view of how best to use technologies from around the SGS network gives us the opportunity to investigate and provide unique value propositions for companies investing in shale plays here in Europe, the US and in other parts of the world.” 6 MAKING SENSE IS NO MYTH It is not just in the oil, gas and chemicals industry that Dirk’s team has innovated in technologies. “In the consumer testing side of our business, we have developed a new cutting-edge IT solution, ARIADNE. In the same way the Greek myth of ‘Ariadne’s Thread’ uses an elegant solution to logically record and retrace every step to escape the confusion of the labyrinth, we have created a way to more efficiently track, navigate and make sense of the maze of data generated by one customer. In difficult economic times, the better you understand what is happening in and around your business, the more productive and profitable you can be, and this is exactly what our team has provided with ARIADNE: a standalone IT service that offers a fully customisable and operable system, which requires nothing more than a web-enabled device. ARIADNE’s simplicity is its selling point. And what began as a project for one customer in Benelux has quickly attracted the attention of other customers, and other businesses, in the SGS network.” The better you understand what is happening in your business, the more productive you can be ENTREPRENEURIAL SPIRIT “Here in Northern and Central Europe the economic landscape is slowly recovering and building new stimulus,” concludes Dirk, “and we have continued to strengthen SGS' position through harnessing our entrepreneurial spirit and innovative use of technologies. I’m sure that as a degree of stability is felt more strongly by more stakeholders here in Europe, the economic fortunes of the region will soon be on the rise again.”
  9. 9. ONE TEST F TS LL GLOBAL PROVING GROUND Since 1995, the Institute for Interlaboratory Studies (iis) has conducted interlaboratory proficiency testing for SGS and third-party laboratories. Originally set up as a means of quality checking the analysis provided by SGS’ oil, gas and chemicals laboratories, iis now provides proficiency tests across a wide range of fuels, petroleum, chemical, consumer and food products. In the last year, iis organised 55 proficiency tests (PTs) with more than 1 100 laboratories from 100 countries participating in the investigation of 70 different samples. 400 proficiency tests performed since 1995 by the Institute for Interlaboratory Studies >100 000 customer results statistically analysed 7 Proficiency tests (PTs) offer laboratories a way to anonymously benchmark performance and identify systematic errors and/or random errors in routine analysis procedures, against similar laboratories in the industry. PTs are not something in which laboratories try and do their ‘best’ analysis; instead they give laboratories the chance to check normal day-to-day practices are providing the quality of results customers expect. Unique PTs for samples containing substances not commonly available for testing, such as iis’ recent chromium 6+ test for leather, are why laboratories find the ‘round robin’ (as PTs are informally known) testing so beneficial for their continual improvement: demonstrated by a recent PTs offer for chromium 6+ receiving 77 responses from laboratories around the world within the first week of it being made available.
  10. 10. NORTHERN AND CENTRAL EUROPE SEISMIC SGS HORIZON PROVIDES UPSTREAM CUSTOMERS WITH SERVICES IN EXPLORATION GEOSCIENCE, PETROLEUM DEVELOPMENT, AND WELL DESIGN AND EXECUTION. Since 2008, the subsurface consultancy company SGS Horizon has focused on developing services that add value by combining technologies for upstream exploration, development and production life span, in particular, advanced seismic processing and cross-business collaborations. FOCUS ON ADDED VALUE In close cooperation with an independent processing company, SGS Horizon quickly established a new service for advanced seismic processing which several customers have rapidly adopted. With operations in nearly every major oil and gas region of the world, the company has successfully initiated a series of cross-business services which harness the best of SGS’ thinking and technologies. Analytical capabilities from SGS ARQS, SGS Institut Fresenius and SGS Intron have combined to create a powerful understanding of how to link QEMSCAN analyses, CT-scan and micro-mechanical properties testing with SGS Horizon’s geoscience and reservoir engineering capabilities. This innovation has enabled SGS Horizon to take to market a new workflow process related to unconventional hydrocarbons development. 8 TRENDS, THINKING AND TECHNOLOGIES Always staying at the forefront of IT and best practice is key for SGS Horizon and SGS knows investment in acquiring the most up-to-date hardware and software is essential. Staying on top of current market trends and thinking ensure customers receive access to the very latest technologies, including all the main interpretative software packages in exploration and production, and allows SGS Horizon to pass on the benefits these systems bring to customers’ upstream operations. LONG-TERM RELATIONS The success of SGS Horizon in offering leading upstream subsurface consultancy has also helped expand its customer base from mainly short-term projects for small and medium size companies, which are often financially backed by banks or investors and hence at risk in economic downturn, towards longerterm relationships with larger and more diversified clients: a trend set to continue as SGS Horizon looks to further consolidate its position through building closer links with national oil companies and larger operators.
  11. 11.  SHIFT LIFESPAN SOLUTIONS AREAS OF OPERATION OIL AND GAS UPSTREAM TALENT • Fully integrated subsurface solutions • North Sea • Geophysics • Asia • Geology • Middle East • Seismic interpretation • Russian Federation • Log interpretation • North America • Reservoir engineering • South America • Production technology • Australasia SGS' subsurface consultancy team in cooperation with SGS Technical Staffing Services initiated a recruiting drive to source and acquire the best talent in the upstream oil and gas industry. Access to experienced technical staff is key for customers in upstream, and due to the initiative SGS has seen its global upstream capabilities and footprint expand, and SGS Horizon's team of subsurface experts increase by more than 40 percent. • Gulf of Guinea • Drilling and completion engineering • Exploration, development and production 9
  12. 12. NORTHERN AND CENTRAL EUROPE ARIADNE THREADS L GIC INT IT ARIADNE, an information technology solution developed by SGS Benelux, has been one of the standout successes of 2013 for SGS Northern and Central Europe. The system gives customers the capability to customise their reporting, recording and tracking of numerous inspection fields via web-enabled mobile devices. This makes it easy to navigate the maze of information generated by SGS inspections, leading to quicker, more efficient and more user-friendly results. IMMEDIATE ACCESS TO DATA ONCE ENTERED INTO SYSTEM COMPATIBLE WITH NEARLY ANY WEB BROWSER ENABLED DEVICE DATA STORED IN A CENTRAL DATABASE MEANING NO SYNCHRONISATION IS REQUIRED WEB BASED APPLICATION NOT DEPENDENT ON EXTERNAL IT RESOURCES AUDIT TRAIL TRACKS ALL DATA MODIFICATIONS 10 EASY TO UPLOAD DOCUMENTS AND IMAGES
  13. 13. FLEXIBLE FUNCTIONALITIES FOR CREATING FILL-IN FORMS OR INSPECTION REPORTS CUSTOMISABLE USER SETUP AND MAINTENANCE ONLINE CALCULATIONS VALIDATION OF INPUT MULTILINGUAL USER INTERFACE DEMONSTRATIONS OF ARIADNE AROUND THE SGS NETWORK HAVE LEAD TO A MULTITUDE OF REQUESTS FROM CUSTOMERS FOR MORE DETAILS ON HOW THE SYSTEM CAN BE ADAPTED TO THEIR NEEDS SECURE LOGIN REQUIRED INTUITIVE INTERFACE DESIGN DYNAMIC VISUALISATION OF DATA STATISTICS AND REPORTS ONLINE HIGHLY SCALABLE SECURITY DOWN TO FIELD LEVEL FOR EDIT, VIEW AND DELETE FUNCTIONS WORKFLOW BASED ON STATUS OF INSPECTIONS PDF REPORT GENERATION 11
  14. 14. CONTINUITY & expansion EASTERN EUROPE AND MIDDLE EAST 12
  15. 15. 13
  16. 16. EASTERN EUROPE AND MIDDLE EAST EXPANDING VISION strength of character TEYMUR ABASOV Chief Operating Officer, Eastern Europe and Middle East SGS IS ALREADY RELIED ON FOR TESTING, INSPECTION AND CERTIFICATION SERVICES BY CUSTOMERS IN 26 COUNTRIES THROUGHOUT EASTERN EUROPE AND THE MIDDLE EAST – BUT THAT IS JUST THE BEGINNING. Teymur Abasov, COO of SGS Eastern Europe and the Middle East, is helping customers and SGS expand into new geographies and emerging markets. A LEADING INVESTMENT “There certainly is a great deal of potential for SGS in Eastern Europe and the Middle East,” confirms Teymur on the question of expansion in the region. “Even during periods of economic slowdown, the turnover of goods flowing around the region remains substantial, and investment continues to flow into Eastern Europe and the Middle East. The economic situation in 2013 has not been favourable for SGS, particularly in agriculture with Russia and to some extent Ukraine lacking grain export volumes; and minerals suffering a slow down in the geochemical market, but overall we were still able to deliver growth due to the expansion of SGS’ geographical footprint and our service portfolio in the region. SGS is a special company with a dedicated recruitment team and a structured approach to helping new employees gain the skills needed for the job “Our focus on continuous expansion efforts,” continues Teymur, “resulted in a further strengthening of our positions for oil and gas in Russia, growth for our consumer testing business in Turkey, increased market share for our product conformity assessment programmes in the Middle East, and solid contract wins for our industrial division in Qatar and Saudi Arabia.” 14 SETTING THE BAR HIGH “The difficulty in always delivering to such a high benchmark,” Teymur explains, “is continually attracting the high calibre of people you need. The testing, inspection and certification industry is very competitive, and so there is a lot of competition for the best talent. Luckily, SGS is a special company with a dedicated recruitment team, an in-depth training programme, and a structured approach to helping new employees gain the skills needed for the job. And we know which industries or areas are in demand for these skills because we have a very detailed approach to understanding our customers’ needs. We aim to provide a complete package – the people, the technologies and the customer care.” COMPLETE PACKAGE The ‘complete package’ as Teymur puts it has indeed given SGS plenty of opportunities within Eastern Europe and the Middle East. With SGS’ expansion into the coal business in Russia, upstream in the Middle East and consumer testing in Turkey, Teymur sums up why SGS remains the global leader, “Our persistence and strength of character to always look for new business are the qualities that make SGS a special company here in the region, and around the world.” Our persistence and strength of character to always look for new business are the qualities that make SGS a special company here in the region, and around the world
