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CMD 2018
Jun 13, 2018
Good morning, everybody, and welcome to the 2018 Billfinger Capital Markets Day at the Trade Fair, Achema. We thank you for taking the time to join us, spend this day learning more about our services and meeting almost the whole Billfinger management team. We will start now with the presentations, which will be recorded and the replay will be later on available on our web page. We have reserved some time for Q and A after a set of presentation, as you can see in the agenda, which is in your folder. The Q and A part, however, won't be pre played on our website.
It's just the presentations. We will hold a lunch break at around 1 p. M. And we will move to the Trade Fair Stand at around 3 p. M, concluding the day with a tour of our exhibits, taking the customer's perspective.
But now let us start with the opening comments of our CEO, Tom Plates.
Okay. Thank you, Bettina. Ladies and gentlemen, good morning. And also on behalf of the entire management team, Michael Bernard, Klas Patzak and all the guys in the front row here, welcome to Bill Finger 2018 Capital Market Update. The bottom line is we're on track.
Our strategy holds. There is no change, and we're making progress. And to show you that, we're going to run through today, I think, a strong focus on operations. It's not about financial numbers. It's about what we do, how we do it, how we're doing it well, what we're doing next and where we're headed.
With that, maybe I'll just take you back a few slides to Capital Market Day, February 2017, when we enrolled not only our strategy, but also our execution plan. At that time, we showed you that we intended to organize along 2 segments, as we call it, ENT on the one side, focusing on the customer's CapEx requirements and then on the other side, NMO, maintenance, modifications and operations focusing on the customer's OpEx side. We showed you that the way we would structure ourselves would be around the customer essentially, which is why the MMO part is a customer centric organization. We're in 4 regions. And then the ENT part is more focused on project.
For us, it was very important to drive best practice, global best practice sharing, governance, which is why the ENT part is structured internationally and the 4 MMO regions are structured regionally. We have a large market. Our view on the market hasn't changed. It is significant. It was €231,000,000,000 in 2016, growing to €256,000,000,000 by 2020.
That's the overall market. A large part is outsourced. We showed that to grow from $125,000,000 to $143,000,000 We believe in that. And we also showed you that not only do we have the 4 regions, but we focus on 6 key industries that hasn't changed. The 3 major ones deliver 80% of our revenue.
The others are growth industries that we will move into. We showed you based on our market studies and on the profit pools, as we call them, our ambitions towards target ranges for both ENT and MMO. Those target ranges haven't changed. Neither have our steps going forward. We showed you also how we will address each of the line items that deliver into our commitment to reach a 5% bottom line by 2020, that's an EBITDA bottom line, 2% coming out of gross margin improvement and then 3% coming out of SG and A.
I think all of that is just a quick recap. Our aspirations, where we want to be in 2020 are known to you. And as I said at the beginning, that hasn't changed, yes. So we're a little bit boring, but the good news is we're on track and our plan works. I'm now going to bring you up to date and probably show you numbers that you know already, but I think important is to appreciate what's behind the numbers, the story, the momentum and where we're headed.
1st out of the box is E and T. E and T has been more difficult, as you're well aware. One of the major issues, items or headlines in 2017 was what have you done with power? As you recall, Power was put up for sale before I arrived, before Claus arrived, I think just after Michael arrived. And we spent more or less a year prior to that time trying to divest power.
Nobody wanted it. We took it back on board. We dissected it. We reallocated it. We moved portions into ENT.
Others, we moved into other operations. We held those for sale. I'll come back to that. Today, the E and T is a lot stronger. It's not where we want it to be quite yet.
For us, it's moving through the stabilization phase. It will exit when we've done 4 successive quarters with positive results. That's the green box at the bottom of the page. We're quite bullish that that will be at the end of Q2. So we're moving out of the stabilization phase with ENT.
We're not yet in the margin bandwidth where we would like to be. But what we do see is that after declining large projects, we turned away large projects, anything over €100,000,000 we turned our back on in 2016 'seventeen. We've now got to the point where risk is understood. Risk is part of our management process. Risk is combined with costs or price, if you like.
It's combined with the contract. And therefore, we feel confident in taking back on board larger projects, triple digit projects, and you will have read about one of those in April that we won for Linde Braskem. Terry Ivers from North America will share with you when he does his presentation on what is different today than a number of years ago with respect to risk and large projects. As I said, that's in April. So our forward view on order intake is also bullish, and that's why we stand by our commitments.
Nice to see if I take Q1, Q1 2018 versus Q1 2017, we have a 16% growth in order intake, 18% tremendous step forward, and I think it's a credit to the team that they've been able to bring us this far. And I think going forward, you'll also hear from Michael Lufferman, who runs the ENT division, exactly what is in store, what other innovative programs we have on the cards. If I move forward to MMO, it's a lot more stable already. We're in the bandwidth we've allocated ourselves. That's on an annual basis.
On a quarterly basis, it will jump up and down. But also here, the big story is orders. One of the things that you questioned at the Capital Market Day was, can we grow in a mature market? Can we grow in a market that's showing a 3% plus CAGR? And the answer is yes, we can.
And that answer is again provided here in the numbers in Q1. We were 19% 19% higher than in the previous year, organically 22% higher. So the momentum is there. We're moving forward. And a lot of the things we're doing around innovation, especially digitalization, is creating pull through.
But more of that later. Bottom line is, MMO is stable. We can rely on it. It's predictable. And it's essentially our bread and butter.
We're in the right space. As we go forward, we want to take MMO to new levels in the Middle East. Alibez Vai is here to share that with you, to share our vision on the Middle East and to show you that there's more growth in the pipeline. If I add it all up together, of course, there are still some elements missing, the other operations or OOP as we call it, But the overall picture for Bill Finger is a positive one. Q1 was negative on the EBITDA.
We're quite optimistic on Q2, but it's still 1 month ago, obviously, but I think we're tracking in the right direction. What I like here in particular is that we fulfilled our commitments, we're delivering on additional commitments and that top line is moving, moving in the right direction, going upwards. Order intake for the entire Billfinger Group in Q1 was 21%, up on the same quarter 2017. We're moving. I'd like to take it down one level now.
And as I mentioned, the delta between MMO plus ENT is, of course, other operations. Other operations, when we shared the plan with you, comprised of a total of 18 companies. Many of these were ex Power. Of these 18, we divided them into 13, which were dilutive, so they were loss making. 5 were accretive.
And the dilutive ones, we put high on our priority list to solve. Solve meaning either fix it, sell it or close it. Of those 13, we said we'd be done by the middle of 2018, check mark, they're complete. 12 have been sold. Number 13 is JV.
We've terminated the JV. The JV partners put the company into receivership, so also that one is off our books and no longer drawing cash or drawing management attention. Of the 5 accretive companies labeled here 4+1, 1 we've brought back into the fold. That's VAM in Austria. As we went through our strategy, we were getting a lot of pull from the customers in terms of turnarounds.
And VAM is an excellent company, not only for project work, but also for turnarounds. And that's why we've reintegrated them intercontinental Europe to address what is actually a wave of turnarounds coming our way in 2018, but even stronger in 2019. So meeting our commitments, we organized power. We've regrouped some of the other power entities into a stronger company called BET. They're looking very good on nuclear and some other innovative items, which Michael will share with you, as I mentioned.
On the right, we also show the number of total legal entities within the Wilfinger Group. At the height of our acquisitions free some years ago, we had over 600 companies. When we shared with you Capital Market Day 2017, we were 232. We're now down to €189,000,000 and still moving downwards. A little over €90,000,000 of those are operational generating cash.
Many others were holding because they have tax advantages. I'm sure many of you know that we have actually €200,000,000 that's the undiscounted number, €200,000,000 in tax loss carry forward. Now of course, you need to make profit to use that. We're on the way. So we like that number, we like those entities, but as we use up those tax loss, we will also reduce complexity by taking out companies, combining others, being more transparent, being more efficient and acting more as one bill finger rather than many small companies.
I think again hats off to the team that executed on those sales. They weren't always easy and often we had to give money with the company, but we stemmed the cash flow and that is now behind us. Speaking of team effort, compliance is and remains a big team effort throughout Billfinger. This really shouldn't be underestimated. Compliance is part of our culture in the meantime, part of what we do.
It also added up to more than $100,000,000 in external spending, more than $100,000,000 external spending. But what I think really knocks people back is we did a study last year to look at how much time our management is spending on compliance issues. And when we look at that time, we see that it's more than So 30% on average is spent on compliance and that is satisfying the requirements of the DPA. And that's why when we target exiting the monitorship by the end of this year, the monitor will decide that, but we're feeling pretty confident that will be a big step forward in having more time to allocate to customers to driving the company forward and delivering our commitments. Another element we promised was SG and A.
If you look at the curve, €87,000,000 were down €12,000,000 on the same quarter 1 year ago. We're down $27,000,000 on the same quarter in 2016. That line continues to move down. And our commitment was to be on an annualized basis at 7.5 percent SG and A by 2020, no matter what the top line was. So we will manage that line.
That's down from the 10.5 on average we had in 2016. That's the 300 basis points we showed you in the strategy. We're moving, we're on track and it's working. Another key element is BTOP. BTOP is our internal productivity program.
BTOP is driving productivity. It comes into play throughout the company, and it comes into play on some very key projects. Duncan Hall, who is running our Northwest Europe division, is going to show you an example of how BTOP has been able to help him turn around a loss making contract into a profitable contract. We measure BTOP in euros, but also in the number of projects. And on the left, you see the ramp up, a slow start in Q3 2017, tremendous progress into Q1 2018.
And then of course, 1 month later, April there, you see 4.25 measures. The number of projects is picking up. Not all of these projects are large projects. The pie chart shows you the makeup, over €1,000,000 But what I like are the small ones, the ones in the range 0 to €50,000 because this is contribution from lower levels in the company. And only when the lower levels contribute is something like this really sustainable.
Speaking of sustainability, we've been working on our culture, driving this performance culture, not only through BTOP, but also through KPIs. The management team is in place. Most of them are in the front row here. In the year gone by, we've been able to change KPIs, more focus on cash. We also changed that to reported cash and not to adjusted cash, so real cash in the real world.
And we've also been able to introduce a 4 year equity linked program, which will incentivize and does incentivize top management at levels 12 below the guys you see on the board to contribute in dividend results. At the end of 4 years, they can earn a bonus equivalent to 1 year's salary, but paid in stock. And the appreciation of the stock price and the way it goes into their pocket as well. It's a significant number, and I think it's having the desired effect. I'd like to turn quickly to the markets because the markets are getting friendlier.
