SGS 2013 Annual Report Business Review

VAST
& accurate

BUSINESS REVIEW 2013

SGS IS THE WORLD’S LEADING
INSPECTION, VERIFICATION, TESTING
AND CERTIFICATION COMPANY.
SGS IS RECOGNISED AS THE GLOBAL
BENCHMARK FOR QUALITY AND
INTEGRITY. WITH MORE THAN
80 000 EMPLOYEES, SGS OPERATES
A NETWORK OF OVER 1 650 OFFICES
AND LABORATORIES AROUND THE
WORLD. WE ARE CONTINUALLY
PUSHING OURSELVES TO CREATE
NEW SERVICES THAT DELIVER
LIMITLESS BUSINESS OPPORTUNITY
FOR OUR CUSTOMERS.
Innovative technologies and integrated
thinking keep SGS as the best-in-class
provider of solutions for overcoming
today’s market challenges. From
establishing trust across the grain
trading routes of Europe, to developing
cutting-edge technologies for the
oil and gas industry, we strive to
provide independent, sustainable and
valued services that go beyond our
customers’ expectations.

INTRODUCTION

>80 000

>1 650

1

employees

offices and laboratories

global network

OUR VISION

OUR VALUES

We aim to be the most
competitive and the
most productive service
organisation in the world.
Our core competencies in
inspection, verification, testing
and certification are being
continuously improved to be
best in class. They are at the
heart of what we are. Our
chosen markets will be solely
determined by our ability
to be the most competitive
and to consistently deliver
unequalled service to our
customers all over the world.

We seek to be epitomised
by our passion, integrity,
entrepreneurship and our
innovative spirit, as we
continually strive to fulfil our
vision. These values guide
us in all that we do and are
the bedrock upon which our
organisation is built.

INTRODUCTION

CHRISTOPHER KIRK
Chief Executive Officer

AN
OPPORTUNITY
IN EVERY
CHALLENGE

SGS spans the globe and this report highlights the openness and
willingness between our geographies to share information and turn
regional challenges into global opportunities.
Successfully navigating the challenges of today’s rapidly globalising
marketplace led us to once again redefine the line between service
partner, technological innovator and solution provider. I pushed each
of our 10 operational regions, comprising a multitude of countries,
industries and businesses, to seek out and deliver an impressive array of
new services in 2013. The vision has helped SGS remain at the forefront
of developing cross-industry synergies: unique offerings that ease the
increasing pressures on businesses.
Throughout the year our 80 000 employees and 1 650 offices and
laboratories around the world continued to exceed the expectations of
our customers, and kept SGS known as the industry ‘best in class’.
Read on and discover for yourself the imagination, drive and
determination of SGS and how we remained as the world’s leading
inspection, verification, testing and certification company during 2013.

Christopher Kirk
Chief Executive Officer

10 REGIONAL
CHALLENGES
& 10 unique
opportunities

STABILITY
& technology

CONTINUITY
& expansion

NORTHERN AND
CENTRAL EUROPE

EASTERN EUROPE AND
MIDDLE EAST

06

14

FLEXIBILITY
& collaboration

ECONOMICS
& creativity

REGIONALITY
& transparency

SOUTHERN
CENTRAL EUROPE

WESTERN EUROPE

AFRICA

22

28

36

EVOLUTION
& innovation

SYNERGY
& realisation

COMPLEXITY
& expertise

NORTH AMERICA

SOUTH AMERICA

CHINA AND HONG KONG

44

52

58

COMPETITION
& differentiation

DIVERSITY
& connectivity

BENEFITS
& industries

EASTERN ASIA

SOUTH EASTERN ASIA
AND PACIFIC

SGS OVERVIEW

64

70

78

STABILITY
& technology
NORTHERN AND
CENTRAL EUROPE

5

NORTHERN AND CENTRAL EUROPE

INFORMATION GIVES DIRECTION
technologies for growth
DIRK HELLEMANS
Chief Operating Officer,
Northern and Central Europe

AS NORTHERN
AND CENTRAL
EUROPE
CONTINUES TO
TRY AND FIND
THE STABILITY IT
SO DESPERATELY
NEEDS FOR
ECONOMIC
RECOVERY, DIRK
HELLEMANS,
COO OF SGS
NORTHERN
AND CENTRAL
EUROPE, KNOWS
INCREASING
OPERATIONAL
EXCELLENCE
REMAINS AN
ATTRACTIVE
PROPOSITION IN
THE EUROZONE.
He has worked closely
with customers in
the region to deliver
new technologies that
improve efficiency
and productivity.