  17. 17. ASSET MANAGEMENT CENTRE serves as the hub for services to customers worldwide 8 STEP STRATEGY FOR 1 UNLOCKING POTENTIAL 4 TAKING THE LEAD 7 ABILITY TO FOCUS Identifying upstream as an area of significant potential for SGS goes back to 2008. In Eastern Europe and the Middle East an initial review demonstrated an opportunity for additional service providers. Acquiring new business means meeting vendor approvals. With people, assets and technologies in place, SGS initiated registration and vendor prequalifications with various regional operators and national and international oil companies. With so many competing players in the oil and gas industry, any rapidly expanding business must remain customer-focused. SGS demonstrated to customers its ability to combine responsive and flexible solutions, while ensuring competitive pricing and the adherence to the highest levels of QHSE requirements at all times. 2 PEOPLE FIRST 5 REPLICATION OF SUCCESS Successfully entering new markets needs an expert team. SGS hired the region’s best-in-class talent, people who really understood how to provide solutions for the needs and challenges of customers. Growing upstream business in Eastern Europe and the Middle East relies on continuity and expansion. As strategic deployment of equipment continued, the ability of SGS to deliver best-in-class services for customers led to rapid expansion into multiple countries in the region. 3 STATE-OF-THE-ART Gaining new customers in the oil and gas business requires companies to offer something unique. SGS already had a full suite of proprietary solutions, developed by the SGS Applied Technology and Innovation Center, such as the FluidPro PAL™, GasPro™, MiniPVT™, AutoGOR™, Rapid Deployment Kit™, GC/GOR™, and others. 21 8 MAINTAINING MOMENTUM 6 ENHANCED CAPABILITIES Careful management and continual enhancement of services expand business growth. SGS expanded its upstream capabilities by constructing a reservoir fluids laboratory in Dubai, which provided well site services and strengthened SGS' hydrocarbon metering and allocation solutions. From 2008 to 2013, maintaining momentum has been key in helping SGS benefit its customers' upstream businesses. SGS has been successful in delivering services for the upstream sector that locate, analyse and extract oil and natural gas from onshore and offshore fields. From exploration, appraisal and development to production and logistics, SGS continues to innovate and deliver advantage through a variety of services and solutions which cover the entire upstream sector. U P S T R E A M 44.956 UTILISATION 16 32.065 PRODUCTION 19 39.098 SOLUTION 20 18 40.078 TRANSFORMATION 37.948 RECOGNITION 15 5 10.811 EVALUATION 1 1.0079 ACTION 13 26.982 MODELISATION
  18. 18. EASTERN EUROPE AND MIDDLE EAST WEAVING ADDED VALUE EXPANSION OF SGS’ CONSUMER TESTING SERVICES HAS PROVIDED A WORLD-CLASS LABORATORY IN THE HEART OF THE GLOBAL GATEWAY FOR CLOTHING MANUFACTURE AND EXPORT – ISTANBUL. Hakan Sebükcebe, Managing Director of SGS Turkey, explains the importance of SGS' capabilities to keep pace with technological advancements and customer expectations. GATEWAY TO GARMENT MANUFACTURE “Turkey is uniquely placed in terms of its geography for any company wishing to manufacture, source or export textiles and clothing worldwide,” Hakan offers as the reason why the country lies sixth in the table of worldwide clothing suppliers, and second in suppliers to the EU. “China is the only country supplying the EU with more clothing than Turkey,” he continues, “but opportunities lie not just with the EU. Turkey’s location offers speed to market for US companies and Asia is becoming a growing market too; all in all it adds up to make Turkey very attractive. Of course, companies worldwide need to be sure of the quality of the product, and that is why we opened our laboratory back in 2004. Back then we had a team of 20 people and a floor space of 500 m2. Today, we occupy a space of 6 000 m2 and have 500 employees. If you were to compare what we started with in 2004 to our laboratory now in 2013 it is like night and day, and this represents a significant advantage in the services we can deliver to our global customers locally here in Turkey.” NETWORK KNOWLEDGE Defining a clear strategy for expansion, identifying the key players in need of solutions, and most importantly, delivering on customer expectations, have elevated SGS Turkey to the number two revenue earner for SGS in Eastern Europe and the Middle East. “We have experienced fantastic results here in Turkey with consumer testing, but it is as much about the strength of the SGS network as our individual work here in Istanbul,” Hakan points out when reflecting on the success of the laboratory service over the last decade. “For instance, we drew on SGS’ knowledge and expertise of the textile and clothing industries from our colleagues in Spain and Asia, and we received strategic input from SGS 16 headquarters in Geneva. Combining our understanding of the market with what the customer requires today, and will require in the near future and beyond, is part of how we manage our expansion and continuity. Our insight means we can become a real partner to businesses for the long term. We do not just offer them services, we proactively provide them with solutions.” RENEWING TECHNOLOGIES Investment in the latest technology advancements for physical and chemical textile testing such as gas chromatographs and liquid chromatographs has given SGS Turkey world-class facilities. “Most of the tests we undertake for customers require sophisticated techniques and cutting-edge equipment, and because of this we paid close attention to outfit our laboratory with the most up-to-date and recent versions,” reveals Hakan. “We continuously monitor how the technologies develop so that when significant changes offering customers an advantage come to market we renew and upgrade our laboratory accordingly. This means we can always offer the most reliable results and cost and time effective sampling. And we ensure accurate recording and tracking of samples and results by taking equal care to keep our IT and back office operations working around the clock so customers know their requirements will be met whenever a need arises.” A FINELY TAILORED REPUTATION FOR EXCELLENCE The success of SGS’ laboratory expansion has further enhanced its reputation in Turkey for innovation, adaptation and excellence. Looking towards the next decade perhaps the biggest test for Hakan’s team is whether the 6 000 m2 of floor space will be enough to accommodate the many local and international customers already choosing SGS as their partner in the global textile hub of Istanbul.
  19. 19. 500 laboratory employees 6 000 m GC & LC 2 of laboratory floor space gas and liquid chromatography, along with other high-tech testing capabilities GLOBAL MARKET ACCREDITATIONS from TURKAK (TR), UKAS (UK), DAKS (DE) and IAS (US) CERTIFICATIONS for customers against ISO, BS, DIN, AATCC, ASTM, and an array of other international standards 24/7 flexible, responsive and customer-focused operations 17
  20. 20. EASTERN EUROPE AND MIDDLE EAST >3 600 employees 17 Mio km2 50 cities covered by a network of 50 offices makes Russia the largest country in the world 6 FROM RUSSIA WITH COAL 5 TH largest coal producer globally 1981 Operating from Moscow, SGS offers quantity and quality inspection services of imports and exports, conducted in cooperation with the USSR’s Chamber of Commerce and Industry 2 ND largest holder of recoverable coal reserves 1990 SGS and Soyuzexpertiza, a member of the USSR’s Chamber of Commerce and Industry (CCI), form a SovietSwiss Joint Venture – Sojex 173 Bio short tons of recoverable coal reserves regional hubs 37 laboratory facilities MOBILE laboratories offering onsite expertise 20 coal producing basins 1991–1992 1993 The first major inspection project by Sojex is undertaken for the control of goods via the European Commission food aid programme head office location Samara, St Petersburg, Novorossiysk, Novokuznetsk, Chita and Nakhodka 389 Mio short tons produced in 2012 MOSCOW Expansion of Sojex office network to include the Soviet Union’s major sea ports Sojex becomes the new legal entity SGS Vostok Limited, a wholly owned subsidiary of SGS SA 1994–PRESENT SGS in Russia continues to expand and evolve services which increase operational excellence for customers in the Russian Federation HOT TOPIC Coal production in Russia is heating up once again. Russia’s Ministry of Energy has outlined plans for the long-term redevelopment of the coal industry, highlighting a renewed investment in the rail and sea transportation infrastructure, and a targeted doubling of coal exports to Asia by 2030. SGS already has a strong coal customer base in Russia for quantity and quality testing, but with the market shift toward new exploration, SGS has increased its analytical capabilities at facilities in Novokuznetsk and Chernogorsk. Improvements in sample handling capacity with faster turnaround times, testing in accordance to the JORC Code and ensuring best-in-class service mean existing, and new, customers continue to benefit from SGS solutions for coal exploration and expansion. 18
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  22. 22. FLEXIBILITY & collaboration SOUTHERN CENTRAL EUROPE 21
  23. 23. SOUTHERN CENTRAL EUROPE STRENGTH IN NUMBERS teamwork for business advantage LADISLAV PAPIK Chief Operating Officer, Southern Central Europe AS IN OTHER REGIONS WITHIN THE EUROZONE, LADISLAV PAPIK, COO OF SGS SOUTHERN CENTRAL EUROPE, IS FACED WITH THE TOUGH CHALLENGE OF A HESITANT ECONOMY. TRANSPARENT THINKING “Collaboration among the countries of Southern Central Europe is key to ensuring the best service for SGS customers. In the past it has not been as strong as maybe it should have been,” begins Ladislav on the challenge of bringing the affiliates together, “but what we have now in 2013 is a transparent and structured process of communication which gives us the flexibility to respond faster to customer requests. From collaboration comes many more opportunities to cross-sell our knowledge and capabilities around the region. At the heart of it is teamwork. Because our region is small you would think we would be closer together in terms of teamwork, but that hasn’t been the case historically. To change that we created new information technology systems and altered management structures. We have a His answer? Collaboration. transparent and structured process Ladislav knows for SGS to prosper each SGS of communication affiliate must be ready to play their part in the region’s recovery. “This approach really has made a big difference, not only for the collaboration between countries but in our sense of ‘team’ here in Southern Central Europe. And the benefit is that we are all now involved in trying to achieve the best outcome for customers not just in one country but across the entire region. We are all pushing in the same direction and helping each other see where opportunities exist and how our capabilities in one country can be replicated in another. This change in thinking has happened in a short space of time, and very dramatically given us a renewed impetus to make a bigger impact, not only here but around the SGS network.” 22 FLEXIBLE SOLUTIONS “Restructuring is another area of collaboration we have focused on in 2013, specifically the restructuring of our laboratory services in the region,” Ladislav continues. “Customers expect testing to be performed by the most up-to-date technologies and what we have done here is look at how our facilities can come together in order to create a more flexible and productive solution. For instance, we had two laboratories in Hungary, one for food and the other for agriculture, with the latter offering greater access to new technologies and service offerings. So naturally after realising this, we combined and merged the strengths of both laboratories into one multilaboratory. This new facility has given us the ability to provide a faster, more efficient solution for customers. The multilaboratory in Hungary is fully accredited and offers customers leading services in consumer product testing and agricultural testing. Our goal is to keep pushing forward in the region and continue to expand our business, deliver higher levels of service to customers, and work with all our affiliates such as Slovakia and Croatia on a blueprint for how to replicate best-in-class facilities and services in their countries.” COMMITMENT TO TEAMWORK Ladislav knows where SGS needs to improve in the region and how to get change implemented. “We are succeeding here in Southern Central Europe and committed to teamwork and collaboration across affiliates, which is giving customers easier access to the services they need to make their businesses more profitable and productive.”