If I start on the right, the maintenance market, MMO, we see that predominantly in the North Sea, Duncan's division, a lot of customers have pushed maintenance programs. They're now feeling a little bit richer. Oil at $75 a day, Brent price is generating cash flow, balance sheets are being rebuilt, and cash means projects that have been delayed will come out of the pipeline, we will see more activity. Chemicals and petrochemicals, mainly in Gerhard Piloto's division, so Continental Europe, is a stable business. You see that our customers, you know their names, are making good profits.
They're investing not in expansions, but in brownfield improvements, emissions or productivity improvements. Energy and Utilities has been low in Europe, but we see good opportunity in Middle East. And finally, Metallurgy, that's been a mainstay. Aluminum in Scandinavia, aluminum in the Middle East, we like that business. On the project side, E and T, oil and gas, I think downstream oil and gas in the U.
S. Is driving chemicals. We see a lot of activity, especially in construction. Braskem is one example, a project we're just finishing, I think, one of the largest methanol plants in the U. S, 5,000 tonnes a day, also just finishing, and we have a strong pipeline of projects coming our way.
So we feel confident in oil and gas and the dancing effects. Energy and utilities, project work, nuclear. Nuclear, it's kind of down in Germany, but bear in mind that in the U. K, there are 11 new reactors planned in 5 projects. The first of those is Hinkley Point, and we're very close to securing a deal on Hinkley Point.
Pharma and biopharma, Tobias Eitel is here, who runs our pharma or biopharma division. He will show you that or I should say business, not division. He will show you that business. We like it because it's growing double digit for the last 3 years, and I hope the next 3 years too. Yes, Tobias is nodding.
I like that. I could talk about projects all day. I mentioned Linde. EDF is good because it's one example already last year where 4 building companies came together to give one value proposition to the customer. We have more of those in the pipeline.
On the left also scrubber innovation, Michael will talk about. I like innovation, especially on companies that have to switch their focus from the dying coal powered electricity generation business to new innovative fields, that is one example. Yes, old dogs can learn new tricks. On the MMO side, I think most of these have been shared with you, it's known. I'd like to move on to the sexy part.
And I don't want to take away too much because Franz Braun, our Chief Digital Officer sitting in the front row is going to give you in-depth view of digitalization this afternoon. He's a techno guy, so I'm going to give you the commercial version and beginning, I think, with the internal looking digitalization. We showed you the slide in 2017, electronic workflow, most of you kind of nodding said, yes, yes, we get it, that's good. You need something like that. We've taken it to another level, internally as well as externally.
Internally, we began with industrial tube. And this is really the ability to capture learnings in video, translate them into any language, put them on to a hollow lens, Google Glass, whatever you want to call it, the glasses there on the left, and have either virtual or augmented reality. It allows you to drive your maintenance performance. It allows you to see things that weren't visible before. We do that inside of our cloud and now more and more customers want to participate in that.
So it's become a service that we've offered not only internally to drive our business, but also we're offering to customers. Now the next one is something, which I recall from my Linde days. Linde, I not only ran the Americas, but I was also responsible for operations. And in operations, one of the biggest nightmares you have is, of course, an accident driven by the fact that you've not been up to date in your documentation. So as plants get older, the drawings get out of sync with the plant itself.
And therefore, the ability to be able to take drawings, drop them into a scanner and have them turn into a 3 d digital model, this is quite unique. We have that capability. It's called the PID graph and it's driving a lot of interest, not only from internal customers, but also from external partners who want to get a closer view because they have the kind of problems that I mentioned that I saw at Linde. Now that big graph also means we can take old drawings, drop them into the scanner and turn them into a 3 d digital model. I show you why that's important in a couple of slides.
But that kind of leads me nicely into digitalization because customers are asking this question every day. Everyone's heard about it. Everyone's doing it, but people have different views on what is important. For us, the big question we answer is in the bottom right hand of this slide, how can I increase overall equipment efficiency? That is getting more out of the equipment, sweating the assets, more uptime, less downtime, higher quality, more output.
That's real money in the customer's pocket. And they come to us because we're already in those plants. We have 25,000 blue collars around the world, most of which are in process plants. And the customer then says, well, you've done it before. You have references.
Bill Finger, can you do it for me? Can you tell me what it means for me? And the first of those references is a job we began quite some time ago, about 1.5 years ago now in Munzing in Germany. Munzing is a chemical plant, midsized. Our target is small to midsized enterprises.
And Munzing told us, do whatever you want, have at it. I'm not paying for anything, but you can do whatever you want. And we took him up on that offer. It's really our playground. And in a very short period of time, we've done tremendous things.
So just over a year later, working from the bottom up, we've improved the data quality by 30%. We've reduced unplanned downtime by 5%, that's real money. We've reduced routine walks, walking around, finding out if something is open, closed, shut, leaking, whatever, by 10%, again, saving operators. And the real good one is we've identified 10% in OEE improvements. That is a kind of a beat up for our customers, transforming operational performance into bottom line performance.
And that customer is really our biggest salesperson when it comes to answering the questions of new customers. We think the market is huge. Name a number, it's bigger than that. So what we did, we went back to our marketing model. We said that just in Continental and Northwest Europe, there are 16,000 process plants, roughly 4,000 of those in the small to midsize company range.
1 of our projects end to end is typically €1,000,000 to €2,000,000 So multiply that €4,000,000 by €1,000,000 to €2,000,000 you come to a big number, in this case €7,000,000,000 Not to say we're going to add $7,000,000,000 to our revenue line, but just to show you there's a huge market out there. And the nice thing is no one is addressing it. We are. Why do I say no one's addressing it? Because when I look at what's been done, Online, there's financials, you can go Amazon, you can go any number of online catalogs and shopping, You can go to automotive.
What you can't do is process industry online. No one does it. We're doing it. So we're in the plants already. The customer sees that.
The customer says, I've got my IT on one side, right side of the page. I've got my OT, my operating technology, on the other side. Can you bridge the 2? And of course, the answer is yes, we can. And that's why, as Sebastien says, we've gone from building bridges made from cement to building digital bridges.
And this really is neat because we're filling a big demand and we're filling it in a unique position currently. So what exactly is that and what is it commercially? Well, our BCAP, our Bill Finger Connected Asset Performance, so sweating assets, really has a different business model to our typical maintenance or project work. We have a business model that has 4 discrete phases. Phase 1 is consulting.
We actually go there and it's as if we were McKinsey, BCG or Accenture. We charge by the day and we give the customer an answer, what does digitalization potentially mean to them. We tell them this is a light solution, a middle or a top end solution. Number 3 is we build within the cloud the algorithms, the apps, Number 3 is we build within the cloud the algorithms, the apps the customer needs ultimately. And then number 4 is really a licensing model where we've connected these data lakes together and we provide the customer a dashboard.
On that dashboard, he gets to see a number of things. We call it descriptive, what's happened in the past, predictive, what's going to happen, and here's the real kicker, prescriptive, what are my options? If I know something is going to happen, what can I do about it? And again, that's unique because we're in the plant, we understand the process, we understand the customers' needs. You will have seen that we've tied up with a number of big names.
We like big names because this is a big business. I mentioned that big number to you. We're getting a lot of pull, not only on digitalization, but pull through to our maintenance contracts. We've teamed up with Siemens to model the digital twin. Microsoft provides the cloud security in particular, most important to our customers.
And most recently, we've now connected with Software AG to drive the let's say, the input output network to draw the data from the sensors. If I were to look at that from a very simplified technical point of view, and I'll go over to the chart, on the right, we've got the classic IT system, SAP, Oracle, whatever. On the left, we've got the OT that's already there driving the plant. All this exists and is working. Now the problem is that these sensors can be many tens of years old.
Some of them can go back to the 60s, 70s, 80s, 90s, some were installed last week. And putting on top of that an agent that can communicate, translate that signal language, this is what is being provided with our partnership with Cumulocity with Software AG. They drive the input into the cloud. The cloud delivers data into the BCAP cloud. The digital twin, Comos, helped by PitGraph, drop the old hand drawings into the machine, communicates with the real time data.
We develop the algorithms and then out comes the dashboard, descriptive, predictive, prescriptive. It's quite simple, and it's a lot of fun, I guarantee you, and Frans will show you some of that later on. I'm almost done. I think it would be remiss if I didn't remind you that in your sum of the parts calculations, we also have a very large position with Aplionna. That was the sale of our building facilities business in 2016.
We retain preferred participation load, 49% of the profits of their eventual sale. We don't inflate that very largely in our numbers. You see that it was an investment of €195,000,000 Today, our book value is €210,000,000 marginally higher. It also has a vendor financing €100,000,000 with 10% compound interest. So dollars 10,000,000 in year 1 and dollars 11,000,000 in year 2, also a nice number.
When they exit, we'll make a lot of cash, we expect, we hope, we anticipate. And of course, that is a tremendous driver to our sum of the parts model for Billfinger. To conclude, I'd like to take you back to one more slide from 2017. At that time, it didn't have the green check marks. We said our strategy would be a long way.
It's not an overnight fix. It's a marathon comprised of many small steps. Sometimes we do 2 forward, 1 back, but we do make progress. And I think you've seen that a little bit of what I showed you, you're definitely going to see it when the colleagues sit up on the stage and show you the rest. But as we've gone through this, we've added our check marks.
The one that's open here on the stabilization phase is operating performance improved. If we get the 3rd quarter green positive from ENT, we're on the way. We're not yet in the margin bandwidth we want to be. We do have issues, but we're now a lot more robust than we were. So when we do have small issues, we can take care of those within the larger picture.
That was not the case a year, definitely not the case 2 years ago. We're on the way. We're moving into build up and already in build up, check mark 1 top line growth resumed, something you questioned. You also questioned cash, I understand that, and therefore 3 from the bottom, adjusted free cash flow positive latest in fiscal year 2018. We're working towards that.
It's part of our ambition for this year. We think adjusted cash flow, we will be positive and entire cash flow positive is our plan for 2019. Getting the compliance DPA behind us is an important milestone as I've shared with you, and I think we're positioned well. We stick to our guns. We stick to our guidance for 2018.
I've shared with you a little bit of insight on 20 18 quarter 2. We're feeling confident there, and I think we're feeling confident on the rest of the plan. So with that, I would say thank you very much for listening. We're going to take questions at the high level, but of course, the real good stuff comes later when my colleagues in the front row do their stuff.
Thank you, management team of our divisions. We start with Gerald Piloto, responsible for the MMO division, Continental Europe.
Yes. Thank you very much, Bettina. It's a pleasure for me to be here and to present our division maintenance modification and operation Continental Europe. My name is Gerald Pilotto. I am 25 year in the business, in the service business.
I started with engineering, with project, with turnaround project that come late down. It's very important for our division. Then I was site manager in different countries. And since 2014, I am responsible with my colleague, Matti Jekkel, for the entire division. What is the MMO Continental Europe?