HOPE ON HORIZON
“The eurozone is slowly recovering, or at
least stabilising to some degree, but the
region is still a long way from returning
to any significant growth,” begins Dirk,
commenting on the persisting economic
outlook in Northern and Central Europe.

We have looked
to build on our
ability to innovate
new technologies
for customers
“Considering this market environment,
we have been focusing on building new
technologies for customers. In upstream,
our investment in SGS Horizon has
increased revenues significantly, which
gives us great hope for the future
especially as there is plenty of scope
for expansion.”

TECHNOLOGIES MEETING POINT
“Taking technologies and adapting them
for cross-business purposes is our
approach with SGS Horizon,” explains
Dirk, “which gives us the potential to
introduce new technologies to other
customers within the Group. For instance,
in unconventional hydrocarbons like
shale oil and gas, we are combining
SGS’ analytical capabilities such as
QEMSCAN analyses (SGS ARQS),
with CT-scan (SGS Institut Fresenius)
and micro-mechanical properties testing
(SGS Intron), and adding these to SGS
Horizon’s expertise in geoscience and
reservoir engineering. Our collaborative
view of how best to use technologies
from around the SGS network gives
us the opportunity to investigate and
provide unique value propositions for
companies investing in shale plays
here in Europe, the US and in other
parts of the world.”

6

MAKING SENSE IS NO MYTH
It is not just in the oil, gas and
chemicals industry that Dirk’s team
has innovated in technologies. “In the
consumer testing side of our business,
we have developed a new cutting-edge
IT solution, ARIADNE. In the same way
the Greek myth of ‘Ariadne’s Thread’
uses an elegant solution to logically
record and retrace every step to escape
the confusion of the labyrinth, we have
created a way to more efficiently track,
navigate and make sense of the maze
of data generated by one customer.
In difficult economic times, the better
you understand what is happening
in and around your business, the
more productive and profitable you
can be, and this is exactly what our
team has provided with ARIADNE:
a standalone IT service that offers a
fully customisable and operable system,
which requires nothing more than
a web-enabled device. ARIADNE’s
simplicity is its selling point. And what
began as a project for one customer
in Benelux has quickly attracted the
attention of other customers, and other
businesses, in the SGS network.”

The better you
understand what is
happening in your
business, the more
productive you can be
ENTREPRENEURIAL SPIRIT
“Here in Northern and Central Europe
the economic landscape is slowly
recovering and building new stimulus,”
concludes Dirk, “and we have continued
to strengthen SGS' position through
harnessing our entrepreneurial spirit and
innovative use of technologies. I’m sure
that as a degree of stability is felt more
strongly by more stakeholders here in
Europe, the economic fortunes of the
region will soon be on the rise again.”

ONE TEST
F TS LL
GLOBAL PROVING GROUND
Since 1995, the Institute for
Interlaboratory Studies (iis) has
conducted interlaboratory proficiency
testing for SGS and third-party
laboratories. Originally set up as
a means of quality checking the
analysis provided by SGS’ oil, gas and
chemicals laboratories, iis now provides
proficiency tests across a wide range of
fuels, petroleum, chemical, consumer
and food products. In the last year, iis
organised 55 proficiency tests (PTs)
with more than 1 100 laboratories
from 100 countries participating in the
investigation of 70 different samples.

400
proficiency tests performed since
1995 by the Institute for
Interlaboratory Studies

>100 000
customer results
statistically analysed

7

Proficiency tests (PTs) offer laboratories
a way to anonymously benchmark
performance and identify systematic
errors and/or random errors in routine
analysis procedures, against similar
laboratories in the industry. PTs are
not something in which laboratories
try and do their ‘best’ analysis; instead
they give laboratories the chance to
check normal day-to-day practices
are providing the quality of results
customers expect.
Unique PTs for samples containing
substances not commonly available for
testing, such as iis’ recent chromium 6+
test for leather, are why laboratories find
the ‘round robin’ (as PTs are informally
known) testing so beneficial for their
continual improvement: demonstrated
by a recent PTs offer for chromium
6+ receiving 77 responses from
laboratories around the world within
the first week of it being made available.


SEISMIC
SGS HORIZON
PROVIDES
UPSTREAM
CUSTOMERS
WITH SERVICES
IN EXPLORATION
GEOSCIENCE,
PETROLEUM
DEVELOPMENT,
AND WELL
DESIGN AND
EXECUTION.
Since 2008, the
subsurface consultancy
company SGS Horizon has
focused on developing
services that add value by
combining technologies
for upstream exploration,
development and
production life span,
in particular, advanced
seismic processing
and cross-business
collaborations.