  24. 24. A TALE OF TWO LABORATORIES Getting cost-effective efficiencies out of laboratory services is a top priority for SGS in Southern Central Europe. Identifying optimal laboratory structures, processes, mergers and alignments, both within countries and across the region, allow SGS to continually improve quality and turnaround time for customers. Any change in laboratory structure or process relies on the collaboration of the entire SGS team, as demonstrated recently in two laboratory merger projects, the first in Bulgaria, and the second in Hungary. SGS VARNA LABORATORY Located in Varna, Bulgaria Opened approximately 15 YEARS AGO Previously only agricultural inspection analyses Now, also environmental and food testing PROVIDES COMPLEX ANALYSES for a wide range of customers Supports labs across the complete region, not just in Bulgaria Utilises expertise and equipment efficiently 23 SGS NYIREGYHAZA LABORATORY Located in Nyiregyhaza, Hungary Provides agricultural and food analyses Previously separate laboratories for each area Now a MULTILAB APPROACH Mainly serves Hungarian trader, retailer and manufacturer customers Optimal use of SGS CAPABILITIES High-tech equipment and experts in one location
  25. 25. SOUTHERN CENTRAL EUROPE The Czech Republic is considered to be the crossroads of Southern Central Europe. With motorways of trans-european importance connecting industrial cities both within the country and neighbouring regions, its dense road network spans more than 750 km of motorways. The D1 motorway, originally built more than 40 years ago, is currently undergoing a full-scale reconstruction, in which SGS is playing a major part. Known for being made out of slabs of concrete, the D1 motorway shakes drivers and passengers on a bumpy ride across the country. The quality of the D1 surface has deteriorated badly over the years, so much so it is now rutted and pot holed at best, loose across entire slabs at worst. The Road and Motorway Directorate of the Czech Republic (RSD CR) founded by the Ministry of Transport and Communications is responsible for the construction and upkeep of the road infrastructure. It has embarked on a huge reconstruction project with the aim of modernising the D1 to the safety standards expected today. The rebuilding is planned over a number of years, section-by-section, with the expense of motorway construction in the Czech Republic on par with some of the more costly road construction across the rest of Europe. Because of this, the RSD CR has employed strict monitoring throughout every stage of the project, to be conducted by an independent third party. In the case of Section 5 of the D1 motorway from Šternov to Psáře, that third party is SGS. 24 485 the number of vehicles per 1 000 people in the Czech Republic >750 km total length of motorways in the Czech Republic 160 km section of D1 being modernised 22 SGS construction experts on the D1 project 19.4 Mio is the total reconstruction cost for D1 Section 5 (in EUR)
  26. 26. ŠTERNOV TO PSÁRE Before any work began on Section 5, the Construction Supervision Services (CSS) of SGS evaluated the planning documents, choice of building materials and subcontractor capabilities. SGS CSS is keeping a close watch on the Šternov to Psáře section of the D1 project to ensure the RSD CR maintains control over the budget and meets pre-agreed targets. Specialist engineers in road construction, geotechnics and bridge structures, along with health and safety experts, surveyors and a range of other highly skilled professionals complete a team of onsite SGS personnel for Section 5. During the project, SGS CSS has worked closely with the construction company to perform key evaluations and confirm the effective completion of assigned construction activities. This involves checking the quality of work and the adherence to prescribed technological procedures, labour safety and project design documentation, as well as overseeing that the terms and conditions of the contract, the building permit, current legislation and decrees are all met throughout the construction process. SGS also provides support for the contractor and gives reassurances to the RSD CR that best practice is being followed at every step of the project. Should a serious incident occur, the RSD CR knows it can rely on the onsite presence of SGS for the collection of any relevant information or analyses, as needed. END OF THE ROAD As with any construction supervision project, the precise service performed during the D1 motorway project is tailored to the exact requirements of the RSD CR, with the goal of completing the project in the most efficient, productive and safe manner possible. Operating as an independent third party, SGS is able to work with the contractors to reduce technical risks and prevent construction errors through a process of continuous supervision. As part of this supervisory role, SGS also completes and issues all the necessary final documentation, certificates and declarations between the contractors and the RSD CR at the end of the project. 25 CONSTRUCTING A TEAM ADVANTAGE Construction projects within the industrial sector represent an area where SGS crossborder and cross-function teams combine their skills to deploy the best possible SGS experts for a given project. The D1 Section 5 reconstruction project is just one example. Similar capabilities from SGS in Southern Central Europe have seen talent pooled for projects in support of the development of electricity infrastructure across the Czech Republic, Romania and Bulgaria for the Czech energy company, ČEZ Group. By partnering with SGS, companies in the region optimise costs and maintain schedules for their respective projects.
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  28. 28. ECONOMICS & creativity WESTERN EUROPE 27
  29. 29. WESTERN EUROPE NEW THINKING excellence in mind PAULINE EARL Chief Operating Officer, Western Europe UNCERTAINTY STILL UNDERPINS NEW ECONOMIC GROWTH IN WESTERN EUROPE. SGS IS CREATIVELY ADDING VALUE FOR CUSTOMERS THROUGH ACQUISITION, INTEGRATION AND MANAGEMENT OF BUSINESSES IN THE REGION. Pauline Earl, COO of SGS Western Europe, knows the challenge is to think differently and continue to seek out new opportunities for growth. CASTING THE NET WIDE The testing, inspection and certification industry in Western Europe has continued to experience difficult times in 2013. With the depressed economy of the eurozone and supply chains shifting to emerging markets, investment in areas requiring the skills of a company like SGS has slowed. “We have had to think wider, as far as casting the net, and really look at our structures and services to ensure they are aligned with the changing marketplace,” begins Pauline, “because that reflects the economy and the opportunities to identify potential areas for acquisition. But it is important not to forget that acquiring new companies in a complex economy is just the start of the journey. Here at SGS we take a very detailed and responsible approach to the integration process that follows. For SGS to remain as the world’s leading provider in the sector, we need any acquisition, and the unique value it brings to our customers, to find its place in our network as quickly as possible. That requires our people to be creative in how best to manage, how best to integrate, and how best to bring to market the new services, and the new people and cultures which come with acquisitions.” BIG IDEAS Spain is one country where the effects of the economic downturn have been well recorded. This is also a country where SGS has initiated and completed its biggest acquisition to date: the Euro 180 Mio deal for the vehicle inspection business of General de Servicios Inspección Técnica de Vehículos (ITV) SA, a subsidiary of Fomento de Construcciones y Contratas (FCC) SA. “Spain has had its own specific challenges regarding integration and to tackle them we put together a multidiscipline team to handle that phase of the acquisition,” continues 28 Pauline, “and they did a fantastic job on many different levels in consolidating all of the testing stations. Acquiring ITV meant taking on 43 vehicle inspection centres spread across six parts of Spain, which employed 660 employees. We now operate in seven areas in Spain and perform over 1.6 million inspections per year. The process of integrating a company of that size has given us an amazing insight into how to creatively get the best out of acquisitions, not just in Spain but other countries in the region.” NEW ENTHUSIASM Encouraging and motivating employees to bring new ideas and look at new ways to tackle challenges for growth and added customer value is not an easy task when the economic reality limits what can feasibly be achieved. We have really looked at our structures and services to ensure they are aligned with the changing marketplace “You have to keep them motivated and not dampen their enthusiasm,” reassures Pauline on how SGS retains the creative spark that makes the difference in a downturn economy. “We always talk about a funnel process, where you simply generate more ideas than you need for new services, and then over time you return and refine them and the ideas naturally narrow down to a few that are going to be very successful. That is what SGS does well here in Western Europe – pinpointing what services customers are going to need and finding the right acquisition to increase our capabilities in those areas.”