We are the biggest division within Billfinger with 37% revenue shares. That's around €1,500,000,000 And we perform these services with 15,000 people in 11 countries. Our main countries are in the Nordics, that is Norway, Sweden and Finland. Of course, the DACH region or gas region, Germany, Austria and Switzerland. And we are very strong in Poland, in Czech Republic and Slovakia.
Our industry split is 60% in chemical and petrochemical industry. I come later on the market of this industry, but that's a little bit driven by the history of all of our companies and our sites. Most of them was created by outsourcing or was bought by Billfinger. How we perform our business? We have 3 different contract types.
50% of our business is reimbursable hourly rates, 25% is unit rates and then we have lump sum. This lump sum, what I talk about is value performance contract. What does it mean? If you consider the name value performance and this is everything, we create value for the customer and also, I hope so and I'm sure also for our bottom line. And we increase the performance for our customers.
What is the difference to lump sum contracts in the project? These are long term contracts, most of them more than 5 years. With a lower risk, with a very clear described scope and we have also the management there. So we have a great influence into this contract together with the customer. On the customer side, usually there's only a gatekeeper.
So this contract create also a big contribution to our division. One of the most important point for the MMO business is the retention rate of our contracts. We have very long contracts, but the longest contract we have in U. S. With TIERI is more than 70 years old, but also our contracts are more than 10, 15, 20 years.
So we are on-site with our customer exclusively for a very, very long time and 90% of our contract we can prolong. If we look a little bit deeper in our market, then we can see uplift in the chemical industry. 60% of our services is in the chemical industry, and you saw it also in Tom's slides. There is big opportunities. Germany is very important.
It's the number one in Europe and is on the 4th place in the world in the chemical and petrochemical pharmaceutical industry. For us, it is also very important the changes in the market. You know very well, the lot of mergers in the market and split and spin offs in the chemical industry. That creates new opportunity for us. We have some examples.
The former Bayer Group was 1 group with the internal technical service provider. They split up the company. And now the new company look for a proper service provider. And in this year, we got with 1 of this company a new contract and a long listing contract. If we look into the business, the OpEx business is stable, predictive and reliable in the past and also in the future.
If we come to investments to CapEx projects, we see on the brownfield side an increase of requests and demand in the market. And Don mentioned it before, we put some companies from other operations into our division. This is the thumb from Austria. And this is a typical, the second M, I say always, modification company, which is now included in our division. And with this company, we can make maintenance modifications and we do also operations, but more in the energy industry.
One example is Fortum was mentioned before. We make operation with Fortum in Sweden on 120 power plants. If we go a little bit deeper in the market, then we see we are the number 1 in Europe. In Nordic, we are in the Nordic countries, Norway, Sweden and Finland, we are on all big industrial sites and we are there, the main contractor, the main supplier for our customers. We are clear the number 1 in Germany with $1,000,000,000 revenue.
That is not only the entire division that is also a little bit from ENT, but we are 30% ahead of the second one. How we reach this position? 1 of our main driver is the Billfinger maintenance concept. What is Billfinger maintenance concept? It was mentioned sometimes.
And Billfinger maintenance concept is a holistic, standardized approach where we can deliver maintenance, 1st class maintenance for our customer. It is assigned complementary or it is assigned in modules. So the customer we can make customer or we can fulfill the customer demand what customer wants to have. It starts with strategy and come to cooperation models. On top of this, we have the BCAB.
It was mentioned before. A big part of BCAB has also influence in BMC and the other way around. And B CAP is the digitalization of the BMC. So in BMC, we started on paper on the usual work, and now we integrate it part by part into the B CAP. What is the output of our BMC?
It is called so BMA. Here on the table left, you see the industries and here you see KPIs, key performance indicators. They are typically for the industry. And here, this is the evaluation with this BMA, building a maintenance analysis that gives us from every industry, from each customer an overview on which stage is his maintenance. And you see we have a wide spread from industry 1 to the last industry.
So we're talking about this as an in the spite of the outcome 71% and this is 35%, different in industry. But therefore, we can compare in the industry and industries together. And if you look into our 6 verticals, our 6 verticals are here on this level 1, 2, 9. This own benchmark, we can also check across, for example, Solomon's study in refinery or also Tom's study in polyolefin. And we see we are quite accurate with our numbers.
If we look at the maintenance then, in the maintenance business, we have one big services and this is called turnaround services. Turnaround services means they shut down, plant shut down industrial plant. So it's not a commercial turnaround, it is a technical turnaround. And in this turnaround, you can make only the comprehensive maintenance. So the whole plant is shut down and then you start with the execution of the services of repair, of modification and of projects.
What is the size of this turnaround? It is a wide spread. You see here 1,000 engineers, technicians, execution people. It can be also 3,000. If you go into a refinery, huge refinery in Germany is, for example, Total refinery, there are 3,000 people on-site in addition to the own staff and to the daily business staff.
And we, as Bill Finger, we are the only one company who can deliver this 1,000 people. Why is this widespread? If you go into chemical industry, chemical plants are more complex. Refineries on the opposite are huge, but not so complex. So that makes it different.
And therefore, you need also different qualification and you have different requirements. We can deliver all services, all mechanical services, all E and I services. We can deliver scaffolding. We can deliver insulation. And we coordinate and we plan also the subcontractors.
So we can deliver the full service package for our customers. And these turnarounds come across every 3 to 5 years. It's also depending from the plant in refinery 5 years and in chemical plants most of the time in 3 years. What are the driver for these turnarounds? The driver are low requirements.
The driver is the production. And the driver are also debottlenecking expansion of plants, so own requests from the customers. What are the trends in this business? The trends in this business on the first priority is quality and safety. And quality and safety is very strong connected.
If you don't deliver quality work, for example, you have a leak, then you have a safety issue if in the startup phase some of the acid, some of products coming out. And mainly in Europe, all the plants are going older and older. And you saw in the presentation of Tom, we are talking about of 16 1,000 plants. And this is 16,000 plants need maintenance and repair. In addition, on our customer sites, they reduce the staff year by year, and so they need a very good supplier who can cover all the requests which you have in a turnaround.
And in that sense, also bundled services are more requested, are more demanded. Bundle services means for an area, for a whole plant, the supplier takes over the responsibility for planning, for execution, and at the end also for startup and quality and safety. And good for us, competition rather decreasing, mainly the competition for this huge turnarounds. There are not so lot companies. They have this huge network as Bill Finger.
In our division, we have 15,000 people. In MMO, we have 22,000 people. So you can imagine we can mobilize a lot of these people and we work, for example, currently on one of these turnaround in Austria in the metallurgical plant with 5 legal entities of Bilfinger. What is our position? I mentioned it.
We have own capacities and that is a very, very good argument. And this argument is a USP from our point of view. We can cover the full scope from planning, from coordination execution to analytics and documentation. And we can prove it. We have examples.
We have satisfied customers and we do it more or less daily. We have certain turnaround departments and one was mentioned before, this is the FAME company in Austria. We are docking here about 700 to 800 people, and they are only dedicated to turnaround and projects. The advantage for the customer is one phase to the customer. So the interfaces are very low.
We take the responsibility. He has only one way to communicate. And of course, at the end, it is a very nice business if we look at our bottom line. That's at the end very important. With which customer we are doing this.
Here you see this who is who. This is only a few examples on the left hand side. Unipertol is a Polish company, is one of the biggest energy producer in Europe. Unipertol is in Czech Republic, belongs to Beike in Olen. This turnaround or the demand in this turnaround is, for example, for refinery and petrochemical pack, 3,000 people.
And 2 years ago, we delivered the 3,000 people. And now we come in the next stage for the next turnaround we start the planning. Yara is the biggest fertilizer producer in the world. Borealis is the 2nd biggest and Borealis is one of the biggest polyolefin producer in the world. And for Borealis, for example, we are covering 5 sites on maintenance.
And now we are discussing how we can deliver a sort of group like a circus is going around the sites to deliver turnaround planning and at the end execution. Other customers to Dal, now we are negotiating for a turnaround 2021. We are speaking about 600 people. We are speaking about projects. And now we go in a sort of partnership agreement that we confirm that we can deliver in 2021.
About how many turnarounds do we talk about? Next year, we know 40 huge turnarounds in Europe. The year after 2020, we're talking about 40 plus the smaller turnarounds. And in 2021, we see also a lot of turnarounds in the business. So what is the conclusion?
We are the number 1 in a very huge market, currently in an increasing market. And we deliver added value for our customer with our huge network, and our business is very stable, reliable and predictable. Thank you.
And we continue now with Duncan Hall, responsible for the MMO division, Northwest Europe.
Thank you very much. Good morning, everybody. My name is Duncan Hall. I look after Northwest Europe for Bill Finger. I'm 50 years old.
I started off my career with ICI. I did 16 years with them. I then moved to an engineering business, which was acquired by Bill Finger back in 2000 and 7. And I've worked with Bill Finger since then, since 11 years. I look after the Northwest Europe division with my colleague, Clive Kendall, who's also been in Bill Finger for a similar period of time.
We look after Northwest Europe, decent revenues, 2nd biggest in revenue from a Billfinger perspective. And we have we split the region up into 3 areas that we look after. The countries are Norway, U. K, Denmark, Belgium, Netherlands. How we operate it to simplify this is we operate it in offshore.
So this is where the offshore division of Bill Finger is situated, looking after fabric maintenance in the North Sea. We have U. K. Onshore and then we have Bene, Belgium and Netherlands. It's all about simplification, trying to get the message over to our customers of how we can do this simpler and better for them.
When you see our industry split, this is where you see the dominance here of Oli and gas. Don't know who Oli is, but that is actually oil and gas. So we have a large dominance within there because that's the upstream side looked after in the North Sea. So we have 86% of our revenues are coming out of oil and gas and chemical and petrochemical, largely through the refinery sectors. In terms of how we operate in contract types, I don't know what's happened to these particular slides.
We have a very similar split as we have with Gerald. We have 25% is lump sum, 25% is unit rates and 50% is reimbursable. The lump sum elements are very similar to how Gerald described it, where we look after the budgets for customers. But we can also change the work that's done because we're managing the work list for customers in those environments. The reimbursable environments also generally have incentives on them.
So we will have key performance indicators that we have with customers. And we're very focused on those because that's where we can increase our margin in those reimbursable environments and deliver what the customer wants. That's what they want, and they're willing to pay us more money for it. Our retention rate is very high. Going backwards, we've got customers, Equinor, formerly Statoil, that we've worked with for 30, 40 years.
And we'll be working with that customer, as Tom said, for at least another 15 years as we have a new contract with them. So I need to talk to you about the oil and gas market because that's my main market. You may have noticed we had a bit of a dip a few years ago in the oil price. I'd be surprised if you didn't. That caused great challenges for customers and for suppliers.
There was a 40% decline in lifting costs reduction. Fantastic for the customers, bit of a challenge for us. We kept very profitable throughout all of that because we're a very agile offshore business, low overheads, able to flex our numbers quickly because it needs to be a responsive market that we operate in. If you look at the sustainability of that North Sea market, if you go back 3 years, I think 90% of the businesses who are operating in the North Sea were breakeven at $80 lifting cost. The lifting cost is now $40 on average.
They're profitable. And we're seeing that and they're making good money again. And we're seeing the backlog start to come through. So our maintenance work is increasing. We're seeing projects starting to move from ideas into sanction.
So it's a positive environment. We're seeing more smaller and private investors coming into the North Sea market. Those guys don't come in those markets without seeing a profit. And they're looking at some different models, which I'll come on to in a minute in terms of how we operate. If we move forward a little bit then into what's that mean to the Downstream business, petrochem hubs that we have in and around Belgium and Netherlands have a significant level of investment, certainly levels I've not seen for quite some time.
And that comes from very, very efficient refineries in Rotterdam and in Antwerp, of which then the chemical and petrochemical hubs grow out of. And again, we've got we are working on those refineries that will be in position for the next 10 to 15 years because that's where the work is and the investment is going. So if we then look at some aspects of how are we responding to those market dynamics, and this obviously isn't the full area that we talk about. Offshore, we're the market leader in fabric maintenance, which is insulation scaffold painting offshore. We are 40% in the North Sea in that market.
Our nearest competitor across the Dutch sector, across the Norwegian sector and U. K. Sector is below 20%. What are we looking at doing to continue to grow? Actually, in the Dutch sector, we've got further to go and that is an unconsolidated sector.
U. K. Offshore, Norway offshore, it's largely 3 suppliers of which we're the largest. The Dutch sector is multiple suppliers. And we will consolidate that and increase our market share and hence stay on top of that fabric maintenance supply base.
We're also moving into what is called the 2nd tier engineering supply area and we've recently won our first contract in that. This is because those private investors are looking at different ways of getting their engineering business done that are not reliant on the large engineering businesses and the large profits and overheads that are demanded from those. They want a more agile, a more customer focused perspective, and we can bring that. And we're moving forward very nicely within that. Moving onshore, very high retention rate again with our customers.
And how do we do this? It's a big challenge. When you're working with a customer for a long time, you generally look to extend your contract through negotiation rather than tender because then it's at risk. So that means we need to keep driving efficiency because when we extend a contract, a customer is generally looking to get something from us. So we will have to give him some reductions, some discounts.
So we've got to continually drive our innovation and performance and efficiency through service and delivery innovation. And more recently, BMC, as Gerald was talking about digitalization, as Frans will talk about BCAP, all of these areas, this is actually now what the customer is talking to us about and really pulling us into wanting to have those as part of our delivery. As I look after the U. K, apparently I'm obliged to talk about Brexit. I haven't got a clue what's going to happen.
So please don't ask me that question or Tom. But what does it mean for the Bill Finger business in the U. K? We've got a big business in the U. K.
We do over €350,000,000 in revenue. But it's a local business. We've been in that been in the U. K. Now for over 10 years and it's largely operates within the U.
K. And with U. K. People. We have made a slight shift to our strategy in terms of growth because the U.
K. Will continue to invest in businesses in the U. K. No matter what happens with Brexit. And that is very much energy and utility infrastructure.
So renewable energy, water distribution, electricity distribution, gas distribution is a growing market for us in the U. K. And we have a number of long term framework contracts to reflect that, which safeguards us against the economic shift that might happen post Brexit. Here is an example, as Tom talked about though, about BTOB and how do we manage difficult contracts. This is a special guest slide that you haven't got in your pack because it's a recent one recent review we did of this particular contract and it is sensitive to the customer.
We've taken the customer name off though. So this is a contract that we won fairly recently. We transitioned it at the start of 2016. And it takes you through a bit of a performance challenge that we have when we win a lot of contracts. When you win a contract, a customer is generally giving you that work for a reason.
The main reason being you are saying you're going to do it for less cost than whoever is doing it at the moment. So that brings challenges. You've got to do things differently. But the first thing you need to do, which is reflected in here, is make sure that your safety and delivery performance is correct. If you don't have that, you cannot talk to the customer about either KPI improvement or changing things as we move forward.
So the first thing we always need to do is get the safety and operational performance right. How do we do this? Before a contract goes in place, we put in a transition team. So we mobilize people even before we're doing work. And they start to get the customer prepared, get our people prepared, documentation processes and systems.
And then that transition team stays in place for the 1st 100 days of the contract and will take the customer through those. And one of the most important things they'll do from day 1 is start to measure performance. On this particular contract, if you've been studying these far too closely, here, this is our margin, not a pleasant outlook. I didn't particularly enjoy discussing this with Mr. Patzak at the time.
We were not doing as we predicted. So we had to come back. We brought in another task force, demobil as the transition team, because we needed a different view. Brought in Task Force 2 to go in and study what's going on here. We're not delivering this properly.
We mobilized our BTOP team to go in there and work on what can we do ourselves to improve our efficiency. And we come up with a very simple framework for doing that in terms of behavioral actions and physical actions, locations of stores so we can drive being more efficient, more hands on tool times. But in this particular case, one of the big ones was the customer hadn't changed how they wish to do things. One of the key elements here was the customer needed to change how they package work, how they give us work to enable us to do this in a more efficient and planned manner. And they weren't doing that.
So we formulated the data, presented it to them and established that there's a need for change. And that's very quickly then where you saw the improvement starting to happen. And we became profitable after 8 months of this contract. And we've maintained profitability since then. And we'll go forward and continue to increase that profitability.
That comes largely from this one, which is productivity, where we started up here and we came down very quickly to improve that and now we're below our target line. And that's the key element when you come to maintenance contracts based on unit rates is we've got to have a robust system of which we've got a tried and tested system to improve productivity and deliver profits after a certain amount of time post transition. So in summary, what's important? Understand what the customer wants, generally safety, delivery and cost improvement. That's fundamental to what we do.
Take shared ownership of the challenge. It's very difficult when you're in that tender process. You have to be quite robust with customers about we need to do this together. You have a desire for change. We have a desire for change.
And we need to get their ownership for their part in that because we cannot do these things ourselves. We need the customers with us. And then most importantly, measure the performance. Data saves any need for an argument. If you have the data, it's just fact.
This is what's happened. And BTOP enables us to have this data very clear, very simply and present it to customers, enables us to move forward better. So Northwest Europe, what are we about? We've got solid markets recovering, good investment going to continue happening in those oil and gas and petrochemical markets. We've got a very stable division.
It's also very agile for what happens going forward. And we will continue to deliver the results that Bill Finger need. Thank you. I will now hand over to my colleague, Michael Lofelman, who very recently was in the U. K.
With me where we were he's embarrassed now where we were picking up our first contract documentation for the Hinkley Point power station at Bristol, which is very positive and a joint effort between Northwest Europe and Engineering Technology.
Thanks for setting the scene. Yes. Dear ladies and gentlemen, my name is Michael Liffelmann. I'm the Executive President of the division Engineering and Technologies. Maybe a couple of words regarding my background, studied chemical engineering, did a PhD on that.
Then finally, I got a little bit fed up with chemicals, went into the consulting business. After several years, made up my mind again, went back into operation into chemicals. And in the last two previous positions before I joined Billfinger, I was a member of the management board of 2 large chemical companies being responsible for maintenance, production, large CapEx projects and engineering. So in my previous life, I was sitting at the other side of the table negotiating with the Bill Fingers of the world, certain CapEx projects or even with Gerald and outsourcing of the maintenance. That's how I got to know Billfinger.
What I would like to do with you is today to share with you some minutes what is E and T about, what are we really doing and then to reflect on the latest changes on the energy and utility markets and how we manage that. The first message is compared to Northwest Europe, all figures are correct on that page. So what is E and T about? What's our core competence? What are we really good at?
Let's take it quite simple. If you would think to invest into a plant, a part of a plant or a large equipment, we are the right ones that can accompany you from the feasibility study through basic engineering, process engineering, detailed engineering, procurement, manufacturing, construction services and finally until commissioning. That's the core of our business. We could do that as an EPCM acting on your behalf or we can do that on a lump sum base as an EPC contractor. For doing that successfully, we have worked now within especially engineering and technologies, especially on our project performance to improve really the performance of our lump sum projects.
It's good if you sell a project, but if you don't bring it home profitable, it's just sunken money and you even worked for that. And I think even Terry, my colleague from the U. S, he will tell you a little bit later about the risk management processes. Where do we do our business? We are basically more or less evenly split across 4 verticals: oil and gas, chemicals and petrochemicals, energy and utilities and pharma.
Especially pharma has experienced tremendous growth in the last years. Tobias will again not exactly. And that's also the reason why among our top five clients, they are not only energy and utilities companies like EDF, not only large chemical companies like BASF. No, we have also Novartis and CSL Behring as our top clients. So we really positioned ourselves now very good in the new pharma segment.
Contract type, well, as already said, we are a plant or equipment manufacturer, so most of it is lump sum based. It's 70%, the rest 30% split between unit rates and reimbursable ones. Looking at our employees, approximately 5,200 approximately 50% of that are really engineers. That shows on the one hand side our high dedication to innovation, but on the other hand, we focus a lot on engineering across all the various disciplines. We contribute 20% to Billfinger's total revenue, and we do that with a share of headcount of 16%.
Now let's have a look, as promised, on the energy and utilities markets. I think you all witnessed the tremendous change that we had in the recent years in the energy and utilities markets. Coal based power generation, it's on its way to say permanently goodbye to Europe. Several European countries have already concluded to exit and several already did that before. What happened to the industry there?
Well, big players Siemens, GE, Hitachi went into heavy restructuring. And we at Bill Finger, well, these good old power units being once a stronghold of profit generation struggled seriously in the market. And as Tom already indicated, some of them we divested. But what did we do with the rest at Bofinger, especially at ENT? We merged them into 1 unit.
We downsized the business, adjusted the capacity, merged them into one new legal entity, have introduced a new business unit structure in order to follow-up the new market in a much better way. So what to do now with all the skill sets, the references that you have still have that you still have from the power generation business. What to do with that? Well, let's simply try to export that or transfer that to another segment that still provides sufficient growth nuclear. We in Germany think also nuclear is a dying business.
But if you look around Germany, there are tremendous growth opportunities. We'll tell you something later about that. The other thing is, well, power generation always had strict emission controls. We have a large track record in DNOX and DNOX capabilities. But now stricter emission limits come on also online in other segments cement, metallurgy, marine business.