  30. 30. ENVIRONMENTALLY DRIVEN EXPANSION INDUSTRIAL BUILT VISION The acquisition of County Durham based MIS Environmental in September 2013 enables SGS to offer a more comprehensive package of Environmental Services in the UK, where customers were already looking for extensive environmental analyses on specific projects: consultancy services, asbestos management, and environmental, health and safety testing. The integration of SGS MIS Environmental, as it is now known, with existing chemical testing and climate change programmes gives Environmental Services in SGS UK a full value chain solution for customers. With three UK laboratories, MIS Testing, acquired in September 2013, has been integrated as SGS MIS Testing and continues to offer leading mechanical testing and machine services such as tensile testing at room and elevated temperatures, impact testing from room temperature to -196°C, izod testing, hardness testing and visual weld inspection, as well as non-destructive testing (radiography, magnetic particle, ultrasonic). The acquisition increases SGS’ understanding in the sector and brings 55 new employees with a wealth of knowledge into SGS UK, supporting the global vision of building SGS Industrial Services throughout the network. 29
  31. 31. WESTERN EUROPE 30
  32. 32. ROAD ON THE In Spain, as in many other countries, the government requires all car owners to put their vehicles through annual or bi-annual vehicle testing to ensure that they conform to regulations for safety and emissions. The acquisition of General de Servicios Inspección Técnica de Vehículos (ITV) SA began an extensive integration period for ITV operations and employees into SGS Western Europe. FROM ONE TO SEVEN REGIONS The acquisition of ITV vastly changed the scale and complexity of SGS’ operations for vehicle testing in Spain. ITV added 43 inspection testing centres, and 660 new employees to what had been previously a small SGS offering in the region. “SGS had been working in the statutory inspection testing business in Spain for 20 years at the time of the acquisition,” explains Alejandro González, SGS Spain Automotive Sector Manager. “However, at the time we were only operating one small concession in one part of Spain, so we were looking at ways to develop our automotive business. The acquisition of ITV brought with it a very rapid expansion, with at least six contracts almost immediately added to our customer base.” ITV allowed SGS to service customers in Aragon, the Canary Islands, Madrid, Valencia, Castile-La Mancha, and the Balearic Islands. “Throughout the whole integration process our focus was on providing customers with a consistent service,” continues Alejandro, “and nothing in ITV changed drastically. Instead, we monitored performance and service delivery. Once we were through the initial phase of the integration it gave us a chance to really start offering a more beneficial service to the public. With expertise from ITV integrated into the culture of SGS and our best in class thinking, we were able to provide a truly world-class service and begin developing new ideas.” DAILY SAFETY CHECKS SGS testing stations in Spain perform mandatory safety and emissions inspections on a daily basis. Tests cover tyres, brakes, direction alignment, lights, exhaust emissions, noises and odours. Up-to-date facilities and the latest technical equipment allow precise measurements to be recorded such as tyre tread depth, brake effectiveness, and emissions residues. As there is little room for human intervention the data generated is always reliable and guarantees vehicles remain in accordance with government regulations and within technical specifications. basis. And here too, we have a great potential to grow. More and more vehicles owners need our service, and as a result we are increasing our service capabilities.” DRIVING SATISFACTION “Over the past three years, we have moved ITV through a full integration process,” concludes Alejandro. “What this means in practice is that now each employee, across the board, realises that the SGS culture is at the heart of everything we do. Being a part of SGS has continued to build ITV’s capabilities and customer service levels. We now have an extremely robust network of vehicle testing centres delivering excellence on a day-to-day basis across Spain.” A REPUTATION FOR QUALITY “Demand is growing,” Alejandro explains, “and we have just recently opened two new testing centres as a result. In Madrid, where we previously operated as a government granted concession, as is the case in many other areas of Spain, we are now looking at an open market scenario. This gives SGS the opportunity to expand market share by attracting new customers because of our reputation for quality and integrity. Customers, by that I mean vehicle owners, can go now to any testing centre in Madrid but we are really promoting our reputation so that they know the service from SGS is the best in terms of ease of testing, wait times, accurate results, and so on. Our new facility in Madrid gives us more capacity, increasing it by 40 thousand inspections per year in addition to the 200 000 inspections we already carry out there, and an ability to target a more highly populated geographical area of the city. We also have a second new centre in Zaragoza, where testing centres still operate on a concession 31 7 areas of Spain have SGS testing centres 1.6 Mio inspections per year performed by SGS
  33. 33. WESTERN EUROPE STREETSMART F R LIFE The statistics for deaths and injuries on Irish roads have been improving every year since the government set a target of no more than 252 per annum by 2012 – a figure it achieved three years ahead of schedule in 2009. The Road Safety Authority (RSA) in Ireland is the government agency responsible for making Irish roads safer than they have been for many years. RSA’s next challenge? Reducing the reported statistics 30 percent further. CREATIVELY EDUCATING ON ROAD SAFETY Education is seen as an essential component of safety by the RSA. It is developing and implementing information and education campaigns targeting groups as diverse as young males, truck drivers, farmers, and children. As a creative way to educate the latter on a very serious topic, SGS brings road safety to life for young Irish school children through an engaging initiative called ‘StreetSmart’. SMARTER KIDS, SAFER STREETS Aimed at three age groups – four and five-years old, five to eight-years old, and the eight to twelve-years old group – the StreetSmart programme delivers a specific series of interactive, and memorable, activities and role-plays. The central prop for the four to eight-years old group is a ‘Streetscape’ map, which laid out on the floor measures 9 metres by 10 metres. The Streetscape has all the typical, but in miniature, street scenes one would expect including traffic lights, pedestrian crossings and buildings. In addition to the Streetscape, the older age group is shown a series of real-world scenarios filmed on actual city streets, and then asked what constitutes safe and unsafe pedestrian behaviour. Working together with the teachers, SGS’ education team actively engages the children in real-life road safety scenarios via the Streetscape in school halls or playgrounds, throughout the course of an action-packed day. 32
  34. 34. STREETSCAPE CHARACTERS LOOK LEFT, OR RIGHT? Children are quizzed on a range of common road safety issues, allowing the SGS educators to guide them through the right way of doing things SGS educators involve children in the Streetscape by assigning each child a role: pedestrian, cyclist, or motorist; and getting them to carry out everyday tasks in order to learn from their own experiences and those of their classmates DRIVING, CYCLING AND WALKING STORY TIME There are ‘walking cars’, ‘standup bikes’ and ‘costumes’ such as nurses, doctors, fire officers, or ambulance drivers; and by interacting within the Streetscape children gain an understanding of how vehicles and people must stay aware of one another to lessen the danger of being on the road Children are encouraged to discuss road safety topics related to a series of short stories which the SGS team use to help prompt the children’s thinking UNDERSTANDING TRAFFIC ‘PERSONALISED SAFETY LICENCE’
AWARD Sitting children behind the wheel of a toy car helps them learn to understand the traffic conditions from the perspective of a driver, and begin to understand how difficult it can be sometimes to see pedestrians and other road users After children have successfully completed the road safety activities each one is given a reward, and reminder, in the form of a ‘personalised safety license’ award THE RULES OF THE ROAD The fun-filled educational programme leaves children with a thorough grasp of road safety, cycle safety and how to travel in a safe manner in a car or bus; and all the rules of the road they learned can be immediately applied in real world situations TEACHER SUPPORT SGS has developed a teachers’ handbook as a guide to each part of the educational programme which includes all the background information needed to educate children on safe road behaviour 33
  35. 35. REGIONALITY & transparency AFRICA 34
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  37. 37. AFRICA CONTINENT OF COMPLIANCE changing expectations FRED HERREN Chief Operating Officer, Africa THE AFRICAN CONTINENT, THE SECOND LARGEST IN THE WORLD COVERING OVER 20 PERCENT OF THE GLOBE AND WITH AN ESTIMATED POPULATION OF OVER ONE BILLION PEOPLE, IS A REGION SET FOR MAJOR CHANGE IN THE DECADES TO COME. In the emerging economies of Africa, each having distinct regional rules and regulations, Fred Herren, COO of SGS Africa, is reducing risk and increasing consumer confidence through services which make compliance an accepted part of everyday life. MIDDLE WAY THINKING “If you look at the region it has an ambitious and hard working middle-class, and an entrepreneurial style of government thinking which encourages new services from the private sector," elaborates Fred, on the middle-class and governments of Africa. "These add up to a region that is demanding higher quality consumer goods, safer transport infrastructure and monitoring, and more efficient government services. For SGS, the new middle-class and proactive governments are great news, because they directly impact testing, inspection and certification. We see a chance to really diversify our offerings and partner with customers across Africa “When the quality of consumer products or the service in the hospitality industry affect tourism and trade, or the amount of revenues generated by government come into question, the only way to answer these is through solutions which offer transparency. And in Africa, where each country is its own entity, we offer our customers, the consumers, manufacturers or the governments, the chance to shine a spotlight on what is happening and create a trust between all the stakeholders.” TECHNOLOGIES FOR TOMORROW “We are presently in more than 35 countries,” Fred continues, “and of course we are still very much involved in basic commodities and the like, but on the other hand we see a chance to really diversify our offerings and partner with customers across Africa and provide services and solutions in manufacturing, the hospitality industry, government institutions, and many more industries. This diversification drastically evolves SGS’ traditional inspection based services towards a much broader range of solutions supported by stateof-the-art technologies. By focusing our efforts in this way, we are better placed to respond to our customers in the industrial, mineral or agricultural sectors who need to make best use of any recent technological development that gives a competitive edge. We are finding that customers are incorporating SGS services into their operations and this is helping us expand our footprint across the continent. Local entrepreneurs and enterprises are often the most stimulating and demanding customers, and in 2013 rarely a day has gone by without someone approaching us to discuss a novel idea or service. People may still think of Africa as a ‘developing’ region, but already the technology infrastructure exists to pay employees via mobile phones, taxes on the internet and more. Africa is one of the continents where ideas for SGS services of tomorrow receive the fastest and most enthusiastic response from around the network.” In 2013 rarely a day has gone by without someone approaching us to discuss a novel idea or service 36