So why not taking our core knowledge there and sell it somewhere else? And I will tell you also here an example. And of course, we also keep to invest in R and D capabilities to be perceived as an innovative player in certain niche markets. But now let's look at the nuclear segment. To be honest, when I joined 1.5 years ago, Billfinger, I had no clue that Billfinger is doing anything in the nuclear segment.
And I think the regular world still has that perception that we aren't doing anything. But if we look here at the sketch of a typical nuclear plant and all the blue dots indicate really areas where we can provide value added, That's the piping in the turbine island. That's the piping in the nuclear island. It can be the containment line on top, the airlock system, the waste treatment system, the filter changing machine, the steam generator connectivity. We can provide a lot of value added.
It's not just plain vanilla construction work that we could do. We can really provide technology here. And not only we can, we did. So all these blue spots really indicate projects that we sold. So we are really well positioned in the market.
And the good thing about the nuclear market is it's a highly regulated market. In order to become a strategic supplier of a nuclear project, you need to have the certifications and you need to have the references. And we have both. So that looks really very good. We are also well positioned to accompany a nuclear client throughout the whole life cycle from beginning feasibility studies until the decommissioning.
We can really go with the whole life cycle through a nuclear client. And also here these boxes look generic, but we could fill each of those also with weather projects that we have sold or projects that are currently ongoing. Now let's come to the U. K. Duncan mentioned it.
The government decided in the U. K. To build 11 new nuclear power units. EDF is focusing on Hinkley Point and Sizewell. Hitachi is doing Wilfa and Oldbury.
New Generation is doing Moorside. And we are already discussing with them. We are also working for some of them with our engineers. We have sold to Hinkley Point the waste treatment system in the value of €15,000,000 We are currently engaged in tenders of approximate range of €400,000,000 to €500,000,000 Will we get all of that? Probably not.
Will we get nothing? Definitely not. So we are, as Duncan said, very well positioned. My German attitude says, well, the bottle is in the fridge, but I would like to wait until we have the signature. But we got very good signals from the client.
The only stupid thing, the annoying thing about the nuclear industry is that every project or most of it starts with a delay. And even more projects end up with a much larger delay. So you need to balance how you manage the resources that you need to reserve for these projects. Let me give you a good example. Uki Lotto, we started in 2,005 with a €105,000,000 contract.
We were supposed to end in 2,008. We have now the year 2018 and we are still working in Okiloto, not because we are so slow, because we simply have reached now a contract volume from 105 to 550. That's the good thing about the nuclear business. It ensures you a high stable baseload. And just this year, we have been awarded at Okiloto additional €20,000,000 Additional new builds are coming in Turkey, Akuyo, Zynub, Ignaida and we are also in conversations here with Rosatom.
Moving from north to the west. In France, the Grand Carrenage is ongoing. Lifetime extension and upgrading of 58 nuclear blocks, 58. We are already working in some of them. We have just not just we have started 2 years ago with partners a method to exchange the steam generator in a nuclear island.
You need to disconnect in the hot zone a 100 ton equipment, lift it out of it, lift the new one in and connect it again. That's, A, not something that everybody can do and, B, even if he can do, not everybody gets that awarded. So we are perfectly positioned here. The other thing is the waste treatment plant in Le Havre. We have 1 year project of €50,000,000 together with a joint venture partner.
Our share is €25,000,000 Why have we won that? That's our modular approach that we were able to sell. We design the equipment that needs to be replaced in skids, mount it and build it in our prefabrication shops, ship it to LeHack and mount it in. By doing that, we save the client valuable time and project execution. So here, nuclear segment is a very promising one, but let's leave the mainland behind.
Let's go on a ship. What happens there? In the marine industry, by 2020, the sulfur content needs to be reduced from 3.5% down to 0.5%, in some of the regions, even down to 0.1%. So what can the shipping companies do? They have 2 options, whether they buy a higher quality marine gas oil with lower sulfur content, costs basically $200 to $300 more per ton or they invest into scrubbing technology in order to remove the sulfur dioxide from the flue gas.
And now the whole economics kick in. That means assuming that a vessel on average consumes 60 tonnes per day, you have the price differential. The investment case for a scrubber is between $2,000,000 to $3,000,000 so $2,000,000 plusminus 1,000,000 dependent on the ownership. You can create a payback time of approximately 2 years. The whole investment case is a no brainer, but still the whole shipping meantime?
We took our expertise from the power generation business, have discussed it with a shipping company, have entered into a pilot project, designed our own scrubber based on our know how, built it into the empty Aurelia, went on stream with that at the beginning in 2017. And since then, it's running without any failure. Given the fact that this was the 1st scrubber we built and it's running without a failure, it's a clear indication that we could benefit from our old know how here. So we are right now in the final negotiations of accumulated contract value of €50,000,000 Maybe if we would help that Capital Markets Day 1 week later, I would be able to say we opened already 1 bottle, but we are really here in final negotiations. We are not in a tendering phase.
We are just aligning here the terms and conditions. On top of that comes the aspect. By 2020, the emission limits will be online. Globally, approximately 25 companies can produce these scrubbers. Let's say each company can do 50 of those per year, resulting in an annual installation capacity of 1200.
Right now, 600 ships have the scrubber installed. There are thousands of ships out there that still needs the retrofit scrubber. So that means we will run into an installation capacity bottleneck. What would that mean for our margins? Most likely they will go this way.
And we really see now that the increasing requests are coming in. So really the shipping companies are waking up. The other thing at the end are our R and D capabilities. We are perceived as a very high quality provider in the superconducting magnetic field. We have just sold beginning of this year a €22,000,000 contract providing to GSI 83 super magnetic superconducting magnetic modules.
Those will be built in into FAIR. FAIR is the facility for Anton Proton and Ion Research, and they will be installed in the new SIS 100 Accelerator Ring. And they do then sell some fancy research like origin of the universe, but also somewhat tangible things like cancer therapy. So we are really positioned in certain niches really as a very innovative player. We have also cooperations here with the Karlsruhe Institute of Technology or CERN or other European Research Associations, quite good positioned here.
So wrapping up, I hope that within the last minutes, I was able to give you somehow the impression, A, what E and T is about, what are we really doing, B, how we managed the crisis in the power business? And C, how we repositioned ourselves to participate in further growth markets? Thanks.
Thank you, Marco. And we will now travel to the Middle East with Ali Veswaj responsible for the region.
Thank you, Tom. All right. Good afternoon, ladies and gentlemen. Pleasure to be here. Name is Ali Vesfayi.
I'm the Executive President of Division Middle East and one of the latest additions to the executive team here in the front row. A quick background where I'm coming from. I have been around with the oil and gas, energy, utility and petrochemical industry for nearly 2 decades. And from those 2 decades, I've spent many years in Middle East working for the companies very similar than likely to Bill Finger, slightly bigger in size, managing their business in the Middle East region. Personally, extremely passionate about the region.
I believe the region is one of the most untapped growth opportunities for many countries and many companies, but at the same time, very excited about Bill Finger's position in Middle East when you look at the portfolio and the profile that Billfinger has to offer in Middle East region. And on that note, allow me to take you through what do we mean with the profile. If I wanted to summarize the slide, and I need to start with one remark. Even though we represent 4% of the revenue, you see a dotted line there that's purposely put there to show you the potential growth opportunities that we see in Middle East. We haven't begun to scratch the surface of what Bill Finger can do in Middle East.
And I have to say, after the streamlining of the strategy with the executive board last year, we have begun to streamline, put our work into focus, look at the customers, and we will be growing the business in Middle East relatively quickly. The other piece is part of our profile in Middle East is relatively over proportionate profitability vis a vis the size of the business. And that's basically what makes business in Middle East for us exciting and promising. That being said, what are the characteristics of bellfinger profile in Middle East in 3 words? Number 1, established and entrenched.
We've been underground for nearly half a century. That's quite some time to have been in Middle East. And if you look at the retention rate of our clients, that a testimony to they know us, we know them, we trust each other, and they continue to give us business, and that's the base. The second part is it's a very balanced business. We're one of the divisions that has the privilege of having resources on engineering and technologies as well as MMO services underground in Middle East, 4,000 people, nearly 4,000 people with a good balance of engineering resources and services.
It gives you quite a privilege in managing and leveraging to provide integrated solutions to little bit later on what it does for us in terms of addressing the market opportunities. But more importantly, if you look at our industry split, it's a very telling story of proud looking back but more excited looking forward. We've been serving the energy utility industry in Middle East as a backbone of business for Billfinger, the DNA of the company. And as you see, we have a very solid share of what we do there in helping clients like Saudi Electric, Ministry of Electricity and Water and even Diva and Adviya in Abu Dhabi and Dubai. But we've managed to establish a very good base as a foundation to start getting into oil and gas and hydrocarbon business in the Middle East.
And it would be very difficult for me coming from the oil and gas industry, it's very difficult to imagine Middle East without the oil and gas part of it. That's the growth engine for Division Middle East. That is where we are going to continue to build on our base business and start to get into the oil and gas part and get our increased share of wallet, if I may use your terminology, on what is it that we do with the customers going forward. And there is an emerging piece to that. If you look on the left side, the chemical and petrochemical part of the business, that's the emerging part of Middle East.
That's similar to what Gerald was sharing with you and similar to what Terry will share with you. You will see that the clients in the oil and gas industry begin to understand the value of integration, pushing through the value chain, the hydrocarbon molecule and converting it into something with the highest cash cost, the petrochemical molecules rather than the crude oil. And that's where we have proven with one of the success that I will share with you at the back end of the presentation, our capability and ability to be a real player in that market. Let's see if the macroeconomics and numbers support our very high spirited view to the Middle East market. On the very left side, Middle East is a region associated with growth simply at the back of necessity, not luxury.
You cannot imagine Saudi Arabia not producing oil. You cannot imagine United Arab Emirates not producing oil, not producing petrochemicals because those exports are the revenue back into country termed as petrodollars that fuels the life of nearly 1,000,000,000 inhabitants in the region. Therefore, oil price at 80 or at 30, there is a certain amount of investment by force, And that's where we are positioning ourselves to take advantage of that base note. Looking at the numbers on the very left side, and I'm not going through each of them, but you see around $500,000,000,000 committed investment for the next 10 to 15 years going down the line. And some of them already converted into projects.
We see the effect of them. Some of them have attracted significant amount of investors like the Abu Dhabi Downstream 1 2 weeks ago where $45,000,000,000 of opportunities have been shared and there are already contracts being signed. If you just look at the contract signature ceremonies at the back of that event, you see the number of opportunities coming up. Let's see on the right side, Saudi Aramco, one of the top clients, one of the largest oil producing companies in the world. If you look at the business that Saudi Aramco is giving out every year on the CapEx side, the relevant part of the market for us is around $130,000,000,000 and that's over a span of 10 years.
I would wish to believe that would be an opportunity for us to take advantage of, but it would be more of a wishful thinking. But I at least can aspire to say, would it be far fetching stretch to look at 1% for Bill Finger? And that's around $1,000,000,000 over 10 years, dollars 100,000,000 of yearly potential opportunities. And that's where we're going to be focusing on and pushing forward to get our fair share. The other piece is on the energy and utility.
Unlike Europe, where the transformation forces are shifting the face of the industry, Middle East continued to be under pressure by what we call it energy demand intensity, getting hotter, the more ACs, the more population, the more consumption. There is no other way but up. So clients will build more and will maintain and enhance the existing ones, good for CapEx, good for OpEx. Looking at the OpEx cycle, the other hemisphere that we are focusing on, 3 characteristics in Middle East, aging assets. Look at Saudi, one of the highest concentration of industrial assets.
57% of the facilities are over 10 years. That tells you a lot of work to be done. And especially Middle East environment, hot, humid and corrosive, a good amount of work to make sure they continue to produce. And we're not talking about growth, just continue to produce what was committed. Looking at increased awareness, at the back of pressure on government fiscal discipline, they're trying to offload all of those insourcings and try to go more and more for outsourcing, disciplined work being shared to the market.
According to the industry intelligence, we are looking at a swing of around 15% by 2020 in the amount of work that's being outsourced. This is new. That notion of you can continue to do everything in house or it's going to cost you a lot more than if other efficient companies like Milfinger could do it for you, That's arriving in Middle East, and that's a very new good wave of industrial renaissance, if you will, for us. And the last part is you do see a significant amount of focus on efficiency, productivity, doing things more better. It's coming at the back of pressure on margins, competitiveness, the arrival of new emerging competitors in the marketplace, And I'll share with you an example of that.
And that's where we can take advantage of good practices developed by my colleagues like Gerald, the BMA, the BMC or the forward looking approaches like BCAP. So all set, a beautiful picture of potential opportunities. How is it that we're going to take advantage of them? What is our strategy? Very simple.
For us, the strategy in Middle East is build on what we have in house and what we haven't addressed, and that's as simple as it gets. We are going to address the white spots. We have started the process of doing that, and we have already generated early successes. I'll share with you 1 or 2 examples at the back end of the presentation. That we call a horizontal growth, address customers that so far we haven't been doing that even though we have one of the most unique portfolios to do that, SABIC, Saudi Aramco, Kuwait oil.
The list can continue. 2nd, vertical growth. Build on and leverage this fantastic portfolio that Bill Finger has already gathered along the line and has been even better streamlined over the last year. Michael used the example of FGD. We are leveraging that at the back of an existing customer in Kuwait who needs the opportunity with a technology to basically reduce the emissions in their power plants.
We've been managing that power plant for them for decades, and now we're building on that relationship, building on that trust and pulling through the term that Tom used, pulling through this technology and adding to our share of wallet from that potential customer. Or again, I use FGD Marine. Michael used the example. That's a very exciting one for Middle East. Highest number of oil transportation vessels.
And Saudi Arabia has decided to build the single largest shipping industrial complex in Saudi. Any ship that leaves and goes to international waters either needs to spend the amount of money that market was showing to you by changing the fuel or simply use a solution that we are offering. And that's another pull through from the existing portfolio. And the last part is the strategic growth around our B cap, around our BMC to just simply take them to the market and address the whole market, which for us is a good white spot. And the other piece is water technologies that is one of the last legacies left in Middle East.
Fortunately, we do even own patent around enhanced desalination techniques in Middle East. And as you all know, Middle East is not necessarily known for high amount of rain or a lot of water conservation on the ground. So desalination is the source of water and there are 1,000,000,000 people depending on them. If we can enhance, help the client produce more with the same, that's where the money is. How are we structuring ourselves to make sure we can address these opportunities?
Throughout the last year, we have gone through an integration cycle to make sure we bundle our strength in Middle East and start being or acting as one bellfinger. And therefore, if you look at the life cycle of an asset from the very early stage when an idea emerges in customer head, we have 2,000 engineers sitting underground that they are able to help the client by getting involved in FEED conceptual design. They are doing that already for, for example, Abu Dhabi Oil Company. Then walking with the customer through the basic engineering, move on to the 1st CapEx cycle where the project is being built, do the detailed engineering as we have done for the single largest CO2 capture unit on this planet, Emirates Steel, And then you move on further with the client, help them on project execution, project execution management and also our work packages around piping, our DNA and piping fabrication. And noteworthy to say that our well to repair ratio in Middle East is the industry benchmark.
We are 2 to 3 times better than anyone else that does the work in Middle East and that's what the clients like. This is the German quality translated to Middle East requirements. And on the customer side, the good news is the list is so long, I don't need to walk you through. It's a good possibility for us to begin addressing them. Digitization, we'll leave it for France, my colleague who also made us passionate about digitization in process industry.
But usually when you talk about digitization, Middle East is not number 1 coming to your mind. You all think Middle East? Not necessarily. That picture is real. The gentleman on the front is His Highness, Crown Prince of Abu Dhabi, and that's ADNOC Panorama Center, the single largest digitization solution for oil and gas and any single barrel of oil or gas going through the sales pipeline.
And any single barrel of oil or gas going through the sales pipeline. We have started the conversation with them. They're very excited because they have managed the bigger picture. And as you see, fancy, typical Middle East. But the low hanging fruit, the dirty part, what goes on the site, the OpEx cycle that they're wasting a lot of money is where the opportunity is for us to help them save money or as Tom rightfully said, put the money back in their pocket.
They like that, and they're happy to share part of it with us, and that conversation started. Now all good stuff. Have we done anything? Yes. Number 1, 1st ever contract with Saudi Aramco.
We have and you are the only and first crowd which are hearing about it because Aramco is very conservative. It's allowing us to go to market with these news. But we finally, yesterday evening, received permission from them that, okay, in our Capital Market Day, at least we can talk about it. A project which is a beautiful representation of combination of engineering technologies and modifications, 1 of the largest and oldest gas plants in Saudi Arabia, Berri Gas Plant, and we are basically replacing and renovating the entire compression system for them. Beautiful piece of business, and it does two things to us.
First, reference, Saudi Aramco and an open door to a pool of opportunities for us to take advantage of. And the last one, on the chemical industry side, Borealis, Borouge, is a joint venture between Borealis and ADNOC's single largest ethane cracker facility on this planet built by Linde. I've had the pleasure of seeing it on the other side. And now Bill Finger has been entrusted by the customer as the one fixing it. So we've just received just we've received the 5 year service contract to manage all the 18 cracking furnaces for the client for the next 5 years.
With that, thank you for your attention, and I hope I could get a picture of potential growth Middle East projected at the back of the slides.
We move on to our region number 4, North America represented by Terry Ivers.
Good afternoon. Is this on? Yes. Well, there's really not much more for me to say. My name is Terry Ivers, and I joined the company 18 months ago.
The company decided to, as Tom said, to have 4 divisions, operative divisions. Operative divisions. I came into the organization finding a bit of a holding company mentality in the U. S, watching over the 4 companies. My job was to build a division.
That's important because the company wanted to have someone on the ground, wanted to have a team on the ground to watch our important projects and the client relationships, not flying over, flying back, but being there. That's good for me because I'm born and raised in Houston. That's my town. I'm a Texan. I'm very proud of that.
And, that's also important for Bill Finger. You laugh, but, it is very important. The most of the key CapEx decisions made in the U. S. And perhaps in the world, one single place, it's Houston, Texas.
And so to be there and to be have a relationship with the majority of the customers in town to be able to go over and knock on the door, talk about opportunities where we can bring value is very important. My charge with Billfinger is actually to raise awareness of who we are. We are known in Germany, but the Billfinger name is not common knowledge in the United States and in North America. That's the reality of things. We are known by the legal entities that we've been operating in.
There is some awareness of Bill Finger, but what an exciting opportunity. As Tom says, we have been stabilizing and building up during this period of time and checking a lot of boxes. But as I launch and as we launch the Bill Finger name and we're being very careful with that, we're going to do it with France. We're going to do it on digitalization, with Tobias on biopharma, with Michael and all the products that we're producing in Europe and we're going to launch those in the U. S.
And we're going to build up our revenue and our EBIT based upon that new delivery to the market. But today, we are primarily serving the chemical and petrochemical market, the oil and gas market. The others, that's a large others because our legacy businesses, we do serve the federal government. We also serve the consumer products industry. And that is where earlier was mentioned by Gerald that our longest serving customer and client with the company is Procter and Gamble.
And that is now 73 years in that journey with them and we're very proud of that relationship. Most of our projects are lump sum today, but that trend is changing. I'm going to talk about that a bit. The market is buoyant at the moment. It's creating different conversations.
It's been mentioned a couple of times about our Linde Braskem project. We'll close on that in this slide show. But that's a unit rate project. And we're also having, conversations with clients regarding large reimbursable construction contracts. My colleague Ali mentioned the outstanding weld rejection rates in the Middle East.
However, I do believe we've got some better numbers that we have in the U. S. And our client has been contacting us about that as well. So one key message on this slide, I want you guys to focus on is predictable, sustainable, repeatable. We have a number of mottos and mission statements with this company.
But the one that I've added in North America is predictable, sustainable, repeatable to our clients, to our investors, for our employees. That's key. We don't want any surprises. No surprises, Klaus. So that's the commitment.
Boy, we have an exciting market in North America, very exciting. I know you're hearing about it all the time. The consumer confidence is high. Hey, we all are buying stuff. We are very excited.
We believe in the future. So we're going out and buying stuff. We're driving a lot, so we're using a lot of oil and gas. The unemployment rate is way down. Now in the areas that we're operating, primarily Texas, Louisiana in the South, other locations, In those industries, personnel are very, very scarce.
That creates an opportunity for us because, we have a reputation as a favorite employer. Our clients see us as being able to provide supervision and craft labor and so they come to us. So in a tight market, that's good for us. The regulatory environment is favorable. The tax environment as you're hearing is favorable.
That creates for developers a confidence to invest in projects and build those out and then look for partners, construction partners that can help them with those. I mentioned another important number is production of oil and gas. We are now in the US at 10,200,000 barrels per day. The projections by the US government are that we'll be at 10.7, on the average for 2018. Russia, 10.5, Saudi Arabia, 10.2.
We could have a chance this year to eclipse them as an oil producer. What's driving all that? Again, back to the Texas base. We're producing 4,200,000 barrels of oil per day as compared to 3,300,000 barrels of oil per day last year. What, why that's important is in Texas we also have a supporting transmission grid, transmitting oil and gas, a pipeline infrastructure.
It's not just about production. You got to get it to where you can manufacture it and turn it in and monetize it, turn it into something more valuable. In our case, that is petroleum and chemicals on the U. S. Gulf Coast, in Texas and Louisiana.