  38. 38. BALANCING THE HEAVY COST OF GOODS TRANSPORT IN KENYA LEGAL ROADS “Vehicle and road safety is another area where SGS has been very successful in helping governments bring transparency into action. In the Ivory Coast every driver now has to come to an SGS testing station, and we test their vehicle for road worthiness before they can purchase a road tax ‘vignette’ which demonstrates their vehicle is road legal. We provide this same service in other countries such as Algeria, Morocco, Argentina, and Chile and what is interesting is how many vehicles actually comply with the requirement: in Chile it is 100 percent, in Switzerland around 96 percent, and in the Ivory Coast it started at around 20 percent but is now nearly 50 percent compliance. Most people want to know their car is safe, and we offer that trust and transparency to them.” Most people want to know their car is safe, and we offer that trust and transparency to them The upkeep and maintenance of road infrastructure is a significant burden on any government’s finances. In Kenya, where road construction costs nearly CHF 1 Mio per kilometre, the National Highway Authority has taken steps to minimise the damage caused by overloaded trucks by introducing new weighbridge technologies, which speed up the process and reduce the risk of corruption. For the last three years, SGS has worked with the National Highway Authority. In 2013, SGS now operates a network as the sole provider in Kenya for the service, with 11 fixed weighbridge stations in 9 locations, and a further 6 mobile weighbridges as and where needed. AFRICA'S ‘CAN DO’ ATTITUDE “In Africa,” Fred concludes, “SGS is matching the continent’s ‘can do’ attitude and is enabling more opportunities for customers in the region to demonstrate their commitment to making compliance a change for good.” 150 000 trucks weighed per month OVERLOADING Trucks have been detected carrying up to 125 tonnes, compared to the limit of 52 tonnes – equivalent to the road damage of 6 or 7 lorries 800 trucks fined per month for overloading DRIVE-BY WEIGHING Weighing technologies placed into truck lanes preassess traffic on the roads, giving authorities a chance to detect overweight vehicles AVOIDING RESTRICTIONS MOBILE WEIGHBRIDGES Some transporters illegally unload additional cargo and reload it on leaving weighbridges via an accompanying vehicle Moveable checkpoints placed near to existing stationary weighbridges help catch trucks opting for ‘escape routes’ or illegal unloading/ reloading practices AUTOMATIC NUMBER PLATE RECOGNITION Loops and loggers capture trucks and all other traffic using the highway for a more accurate census count, with automatic number plate recognition, infrared and CCTV cameras assisting the tracking of vehicles around Kenya 37
  39. 39. AFRICA SGS MAURIT US Taking a market-by-market approach led the SGS team in Mauritius to identify a huge local opportunity for SGS expertise: hospitality. As one of the main economic pillars for the country, Geraldine Koenig, SGS Systems and Services Certification Corporate Project Manager (Hospitality), recognised just how perfectly placed SGS is to support the high-end resorts and hotels that need to consistently exceed consumer quality and service expectations, while ensuring risks are mitigated. THE STANDARD OF PARADISE Mauritius, famed as one of the world’s top luxury tourist destinations, offers a paradise of lush forest, wild waterfalls, unique flora and fauna, rocky mountains, and white sandy beaches that stretch as far as the eye can see. However, as the country feels the pinch of the global recession and the competition of less expensive destinations, the local hospitality industry has to align itself to the highest international standards of service expected by guests and tour operators. As in any high-end destination, industry needs to ensure that every review is outstanding and no guest leaves feeling unsatisfied, which is where SGS has made the difference in the Mauritian tourism sector. CONFIDENCE IN EXCELLENCE “There are a number of different players in the tourism industry,” explains Geraldine, “and each has to be sure of the exacting standards of the end product. Tour operators buying packages to be sold on to other operators, or directly to consumers, need to be confident in the products they are buying and selling. They need to know that the product agreed during a purchasing visit remains consistent with what is delivered throughout the contract period. It is important too for insurance companies to be assured that all necessary health and safety measures are in place. Because of these factors, operations teams in resorts are under pressure to prove due diligence, service levels and standards to all stakeholders: within their own international organisations, the tour operators, and the insurance companies to name just a few. SGS provides that link to transparency needed to demonstrate compliance.” PROTECTING EVERYONE Many safety requirements in the hospitality industry have been driven out of a need to protect both guests and employees. Above all, guests want a safe place to stay. Legionella and other water-borne illnesses, alongside the risks associated with faulty gas boilers, are a constant cause of concern for hoteliers, wherever they are in the world. Similarly, the worry of a food-related contamination is a major fear as an event can ruin the reputation of even the most established organisation. “Our services fall into three main categories,” Geraldine continues, “safety, sustainability and service. When it comes to safety, we conduct Performance Assessment Audits, where we become the eyes and ears on the ground for the operations teams within large organisations. Our experts arrive at resorts unannounced to the local management, and proceed to audit and undertake tests in order to verify the correct standards are being met. Samples are sent to our laboratories and analysed for 100 percent accuracy in 38 our findings. For sustainability practices, hotels place a great deal of importance on environmental issues, as they use a lot of water and energy. We help them find ways to operate more efficiently and implement more effective Environmental Management Systems. These systems allow our customers to have measurable targets and environmental commitments, which they can use to gauge operational excellence. In service, we quality assess resort operations and support the delivery of a consistently high-level of service by providing expert training of employees via our SGS Academy courses, as an example.” VALUED EXPERTISE With services spanning many sectors in the hospitality industry, SGS has assembled a best-in-class team of experts to consult and train customers in how to operate to the highest benchmarks for excellence. “We have great relationships with our customers as they’ve seen the value of SGS expertise for their operations,” Geraldine concludes. ”As well as helping them meet an ongoing need for assurance, we continually communicate to them our reviews of regulations and best industry practices. Our service for customers adapts and develops in accordance with how the hospitality sector as a whole improves the quality of its service to the tourism industry.”
  40. 40. STAY HAPPY – BEACHCOMBER HOTELS Recognised as a pioneering hotel group at the forefront of the Mauritian luxury tourism sector, Beachcomber Hotels has partnered with SGS for a number of years. Initially, SGS only provided food safety assessments in one hotel. But, in an attempt to implement best practices to satisfy tour operator requirements, this eight-strong hotel group called on SGS for more and more monitoring of its safety, sustainability and service levels; in order to ensure the same high standards across all locations. With some of the finest resorts in Mauritius owned and operated by the Beachcomber Group, and over 2 000 rooms for guests, the relationship with SGS is essential in maintaining and reassuring the tourism sector that guests stay happy. SAFETY 2 000 rooms operated by the Beachcomber Group SUSTAINABILITY SERVICE FOOD SAFETY ENVIRONMENT QUALITY • Hospitality Excellence Programme • Good Environmental Practices Audit • Compliance Training • ISO 14001 Certification and Gap Analysis • ISO 9001 Certification and Gap Analysis • Management Standards Training WATER SAFETY • Training on ISO 14001 and ISO 15001 • Carbon Footprint Assessment • Legionella Risk Assessment • Legionella Testing • Water Monitoring HOUSEKEEPING • Good Spa Practices Audit 39 • ISO 9001 Training
  41. 41. TRAFFIC REPORT AFRICA TANZANIA HAS SEEN PHENOMENAL GROWTH IN THE TELECOMS INDUSTRY OVER THE LAST 10 YEARS. WHILE THE FIXED NETWORK IS LIMITED, MOBILE SERVICES HAVE RAPIDLY EXPANDED. THE TELECOMS INDUSTRY MAY HAVE KEPT PACE WITH DEMAND BUT THE GOVERNMENT HAS NOT ALWAYS BEEN ABLE TO REAP THE FULL REWARDS OF INCREASED TRAFFIC. 48 Mio population of Tanzania (45% are under 15 years old) 27 Mio subscriptions to fixed (0.6%) and mobile networks (99.4%) in Tanzania (June 2013) 363% increase in telecoms subscriptions from 2006 to 2013 DIALLING IN REVENUES Based on license agreements telecoms operators pay tax at a set rate related to income, but without accurate telecoms traffic information it is impossible for operators and governments to be sure payments and revenues are accurate. The Tanzania Communications Regulatory Authority (TCRA) relied in the past on operators to submit accounts of their revenues. In theory these numbers should be correct, however a number of factors meant operators and the government of Tanzania were not earning the full quota from calls on the network. Monitoring and supporting roaming calls require a significant investment in technologies and upgrades to network infrastructure. In addition, implementing sophisticated network management systems needs a team of highly trained technical staff, another factor that telecoms operators do not always have. Without the transparency given by technologies and expert staff, telecoms fraud can easily go unnoticed at a major cost to all stakeholders through lost earnings and network disruption. LEADER IN TANZANIA Following SGS’ already successful maintenance project on the International Gateway Traffic Monitoring System in Rwanda, SGS launched an even more comprehensive project in Tanzania: the SGS Telecom Services Project. As a first-of-its-kind service in Tanzania, SGS partnered with a leading technology provider, and completed phase one of the implementation on 1 October 2013 when 40 call monitoring went live. The full scope of the service covers multiple areas: • International Gateway Monitoring • National Interconnect Monitoring between Operators • Anti-fraud Services • Automatic Device Detection and Central Equipment Information Register • Mobile Monitoring Services At the heart of the telecoms infrastructure created by SGS and its partner is the ‘Network Operating Center’ and ‘Transmission System’. This enables the Tanzania Communications Regulatory Authority to generate reports and invoices for government taxes and vastly improves the interconnection infrastructure for international telecoms.