Now we actually have a bit of a bottleneck in Texas right now in our gas pipelines. The associated oil that is coming out associated gas that is coming out with the oil in West Texas, has no place to go. And there are limitations on flaring in Texas, believe it or not. There are limitations on flaring. We do think about the environment.
And so the pipeline infrastructure has to be build out a bit. That's an opportunity again for us and what we do on cryogenic plants and metering stations and compression stations and pumping stations. So every issue in terms of a challenge creates an opportunity and the very nature of the production creates an opportunity at the same time for us. So very exciting times. There is a concern.
The U. S. Federal government has a concern about the Fed has a concern about an overheated market, but we still we could see some interest increases this year. That will play a factor going forward. Just a slide, a lot of numbers here, really focused on the fact that we saw a change of 11.1% growth from 'sixteen to 'seventeen on CapEx expenditures, and now we're projecting another 16% for 'eighteen.
I want to focus on petrochemical, which is a very important market for us. The gas that we have in the U. S. And in Texas, we're creating ethane with that as a feedstock for chemicals and plastics. That gives us an advantage in the global market.
Others don't have the opportunity to have that gas and therefore derive ethane. They use naphtha. They're deriving that from oil. Oil is more expensive. Gas has separated from oil.
So they're in terms of pricing. It's very economical. So in Texas, using ethane or in the Gulf Coast using ethane as a feedstock is creating wonderful opportunities for expansions along the Gulf Coast. And we're involved in a number of those, as Tom was mentioning, with the methanol facility and other projects such as the Linde Braskem polypropylene facility. So, ethane is an advantage.
But for those producers that are not producing plastics or chemicals but are involved in chloral alkali or caustic facilities and others, they're benefiting from the low cost natural gas from an electricity requirement where huge demand for electricity, they're benefiting from that. So both the power and the energy need as well as the feedstock is creating an environment in the US that is very robust. We're here at a good time in the US and in North America. Now the projections long term, Moody's for example, is seeing that this is not a temporary situation. This is a decades long trend.
I would say that some of us, and I want to put my environmental hat back on for a moment, we're concerned about plastics, single use plastics in the world. That's not a good thing. We at Bill Finger would not support that as well as a long term. But even if we can find a way of eliminating those single use plastics, that's only going to have a 3% to 4% impact on the overall plastic demand for oil. So this is a long term trend, and so we see plenty of many, many years of opportunity in Texas as we go forward.
Now I'm going to focus a little bit on our heavy construction business, Westcon. We were a cold weather contractor located in the north, working in the Balkan, not a lot of competitors, always were successful, very successful. The future, however, is taking that business and not only concentrating in the North and the East but bringing it to the South, an environment that has many more competitors. Contracting is much more challenging. Contracts and the legal experts around those are much more astute.
So we have to have all of our processes, our procedures, our estimating departments, our project controls department running at 100% efficiency effectiveness to ensure that we can deliver the project as we expect. Now, we had to analyze our departments. We had to review those. We analyzed all the lessons learned from all of our projects, good and bad, not just resting on the fact that we can repeat great projects that were in another region in the U. S.
And bring those to the South with the same success. No. Stepping back and analyzing and we've done all that. One of the things that we've really focused on is the identification of risks on our projects and in the contracts that we signed, very key. The executive board challenged me and said, Terry, seriously, before you come here and ask for the approval of large projects, you're going to have to demonstrate to me that you and your team can look at these projects, identify the risks, assess them and mitigate them, and we've done that.
We have created our quantitative and qualitative risk programs. In this case, I'm just showing a slide which is we're leveraging Oracle Primavera, our scheduling tool fully loaded, cost loaded with our experts. We will run 2,000 iterations of every project looking for that ideal point where we can say now we can execute it, we know what our risks are at this point, we can put the proper contingency at those risks and then we can book the project, get approval from the Board and proceed. Now in doing that, we bring our experts into a room. We interview them.
We have a facilitation. We interview those experts. We get their feedback into the program, which we're analyzing. We also bring cold eyes review in. Folks that are not involved in building that project but are experts in the industry, we bring them in to get their perspective just in case we may have missed something.
So this has given us a great deal of confidence and has also given us approval from the board. We're not going to be able to approve these or proceed to contract to these large jobs without demonstrating that to our Board. Again, repeatable, sustainable, predictable results. That is our objective. Now the project that we're talking about here, this is the Linde Braskem polypropylene project.
Linde is a long time customer of ours. We've had them for many, many years and had each project that we've had in North America has been successful. This one is at Braskem. It's only about 2.5, 3 miles from our southern region headquarters for Westcon in Deer Park, Texas. What's different about this job?
We have a challenging contract. It is a unit rate contract, but we have a contracts manager on board. The contracts manager is there to help us and educate all of our members on the project management team as to what the contract is, what does it say. Any change orders or any change that occurs, we understand how to document that change and communicate that quickly to our clients, so that we together with them can make decisions about a path forward. No surprises.
The client sees that as an advantage. As we are in the project, as we do see change, we are going to rerun our analysis, our quantitative risk assessment to ensure that that change is not changing our ability to predict the outcome of that project. And we'll also share those results with our clients so that that relationship of trust will continue to grow. 20% to 30% of each of our projects on average is involving subcontractors. So therefore, subcontractors play a key role in our success.
We have a subcontracts manager on board and not as in the past relying on superintendents and others in their relationships to manage those subs by themselves. But we also involve superintendents who are familiar with those particular subs and they already have a relationship. So there's no surprise in that relationship. Now underpinning all of this, and this was said earlier by the other speakers, quality and safety. We don't get any contracts in North America unless we can demonstrate to our client that we're operating safely.
Our pledge to our employees is to return them home every day in the same condition that they came to work. That's a pledge. That's a commitment. And we're looking beyond the success we've had so far. We're giving our employees stop work cards where they can, if they're confused on a project or they're getting conflicting instructions, analysis, algorithms
and
others predicting analysis algorithms and others predicting high risk areas in our projects so we can intervene before something happens. Let me leave you with this. We will have other projects like this. I'm certain that the board is anxious for me to present those. We will be coming back here again soon because we're going to continue to deliver predictable sustainable results.
Thank you very much.
Welcome back, and we would like to continue now with our afternoon program. We start now with 2 presentations of our specialists. First, it will be Tobias Eitel on the hot topic of pharma and mostly biopharma. Go ahead, please.
Thank you, Sean. Good afternoon, ladies and gentlemen. For the next 15 minutes, I would like to set the focus with you on biopharma. My name is Tobias Eitel. I'm looking after the company Bilfinger Industry Technik in Salzburg, Austria.
I'm 17 years with Bilfinger, and since 7 years, I'm Managing Director of Wilfinger Industry Taking in Salzburg. Biopharma, biotech pharma, what is that? Biotech Pharma is the new way of producing the modern medicine. So we have the chemical synthesis on one side, which is the tablets and the pills, which you eat. And we have the new medicine that goes directly as injection or infusion into your blood.
So the biotech way of producing the new medicine is genetically modified mammalian cells or microorganisms that produce a human protein that goes straight into your blood. So all new medicine is produced in the biotech way, and the share of biotech is increasing from year to year. And the old way, the chemical synthesis is putting back. Since it goes directly into your blood, the new medicine, the standard and the level of quality is very, very high. Sterility, quality, purity is very important in biotech pharma.
Biotech pharma is a clean industry. We don't have corrosive media. We don't have high pressures. We don't have high temperatures. We have low pressures, low temperatures, and the cells, yes, they feel most comfortable with 37 degrees, and then they produce the best output in medicine.
Biopharma is core industry in Wilfinger. We do together around about €230,000,000 in turnover. That is €180,000,000 revenues in the division ENT and roundabout $50,000,000 turnover in MMO. We are active in the pharma industry since the 60s and in the biotech industry since the '80s. So we were there when the biotech industry started off.
We are operating mainly from our hubs in France, Belgium, Netherlands, Germany, Austria and Switzerland. This is where we have branch offices. But on top of this, we do business all over Europe, and we do delivery business to overseas countries like China, Korea or Russia. What do we do? We starting from engineering, we have all in house.
We start with process engineering, basic engineering, conceptual design before that, 3 d engineering. We have all automation in house. We have all electricity and instrumentation experts in house. And this is how we build up the modules in which our clients produce their medicine. So it's the modules on one side, the modules are being prefabricated in our workshop.
The client comes, tests the module if it works well, and then we ship to the client and commission it there. We have another business unit, which is the pipeline, the piping business, which connects all those modules at the client side. This is a business at the client side, 200, 400 people we have then on the client side. A third one is water solutions. It's also a skid mounted business where we do process water for our customers.
And of course, service, maintenance, spare parts is very, very dominant also in pharma, biopharma, mainly of the MMO companies. This, for example, here is a live project. This is how a skid looks like. From scale, you see here, these are the people these are the clients with white helmets. The client currently tests this project.
That is a project for the company Alexion. Alexion, a startup company from the U. S. Being active in the ultra rare diseases. This is how it looks like when it's in our workshop.
That's the real picture of our workshop. So it's mainly vessels, yes, it's a platform, it's a clean area in front and where the clean room is and the technical area in the back. So we build this up, we test it, we run water cycles. The client is happy, we ship it to the client. We dismantle it, we ship it to the client.
On the left side, you see how we start with engineering. So the whole skid first is engineered. The client accepts the engineering. Then we go to construction. Our market is a market that is growing very, very fast.
What are the drivers for the sorry, that is my phone, which has been switched off. The drivers for the growth of the market is worldwide more and more people can afford medicine. So people get older, they even take more medicine. So yes, the pharma sales grow. And on top of the growth of the whole pharma industry, the biotech grows even quicker since the share of the biotech medicine within the overall pharma is increasing from year to year.
So it's a double growth in biotech pharma and the market is strong and but of course, also our clients, they have requirements, yes. So we do have challenges with our clients and with our competitors. This is mainly our clients more and more get also global, so we have to respond on a global basis. They want to reduce the number of suppliers. They want to have suppliers where they can have a one stop shop.
So this means we have to broaden our portfolio. The engineering know how is requested from the client. And the smaller the clients, the more they are interested in EPCM solutions so that we not only deliver to them our process equipment, but also other trades that are around this. On the competitor side, we have seen recently, unfortunately, new entries from other regions and also from other industry branches, mainly from power. So most of our new competitors come from the power industry.
However, this is quite difficult because the power has not that high standard of quality and sterility. So but nevertheless, we have seen new competitors entering. However, on the other side, Billfinger's setup in pharma is unique, is good. We are the biggest contractor in Europe for biotech pharma for stainless steel installations. We do have a wide portfolio of services and products.
This is written in blue. In blue is where we have further development to do. Of course, we can even increase our portfolio and offer more services and products to our clients. We have already a broad coverage of regions. One of the big regions that is still missing on our map is the U.
S. And as Terry said already, we will start this year stepping into the U. S. For the biotech industry since it is the single biggest market in the world. Engineering capacities, but also capabilities, we had increased over the years tremendously.
So the client really wants us to be on eyesight. We are not only the mechanical contractor, we also deliver automation, we deliver electrical. So, plug and play fully automized modules. This step up in technology, we reached already. We reached this also by a lot of R and D projects that we are doing and that we have done with several universities.
We have to be ahead of the competition. We have to be in the position as biggest contractor in Europe. Also, the R and D, we have to cover, and this is what our engineers sometimes like the best because it reminds them of going back to university. EPCM, we started doing small EPCMs. The emphasis is on small.
We're not going to large EPCMs since they are already covered by other players in the market. So who are our customers? Our customers are well known companies. You can read them out on the screen. We put them in 3 boxes because they are different, the type of customers.
So the large multinationals, someone like Bayer, for example, they have large own engineering teams. And if their own engineering teams are not sufficient, they have a client's engineer next to them. And the meal is fully cooked when it's served at the big M and Cs. In the middle box, the midsized players or the special players, they are start up companies like Alexion or Biogen, Biogen Heidec, both American customers, they have started as a startup. So they are young companies and they do not have such big crowd of engineers, so they require more engineering being done by the contractor.
And also some players like Octapharma or BioTest, which are specialists in blood plasma fractionation, require special engineering, of course, and special know how on our side. The small process equipment, but also some other trades around the process equipment. To wrap it up, why should a client buy with Bill Finger Pharma? Because we have standardized solutions, but we are also able to do tailor made customized systems for our clients. We have a proven track record of acceleration on projects.
Since, again, we are the largest contractor, we have also built a very large workforce pool. We have half of our people are still blue collar workers. So this is an asset for us. But nevertheless, we also have, of course, agency people on top of this. But we can accelerate projects and the clients, of course, appreciate this when it comes to time to market of the medicine.
Every month of late commissioning is a loss for them. We can do projects in any size. That means small projects, dollars 50,000, dollars 100,000 but up to $30,000,000 $40,000,000 we are also very comfortable with. We are a very reliable partner when it comes to finance. We have a sound parent company, Bill Finger SE.
And of course, we have decades of experience in pharma and in biotech. On top of this, our logistics are quite sophisticated. So for example, when it comes to piping systems, we have 40,000 to 50,000 meters of piping in one project. 65% to 70% of all wells being done in our workshop. So that is a prefabrication of pipe spools and only the remaining 30% to 40% are being done on-site.
That helps the quality, that helps to reduce people at the client side. So, that's a sophisticated logistic behind. And in the end, what our clients like most is that we adhere to schedules. We are big enough to accelerate projects and to finalize projects in time. That was it.
Thank you very much.
Thank you, Tobias. And we continue with Frans Braun, digitalization.
Thank you. Good afternoon, ladies and gentlemen. Now I'm very appreciated that I can present the most exciting topic again, digitalization. And before I start, short introduction myself, I'm Franz Braun. I'm the CDO.
I'm the CDO since March 2017 before I was 17 years Managing Director of the Bilfinger Maintenance Companies, at least the CEO of the largest maintenance companies in Germany. And in the last 15 months, I started with 6 people to develop digital solution for Guilfinger. And Tom presented before what we which we have developed and all this expertise, all these products will be now come to our own company. It's called Billfinger Digital Next. We bring it in our own company because we notice also that to sell digital solutions, it's not so easy.
It's a little bit complex. And you say, we will be sell digital or we will sell digital with our full equipped company. And we bring all expertise and people into these companies, including the customers where we have on our Big Cap platform or also the whole products which we have developed. And you see on the right side, the value for the client. And in the 1st July, we will start with 30 people to develop further digital solutions and also to sell digital solutions to the market.
And Tom presented BCAB. BCAB is our most important digital solution. It's a holistic approach. It's not our approach. It's a solution.
You can see it later on at the trade fair. And what I noticed the last 50 months, if we get or analyze some data, build up some KPIs, we find a lot of new potential. And I think you are familiar with KPIs. And if you have good KPIs and you see something, then you can change a lot and can improve something. And this is the basic what we do with BCAP.
First, we collect the data in our platform, BCAP platform, which is not own platform. We only use standardized products. In this case, it's Microsoft Azure. And we customize this for the process industry. And the next one, if we have the data to transparency, then we can thinking about predictive analytics.
And this is very important for our business also for business for their clients because if they know if some failure is coming, then they can change it or we can change it with the maintenance business. And I think you have every time predictive maintenance, it's for me, it's a little bit buzzword every speak about predictive maintenance. But before you have the algorithm that you can say, in 80% probability, the available come in 4 weeks, It needs a lot of data and it needs a lot of quality data. And the next problem is we're working a lot of startups together with data analytics company. And the data analytics company, they never give a guarantee about the result of their algorithm.
So it's not so easy to install an algorithm in a special industry. But I think with our domain knowledge, we can do this with the IT experts and our engineering experts that we create algorithm for the process industry. And the highest level is prescriptive analytics that the systems give us an idea what we have to do. But we are not we are on the Phase 2 in the moment. Predictive analytics, we have the first algorithm on that.
And predictive analytics will be the next step. And why we think that we are really successful on the market, also why we think we are the first one because we are the fastest one. And we have a really fast and easy implementation plan. And if you go to the client, when we ask the client, do you have some data for us? And then you say or you say, yes, maybe maintenance data.
You say, give us the data. We analyze it, and we will find something to improve. And this is the first, yes, contact to digitalization to from the client to us. And everybody tried to start with digital solutions. Everybody has started a lot of digital projects, but for me not in holistic approach.
And BKIP for us is really an holistic approach that we recombine the data from the whole operation process to improve the OEE. And after this maybe taste phase, we're offering for free. If you not if you go to the startup phase, then we will digitalize in 6 months the first process unit. Sorry. And in this startup phase, we say we make digitalization plug and play.
In 6 months, digitalize the 1st process unit. And for us, and I never see before a system that we can deliver that we say in 6 months to digitalize the whole operation process. And after this, hopefully, you're convinced about our systems, our BKAP platform, then you would like to go to the BKAP Life phase that we really digitalize the whole plant or size. And a little bit more deeper in this project with Munsing. In Munsing, Tom said it, we can do everything.
We can test it everything and we tested a lot of things. We built up a digital twin. We make 3 d scanning. We installed a lot of different kind of sensors that we get data from the assets and also we visualize and build up client dashboard. And Minxing has nothing to pay until now.
In the future, he has to pay because he understands this. He has a lot of benefits for this project. And in the moment, we discuss that you really pay for our bigger platform because it's an operational system. He has dashboards. He sees something to improve together with our expertise.
Then we can improve really the OEE immediately. And OEE means for him EBITDA. And this is why we think that we are on the right way with the big cap platform. And here you see again the results and the benefits and this is also the reason why we come in discussion with Munsing that he has to pay something. But for all for us, it's also a good reference Every client we can bring to him and he presented and he see the benefit and see that he can say he's the modernist he has the modernist chemical factory brownfield in the of the world because he digitalized all in his plant.
And I think it's a good thing for him and for the Munting and it's a good thing for us that we can test a lot and can scale up some solution. And but we are not stopping now. We are also we developed in the moment a lot of new things. Maybe on the right side, cognitive analyzer. What we do, we installed microphones or cameras and collected videos or noises and then we trained this algorithm.
Every asset has a different noise and we are with 25,000 employees on plant, then we can really train on cognitive sensors. The sensor is not the hardware, the sensor is a software that we program we make our other setup for these sensors. And with this database, this is I think the asset which we can generate with our domain knowledge. And my point of view, what is the revolution of digitalization? It's not connectivity.
It's not the hardware. It's not the algorithm, it's a trained algorithm. And this is what we can do with our expertise in our market. And every project which we started, we will start together with some customer internal and external. Then we get the feedback that we are on the right way.
This is similar. It's the same maybe we announced a strategic partnership with Software AG. Software AG is really strong in real time tracking. And we discussed in the moment that we built an OEE app to track OEE that we see really the benefit of our efforts in BCAP or Vector Advisor. We use analysis, maybe text analysis, text mining to analyze what's wrong in our business.
Every blue color writes something in his task and this text, we analyze it and find out we have a problem on this side. And there are so a lot of possibilities with data analysis. And I don't know exactly in which area we end in 1 or 2 years. Terry doesn't like surprises. I like surprises because when we have started last year, we have never the idea that we will develop industrial tube or pit graph.
It's come with my young guys. I have really good young digital natives. And they combine this I have idea, but and he has an idea. And what's really important is that they have a boss like me because I understand from the business. And I can say it's possible to bring it on the street.
This is the biggest problem also from startup companies. I have a lot of pictures from startup companies also. And I see they are really good ideas, but they will never bring the concept on the street. And this is very important if you start with digitalization that you have a fast entry to this or with these tools to the market. It's very, very important.
And you see all the things. I think in the next month, next 12 months, we will develop also new completely new project. We have a lot of ideas. What's important for us is we have it to bring it on the street that should or they should they have to create value for the client and also they have to create EBITDA for us. It's very important.
And if you see some, yes, idea, digital idea, high sophisticated, then we're thinking if you have it not realized between 2 or 3 years, then we say it's nothing for us in the moment. We assess it. It's important that we deliver with our digital solution. This is for us very important. And also and this is what's really exciting is when I started 15 months ago and how can I influence Billfinger with digitalization?
Then I say I cannot call everybody and say digitalization is good. And I say to my team, yes, let's start really exciting things. Everybody will follow us. And this is coming that we have to find, I think, the right project. And everybody say, yes, BCAP is a door opener maybe for maintenance business or for engineering business.
And hopefully, we find the next years have the same innovative ideas that we have produced more and more. And for me, what is important that you're really successful in digitalization? It's a long standing experience in the process industry. I think we have it. And it's covering the entire life cycle of the industrial plant from ENT to MMO.
We deliver the whole life cycle. And also, we have detailed knowledge due the on-site presence. We're also thinking about how can we use our employees. They are for us human sensors. If they get sensors, then we collect data and we can use it.
It's also a deal which we have because we are on-site. And I think in the last 15 months, we have created or developed really a comprehensive digital competencies. If you have not, we cooperate or we have strategic partnerships. And we are always platform independent. And for me, the most important is really high implementation speed.
And hopefully, you feel it. That is my impression. Speed is speed before perfect. BP is speed before perfect. And then you can deliver and then you can also impress the clients about the solution.
Yes, short introduction about digitalization. Thank you for your attention.
Thank you, Fran.