  42. 42. EMPOWERING KNOWLEDGE In South Africa, unemployment is estimated at 25 percent but the mining, energy, engineering and construction industries still struggle to fill vacant positions with skilled employees. The SGS Academy partners with organisations to develop the skills of their employees. Drawing on knowledge of worldwide industry best practice from across the network, the SGS Academy empowers individuals and formalises knowledge through 51 different courses, the majority of which focus on health, safety, environmental and quality risk management. ACTIONS MEET WORDS Behaviour-based safety programmes apply the science of behavioural change to real world problems. The SGS Academy Behavioural Based Safety Zero Harm Observation and Coaching Training course gives attendees the ability to observe the behaviour of others, and trains them in the interpersonal and coaching skills to be able to deal with addressing any issues. For safety training, this is an increasingly popular approach as it monitors individuals in the workplace, with follow up training used to encourage and develop consistent, safe behaviour. Recognised as particularly effective in the mining industry, where operations are largely people based, behavioural safety programmes have helped the industry rethink risk and not view it purely from a technical or engineering standpoint, but from the wider perspective. In South Africa, this course has become one of SGS Academy’s most popular. HEALTHY EATING PREVENTION FACTORS TAKING RESPONSIBILITY CONTINUAL LEARNING The Foundation for Food Safety Certification (FSSC) developed the FSSC 22000 for food supply chain manufacturers, and SGS Academy teaches participants the importance and implementation of food safety management systems for organisations. Learning how to prevent major incidents by understanding the root causes of previous accidents is the goal of the Root Cause Analysis Method (RCAM) course which develops industry-specific risk assessment techniques. ISO 26000 guides organisations in ways to operate an ethical, transparent and socially responsible business. SGS Academy’s ISO 26000 courses explain the internal audit process and how to implement socially responsible systems. The SGS Academy continually updates courses by listening to feedback from businesses and participants on what future trainings are required to further excellence in their organisations. 41
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  44. 44. EVOLUTION & innovation NORTH AMERICA 43
  45. 45. NORTH AMERICA AN UNCONVENTIONAL PATH energising the future JEFFREY McDONALD Chief Operating Officer, North America IN THE LAST FIVE YEARS NORTH AMERICA HAS SEEN AN UNPRECEDENTED EVOLUTION IN THE OIL AND GAS INDUSTRY: A SHIFT IN FOCUS, AND FORTUNES, TO UNCONVENTIONAL RESERVES. Jeffrey McDonald, COO of SGS North America, has evolved SGS services in parallel with the ‘unconventional boom’ and is helping to position SGS as a technology innovator and end-to-end value chain partner for the oil and gas industry. EVOLUTION IS REALITY While experts continue to debate whether the shale oil and gas revolution in North America can really deliver on production estimates, the reality remains that the energy market in the region is certainly evolving towards self-sufficiency, if not outright global dominance. For SGS, active in North America for nearly a century, it means change has been inevitable. “I think one of the key things we are aiming to do in the oil, gas and chemicals market is to reinvent ourselves,” begins Jeffrey on how SGS has responded to the energy revolution. “With the advent of shale oil and gas, the amount of imports coming into the US over the past five years has been in decline. The problem for SGS is, with our oil and gas business originally set up to provide verification and validation of imports, now they are declining, and likely to continue doing so, we need to rethink SGS' approach to our traditional service offerings. Unconventional reserves have a much wider requirement for oil and gas, industrial and environmental services. In order to help customers gain a competitive advantage in this unconventional energy revolution, we are tapping into the entrepreneurial spirit SGS is known for and planning new services, some of which will be at the cutting edge of the industry. SGS’ Applied Technology and Innovation Center in Houston is already helping us achieve this and providing innovative services for upstream exploration, which in turn are helping the oil and gas industry look at SGS services in a different, more value-added, way. Energy companies now come to us for state-of-the-art equipped mobile laboratories which can operate anywhere, and sophisticated portable calibration devices which are bringing new flexibility to services.” 44 PARTNER WITH INTEGRITY Exploration ultimately leads to production and the need to transport oil and gas is another area where SGS is hoping to attract new customers. “In North America, midstream pipeline and processing infrastructure is not as advanced as it should be,” explains Jeffrey, “and this means customers are not fully realising potential returns. Some estimates in North America put the figure required in midstream investment at USD 200 billion over the next twenty years. Because the exploration and production of oil and gas now takes place in non-traditional locations there are no pipelines to service the industry, meaning you have a very real infrastructure challenge in getting oil and gas to a refinery, or a storage facility. Added to that, the pipeline infrastructure that is in place is now deteriorating because of its age. Our investments in acquisitions are building SGS' pipeline integrity expertise so that in the future we can offer more services in this segment. In North America, SGS is a true partner to business throughout the entire hydrocarbon cycle, conventional or unconventional “We already have some of the most advanced and innovative services to support pipeline operations including materials testing for fabrication and assembly, and asset integrity solutions for failure analysis or decommissioning. And when the product does make it to the refineries, like the ones of vast scale on the Gulf Coast, we have plant
  46. 46. FAILURE PREVENTI N and terminal operations for barge loading/unloading and railcar switching which create further opportunities to increase productivity for customers. In North America, SGS is becoming known for technological innovation, which further adds to our reputation for a commitment to quality and excellence, and our deep understanding of the global market.” >1 930 employees in Canada 1918 SGS established in New York >5 200 employees in the US >480 employees in Mexico >205 employees in Central America 45 SGS conducted root-cause analysis of two major accidents, which occurred in Pemex facilities during 2013. From around the network, SGS assembled a leading team of fire and explosion engineers, safety experts, geologists, and structural engineers, all with solid experience in the investigation of similar events in the oil and gas industry. The expert team reviewed onsite damage, interviewed witnesses, looked into policies and procedures in place at the time of the accidents, and undertook a full mechanical integrity review including the collection of materials samples. Normally a preventive process to warn of the potential of failure and possible danger, this time around the SGS team needed to simulate how the explosions happened and what their impact had been using specialised software. By drawing on their leading knowledge in materials testing the team were finally able to determine how and why failures occurred. Based on the findings, Pemex is implementing an action plan that consists of more than 40 separate follow-up actions, and requested SGS to conduct operational and mechanical integrity studies at other Pemex installations.
  47. 47. NORTH AMERICA WATER TESTING SERVICES AT THE WELLHEAD UNCONVENTIONAL AND CONVENTIONAL CAPABILITIES SGS is innovating every day so that it can deliver state-of-theart and best-in-class solutions for upstream and midstream unconventional and conventional oil and gas assets. From water testing to wellhead inspection for shale plays, to pipeline integrity and plant and terminal operations, SGS continues to develop a portfolio of services which go beyond customers’ expectations. SGS provides aqueous testing for the oil and gas industry to demonstrate the quality and integrity of flow-back and produced waters in order to help customers minimise their environmental impact during operations and maximise the longevity of assets. • Prevents corrosion and scaling build up issues SGS offers asset integrity inspections of wellhead equipment to verify upstream assets meet the American Petroleum Institute’s standards. In addition, SGS provides other specialist services such as the introduction of guided wave non-destructive testing and tablet based inspection data capture systems for upstream applications. • Creates historical data trail for monitoring and reviewing trends • Reduces chemicals usage and costs • Detects environmentally sensitive and unsafe contaminants • Monitors microbial contamination to prevent asset degradation 2011 10x 4 SGS initiates a shale flow-back fluid project growth in aqueous testing during the last two years shale plays covered by SGS services in aqueous testing 46
  48. 48. • SGS has introduced laser scanning to measure external corrosion and dents • SGS performs radiography examinations and state-of-the-art NDT testing REFINERY TRAINING FACILITY PIPEPLINE INTEGRITY SGS works with several owners of pipeline transportation infrastructure in the US, Canada and Mexico. SGS is committed to training new employees and has established a custom-built facility in Oklahoma, which ensures capable, knowledgeable and qualified technicians who can deliver or recommend a wide range of advanced inspection techniques as per customer requirements. • SGS qualifies welders for increased access to skilled employees • SGS combines pipeline inspection with data management which is a value-added service for customers SGS acquired Petroleum Service Corporation (PSC), a private plant and terminal operations services company founded in the US in 1952. Plant and terminal operations services are unique within the SGS network as, rather than being traditional testing, inspection and verification, plant and terminal operations services provide personnel who conduct product handling operations at oil refineries, chemical plants, and terminals, and for major barge lines. • SGS PSC is the oldest and largest barge tankerman service in the US • SGS PSC operates one of the largest crude-by-rail terminals in the US FIELD SERVICES LABORATORY SERVICES TECHNICAL SERVICES meter calibration, service, installation, sample procurement (crude oil, condensate, natural gas), monitoring full range of hydrocarbon analysis (crude oil, condensate, natural gas), water analysis hydrocarbon production allocations, process flow analysis, facility assessments 47
  49. 49. SGS PSC is responsible for all types of product handling services, including loading and unloading railcars and trucks, switching (‘shunting’) railcars inside facilities, marine dock (‘jetty’) operations, operating tank farms, warehouse operations, and other site logistics activities at more than 75 marine dock facilities in North America. SGS PSC TRAINING ACADEMY BARGE TO REFINERY RAIL TO REFINERY NORTH AMERICA SGS PSC operates marine docks, loads and unloads barges and ships, and manages other site logistics activities for a large number of leading companies. Many operations have been in place continuously for more than 20 years. SGS PSC employees are an integral part of customers’ daily operations. • 2 400 employees across more than 60 sites SGS PSC runs one of the only schools approved by the United States Coast Guard for the training and licensing of ‘tankermen’ – the SGS PSC Tankerman Career Academy – which is helping to meet the growing needs of the domestic tank barge industry for skilled and qualified personnel in the safe transfer of hazardous materials on and off of tank barges. • Liquid chemicals • Refined products • Liquefied gases 500  000 38 000 railcars estimated loaded and unloaded per year barges loaded and unloaded per year 48 APPROVED by the United States Coast Guard for the training and licensing of ‘tankermen’
  50. 50. MAIN US SHALE PLAY LOCATIONS BAKKEN SHALE North Dakota MARCELLUS SHALE North/Central Pennsylvania HAYNESVILLE SHALE North Louisiana PERMIAN BASIN West Texas EAGLE FORD SHALE South Texas 49
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  52. 52. SYNERGY & realisation SOUTH AMERICA 51
  53. 53. SOUTH AMERICA CULTURE, CHANGE AND CHALLENGE meeting potential ALEJANDRO GOMEZ DE LA TORRE Chief Operating Officer, South America SGS IS RAPIDLY EXPANDING IN SOUTH AMERICA. Instilling SGS’ culture of excellence into every service has allowed Alejandro Gomez de la Torre, COO of SGS South America, to offer better synergies and better solutions for businesses in the region. 50% increase in revenues for SGS South America during the last two years 17 lanes of vehicle testing – the biggest SGS statutory inspection station anywhere in the world CHALLENGING CULTURES “In the last two years in South America, SGS has increased revenues and employee numbers by 50 percent, and made three significant acquisitions in Brazil,” begins Alejandro. “So, in South America when we talk of opportunities, we are thinking about the potential cross-business and cross-regional synergy still to be realised. In 2013, we integrated six companies. The interaction between SGS management from different countries allowed us to expand our understanding of our business and potential opportunities across the region. Of course, this undertaking has presented several challenges. Some of the companies we acquired significantly increased the size of SGS in South America. For instance, in Chile we integrated 2 000 new employees to the Group. Integrating companies poses a challenge not only because of the potential large scale of the acquisition, but also due to the fact that each company has a completely different culture from SGS. We addressed this with the help of SGS Human Resources. We know our process works because we stay in close contact with customers and listen to what they need “For example, our integrity training is a key factor in any acquisition, as it communicates the culture of SGS to the acquired companies. Trainings, work sessions and communication efforts are all implemented to ensure operational managers understand our expectations and culture. We also make the effort to learn from the acquired companies, as this helps us expand our competencies and can unveil business opportunities, or recognise potential synergies that 52 may not be obvious at first. All of this helps improve efficiencies and aids productivity, both in our own processes and those of our customers. And we know our process works because we stay in close contact with customers and listen to what they need from SGS, and how well we are meeting their expectations. We have made many new connections in the region and these have opened up new services and solutions in areas ranging from industrial to environmental, to oil, gas and chemicals.” MILESTONE EXPANSION “One example of where we have realised a new business opportunity in the region is the acquisition of Enger Engenharia SA (Enger), a leading engineering consultancy company, based in Sao Paulo, Brazil. Incorporating what Enger does into the SGS network allows our portfolio to cover project supervision and management, as well as technical consultancy for infrastructure, building and industrial projects in the following phases: feasibility, construction and operation. This represents a milestone for SGS South America's industrial service offerings and really gives us a strong foothold to leverage our skills in hydraulic plants and oil and gas facilities and in the transport and infrastructure sectors. So that is a very real instance of how successfully integrating one part into the network has a massive effect on realising a much bigger growth potential.” ROOTED IN TRADITION Alejandro adds, explaining how SGS has been mindful of traditional services while it continues to look for new growth opportunities, “Our matrix is changing as far as the services we provide in the region but we have been careful not to neglect our customers in SGS’ traditional business lines. In inspection services for automotive and vehicle testing we are in the process of finishing three large statutory inspection
  54. 54. stations, one of which is the biggest project of its kind for SGS anywhere in the world, with 17 lanes of testing. Similarly in agricultural services, we have managed to expand our traditional business through a new project for field trials in Brazil, a service that simply did not exist in the country before we introduced it this year. These projects are the result of researching the SGS network, and identifying investment coming into South America specifically, and finding solutions that really offer something unique to the industries of the international and local customer.” SGS is finding solutions that really offer something unique RESPONSIBILE FOR BETTER “With the scale of expansion and growth here in South America, SGS has a responsibility in terms of our commitment to the new employees brought into our Group,” Alejandro says of what SGS must keep at the forefront of any expansion. “We know it takes time to get used to a new working culture, and accept and integrate the SGS way of doing things into daily routines. But in return, SGS offers employees a place where there are many benefits: career development and personal development in skills and leadership abilities, opportunities to gain international experience, training in different areas of expertise such as integrity, health, safety, plus the chance to become a leader, manager and more. SGS opens doors for people, as you would expect from a company that is best in class and a world leader. The better we can be at realising the potential from each employee, and the more we can create synergies between management and services, the higher we can continue to set the bar for success in South America.” BUILDING A BETTER SAO PAULO >550  000 homes built and sold by the CDHU The state of Sao Paulo has the largest slum population in South America. Life in a slum (known as a ‘favela’ locally) is hazardous, unhealthy and often provides only limited access to basic services such as sanitation. SGS, in collaboration with the Housing and Urban Development Company of the state of Sao Paulo (CDHU), is providing construction supervision, project management and associated services for CDHU’s large-scale housing project which aims to build 12 647 homes and give a better standard of living for the favela population. The CDHU has housed over 2.2 million people to date, making it one of the world’s largest housing organisations. It has been a customer of SGS Enger Engenharia – acquired by SGS in May 2013 – for 29 years and benefits from the combined expertise of the entire SGS global network. SGS supports the CDHU in the management of the favela programme at each stage of its implementation: planning, management and feasibility studies during development, project management, tracking of construction inspections, permits, and compliance with all necessary regulations. Beyond the new construction, SGS offers the population affected by the relocation a comprehensive social care programme, which makes the sometimes challenging move from perhaps the only home people have known an empowering and positive experience. Change can be difficult and every person relocated is able to access training and other services that helps them adjust quicker to the new environment and social setting provided by SGS and CDHU. 53 >2.2  Mio people housed by the CDHU
  55. 55. SOUTH AMERICA 560  000 830  km barrels per day pipeline capacity for Ocensa total length of the Ocensa pipeline OIL FIELD TO OCENSA TO OCEAN Colombia’s average crude oil output for 2013 is estimated at 1 007 million barrels per day, up 7 percent on output in 2012. Considerable government investment is planned for oil explorations and production in 2014, and the growth in this sector means an increasing need for infrastructure (i.e. pipelines, terminals, storage and pumping stations) to transport, refine and export oil. SGS ETSA is part of the solution. 54 GROWTH TARGETS As Latin America's fourth-largest oil producer, Colombia has been pushing to grow oil reserves and production. Over the past seven years, oil production has doubled as the government has provided the market with an improved tax and royalty rate structure, and found ways to tackle guerrilla attacks on pipelines, with support from the US, Colombia’s main export market. LOCAL EXPERTISE There are six major oil pipelines crossing Colombia, which take oil from the inland fields to the coast. Four connect to the Port of Covenas, a Caribbean export terminal, one of which is the Ocensa pipeline. Ocensa runs 830 km from the Llanos Basin fields of Cusiana and Cupiagua to the Port of Covenas. The increasing need surrounding pipeline infrastructure prompted SGS to acquire Estudios Técnicos (ETSA) SA, a Colombian-based engineering project supervision and management company. ETSA served the energy, infrastructure, construction, and public
  56. 56. 6 major oil pipelines cross Colombia services sectors from its headquarters in Bogotá. With over 50 project offices throughout Colombia, SGS ETSA, as it is now known, allowed SGS to diversify its service offering in Colombia and meet the demand for construction expertise in oil and gas infrastructure. With the integration of an established and locally known company, SGS ETSA immediately entered the market able to give customers the advantage of local personnel who understood the challenges of construction in Colombia, but now with the full backing of the SGS network to improve efficiencies and maintain quality. A PERFECT PARTNER FOR OCENSA Enrique Chávez, Managing Director of SGS Colombia, knew that the sheer size of the Ocensa project fitted well with the approach of SGS ETSA. “With the acquisition of ETSA," Enrique explains, "SGS Colombia had all the expertise, personnel, procedures, and know-how to provide a full range of engineering, construction supervision, project management and consulting. This is why SGS made the ideal choice for the Ocensa project. The Ocensa pipeline has a capacity of 560 000 barrels per day and accounts for around 60 percent of total oil production in Colombia. SGS ensures the best standards are being continually met in all modification work being carried out at seven storage stations, pumping stations, and a maritime terminal for oil dispatch and reception. The project expands the existing pipeline capacity by 35 000 barrels per day.” Enrique continues, “Our team of 30 inspectors, under the guidance of a project manager who has extensive experience on similar projects, gives Ocensa the supervision it needs over the next two years in the civil, mechanical, instrumentation, control and electrical infrastructure, and fire fighting protection segments. Our skilled team is on hand every day to make sure the Ocensa project meets all relevant regulations and quality standards, and realises an on time and on budget success story for construction in Colombia.” 55 PROJECT MANAGEMENT Keeping the Ocensa project on schedule, while reducing technical risk and preventing construction errors requires continuous supervision: SGS ETSA ensures construction conforms to specified documentation and permits. QUALITY ASSURANCE Every aspect of the Ocensa infrastructure has to meet stringent regulations and requirements: SGS monitors construction against compliance with contractual agreements, quality standards and applicable laws and regulations. NON-DESTRUCTIVE TESTING The equipment and assets associated with the Ocensa infrastructure must operate safely and efficiently: SGS NDT inspectors perform examinations to detect possible failures and defects and assure standards are met at all times.
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  58. 58. COMPLEXITY & expertise CHINA AND HONG KONG 57
  59. 59. CHINA AND HONG KONG FIRST IMPRESSIONS lasting relationships HELMUT CHIK Chief Operating Officer, China and Hong Kong DURING THE LAST 20 YEARS, SGS HAS SUCCESSFULLY BUILT AN ESTABLISHED AND TRUSTED NETWORK IN CHINA. A focus on hiring the best of local talent, and supplementing regional expertise with SGS’ global understanding, has given Helmut Chik, COO of SGS China and Hong Kong, a unique ability to help customers navigate the complexities of doing business in the region. LOCAL INVESTMENT ONE INTO MANY “When our customers first begin to explore the possibilities of business in China and Hong Kong, they often think of the region as one single market,” explains Helmut of how the region is viewed, “and while there is overall communist party rule for regulations across the country, individual provinces might have very different interpretations of the same regulation and implementation guidelines. To understand each province's local thinking, you need to have ‘guanxi’ “So, the complexity faced by our customers is how to understand each province's local thinking and interpretation of business practices. To do that here in the People’s Republic of China, you need to have ‘guanxi’, which is difficult to directly translate into English but can be thought of as the need to build relationships for business success. That is what SGS has focused on achieving over the last 20 years, and today we have the people and expertise to guide our customers through the local rules, the different local cultures, and introduce them to the local business community.” 58 While the market in China is still not 100 percent open, Helmut knows SGS needs to keep building its network and investing in local talent. The inhouse 18-month ‘mini MBA’ programme, which selects and coaches the most promising employees, is now entering its ninth year. The programme is clearly working, demonstrating higher retention rates from graduates, and further consolidating SGS’ expertise and value-added potential to customers. In a region so reliant on relationships, SGS is certainly one for the long term. TRADING PLACES Insight and understanding have allowed Helmut and his team to successfully expand services and solutions away from China’s historical export focus towards newly emerging opportunities in the domestic market. “Four or five years ago, we were mainly the leading solution provider for trade-related services. Our customers relied on us for many solutions in export services. However, we decided that in order to sustain our leading position in China, we had to also penetrate the local domestic market. Rapid urbanisation and a growing disposable income have meant an increasing desire for consumerism.
  60. 60. 103 different offices and laboratories operate in the SGS China and Hong Kong network 20 years of success for SGS in China and Hong Kong “For instance, the region has grown into the biggest automobile market in the world. We recognised the potential in this market and for a number of years we worked to build up our auto components laboratories and capabilities. Our forward thinking has given us the ability in 2013 to offer our customers the largest auto parts testing network here in China. In any major car manufacturing city or province, there is an SGS presence. In terms of market share, we are now the leader, with nearly all OEMs and manufacturers requiring our services. Why? Because we invested in technology, people and network coverage, but we were also careful not to forget and work with the local car manufacturing community. Our forward thinking has given us the ability in 2013 to offer our customers the largest auto parts testing network “Our automobile expertise in E-mobility, materials testing, electrical and electronics testing, and others prove a real advantage for our customers in the world outside and inside China.” THE WHEEL OF TRUST Automotive companies typically source from a very large and diverse number of suppliers, and SGS, as the biggest independent laboratory network for automotive component testing in China, has helped local suppliers meet the many challenges of manufacturing components to domestic or international regulations. SGS ensures the quality, safety and reliability of locally sourced components, which can range from plastics (i.e. dashboards, steering wheels) to metals (i.e. doors, panels) to electronics (i.e. instrument panels, engine management systems), so that components can meet local and international standards and OEM-specific inhouse benchmarks. SGS’ global relationships with major automotive companies and local presence in all of China’s automotive manufacturing provinces offer a trusted bridge for delivering excellence in China’s automotive industry. 59
  61. 61. CHINA AND HONG KONG Manufacturing in, distributing from, or importing into the People’s Republic of China is one of the most challenging and complex consumer testing and certification scenarios in the world. However, partnering with SGS’ multidisciplinary and extensive testing network opens a doorway to unparalleled value-added services. 60
  62. 62. quality assurances for customers on incoming materials and chemicals used in the manufacturing process. The certification mark demonstrates products are QUIET NIGHTS PLAY SAFELY GREEN WALK SUN SAFE NANJING XIAMEN LOCATIONS NINGBO LABORATORY NETWORK 8 of strict BIGGEST TOY TESTING LABORATORIES IN SHENZHEN SGS China and SGS North America offering chemical testing capabilities to has resulted in SGS’ laboratory in Shanghai becoming the first Chinese testing facility certified by the US Consumer Product Safety Commission (CPSC) for the ensure the safety of toys destined for the domestic and international market. ENVIRONMENTALLY SAFETY TESTING OF CRIBS FRIENDLY and free from hazardous chemicals. destined for sale in North America. QINGDAO testing methods of bacteriostatic value against international industry standards. POPULAR due to concerns about the dangers of excessive exposure to the sun. Originally a niche market for baby clothes and children’s swimwear, UV fabrics can now be found in entire adult UV protective clothing lines. SGS testing for UV fabrics IMPROVES QUALITY AND PERFORMANCE. Collaboration between GUANGZHOU SGS applies qualitative and quantitative facilitates the implementation SGS has one of the CHANGZHOU the most demanding of workouts. SGS ECOSECURE Ultraviolet (UV) protective fabrics are becoming more HANGZHOU Getting hot air out into the open and away from the skin keeps the wearer dry and comfortable. Functional breathability claims need to LIVE UP TO CONSUMER EXPECTATIONS, which is why manufacturers rely on SGS testing of water vapour permeability of textiles. Antibacterial treatments (including anti-odour systems) keep clothes fresh and functional, even during SHANGHAI HEAT. STAY FRESH BREATHE EASY Strenuous exercise in the outdoors means one thing – CNAS CMA GB 18401 SGS is accredited by the China National Accreditation Services for Conformity Assessment (CNAS) SGS is accredited by the China Metrology Accreditation (CMA) SGS performs testing to China’s National General Safety Technical Code for Textile Products 61
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  64. 64. COMPETITION & differentiation EASTERN ASIA 63
  65. 65. EASTERN ASIA REGION ON THE RISE high-growth potential DENNIS YANG Chief Operating Officer, Eastern Asia EASTERN ASIA IS RAPIDLY BECOMING A DRIVING FORCE IN THE GLOBAL ECONOMY. ‘The world’s workshop’, as the region is often referred to, needs now, more than ever, services that prove quality, safety and reliability for its goods, exports and manufacturing processes. Dennis Yang, COO of SGS Eastern Asia, is differentiating SGS from its competitors by striving to be firstto-market with solutions and services with high-growth potential. FIRST-MOVER ON INDUSTRY CHALLENGES “Eastern Asia is experiencing rising urbanisation and an increasing consumption of consumer goods and personal technologies. This has been helped by an expanding middle class,” reflects Dennis on the shift in population location and power. “Industry is accommodating the new demand. Government incentives are encouraging technology firms to manufacture higher added-value goods. Infrastructure developments continue to expand. Exports are up. Growth is up. We have to continue offering more solutions, more services, in more industries “All in all, Eastern Asia has weathered the financial storm and its aftermath far better than western economies. Some countries, such as Japan, are now reawakening and reaffirming their position in the global economy. For SGS, with change comes competition. For us to remain the leading testing, inspection and certification company in the region we have to continue offering more solutions, more services, in more industries, and always look to be the first-mover on industry challenges.” 64 LONG-TERM INVESTMENT Areas where SGS has already established a strong reputation for solutions that deliver competitive advantage to customers – wireless technologies, medical devices, food testing and materials testing – are examples of how Dennis’ leadership has continued to keep pushing SGS forwards. “If you look at construction materials testing,” Dennis continues, “then it is easy to compare our growth in the region with Eastern Asia's economy. We began materials testing over 20 years ago. At first it contributed only a fraction to our revenues. Today, the service has gone from 2 employees to 800 employees. Our investment in providing solutions has matched the commitment of the governments to grow their respective country’s infrastructure. Because we have continually increased the scope of our services, we now have region-wide leading materials testing capabilities in serving industries ranging from construction, transport and marine, to oil and gas. We are not a new player in Eastern Asia. SGS is a byword for quality and safety in many countries in the region – which is a reflection of our long-term investment in delivering excellence.” Because we have increased the scope of our services, we now have region-wide leading materials testing capabilities
  66. 66. FOOD TESTING Flour, rice, ice cream and cooking oil have all recently hit the headlines in Eastern Asia. Why? Food safety concerns. SGS has made its own headlines too, by playing an important role in the quality testing of local food products. In the region, SGS is educating consumers on food safety via business-to-consumer campaigns, working closely with university programmes to develop the food researchers of the future, and creating state-of-the-art automated sampling systems for faster, more accurate results. 65 MEDICAL DEVICES Demand in emerging markets for medical devices is increasing year-on-year, especially in Taiwan where the population by 2025 will be deemed ‘super-aged’ (i.e. more than 20 percent over the age of 65). SGS has closely followed government schemes to encourage local companies, and new start-ups, to transform themselves into high-tech and high added-value medical device manufacturing and R&D experts. The result of the incentives is 705 medical device-related companies now in Taiwan and revenues from medical devices estimated at CHF 2.46 billion a year. SGS, as one of the few members of the ROC Taiwan Technical Co-operation Program (TCP), offers medical device companies in the region indepth knowledge of local and international medical device certifications in order to facilitate speed to market and entry into the global supply chain.

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