FOCUS ON ADDED VALUE
In close cooperation with an
independent processing company,
SGS Horizon quickly established a
new service for advanced seismic
processing which several customers
have rapidly adopted. With operations
in nearly every major oil and gas
region of the world, the company
has successfully initiated a series
of cross-business services which
harness the best of SGS’ thinking and
technologies. Analytical capabilities
from SGS ARQS, SGS Institut Fresenius
and SGS Intron have combined to create
a powerful understanding of how to
link QEMSCAN analyses, CT-scan and
micro-mechanical properties testing
with SGS Horizon’s geoscience and
reservoir engineering capabilities.
This innovation has enabled SGS Horizon
to take to market a new workflow
process related to unconventional
hydrocarbons development.

8

TRENDS, THINKING AND
TECHNOLOGIES
Always staying at the forefront of IT and
best practice is key for SGS Horizon and
SGS knows investment in acquiring the
most up-to-date hardware and software
is essential. Staying on top of current
market trends and thinking ensure
customers receive access to the very
latest technologies, including all the
main interpretative software packages
in exploration and production, and allows
SGS Horizon to pass on the benefits
these systems bring to customers’
upstream operations.

LONG-TERM RELATIONS
The success of SGS Horizon in offering
leading upstream subsurface consultancy
has also helped expand its customer
base from mainly short-term projects
for small and medium size companies,
which are often financially backed by
banks or investors and hence at risk in
economic downturn, towards longerterm relationships with larger and
more diversified clients: a trend set to
continue as SGS Horizon looks to further
consolidate its position through building
closer links with national oil companies
and larger operators.

SHIFT
LIFESPAN
SOLUTIONS

AREAS OF
OPERATION

OIL AND GAS
UPSTREAM TALENT

• Fully integrated subsurface
solutions

• North Sea

• Geophysics

• Asia

• Geology

• Middle East

• Seismic interpretation

• Russian Federation

• Log interpretation

• North America

• Reservoir engineering

• South America

• Production technology

• Australasia

SGS' subsurface consultancy
team in cooperation with SGS
Technical Staffing Services
initiated a recruiting drive
to source and acquire the
best talent in the upstream
oil and gas industry. Access
to experienced technical
staff is key for customers
in upstream, and due to the
initiative SGS has seen its
global upstream capabilities
and footprint expand, and
SGS Horizon's team of
subsurface experts increase
by more than 40 percent.

• Gulf of Guinea

• Drilling and completion
engineering
• Exploration, development
and production

9


ARIADNE
THREADS
L GIC
INT
IT
ARIADNE, an information
technology solution
developed by SGS
Benelux, has been one of
the standout successes
of 2013 for SGS Northern
and Central Europe.
The system gives
customers the capability
to customise their
reporting, recording and
tracking of numerous
inspection fields via
web-enabled mobile
devices. This makes it
easy to navigate the maze
of information generated
by SGS inspections,
leading to quicker,
more efficient and more
user-friendly results.

IMMEDIATE ACCESS TO DATA
ONCE ENTERED INTO SYSTEM

COMPATIBLE WITH NEARLY ANY
WEB BROWSER ENABLED DEVICE
DATA STORED IN A CENTRAL
DATABASE MEANING NO
SYNCHRONISATION IS REQUIRED

WEB BASED APPLICATION
NOT DEPENDENT ON EXTERNAL
IT RESOURCES

AUDIT TRAIL TRACKS ALL
DATA MODIFICATIONS

10

EASY TO
UPLOAD
DOCUMENTS
AND IMAGES

FLEXIBLE FUNCTIONALITIES FOR
CREATING FILL-IN FORMS OR
INSPECTION REPORTS

CUSTOMISABLE USER SETUP
AND MAINTENANCE

ONLINE CALCULATIONS

VALIDATION OF INPUT

MULTILINGUAL USER INTERFACE

DEMONSTRATIONS OF
ARIADNE AROUND THE
SGS NETWORK HAVE LEAD
TO A MULTITUDE OF REQUESTS
FROM CUSTOMERS FOR
MORE DETAILS ON HOW THE
SYSTEM CAN BE ADAPTED
TO THEIR NEEDS

SECURE LOGIN REQUIRED

INTUITIVE INTERFACE DESIGN

DYNAMIC VISUALISATION OF DATA

STATISTICS AND REPORTS ONLINE

HIGHLY SCALABLE SECURITY
DOWN TO FIELD LEVEL FOR EDIT,
VIEW AND DELETE FUNCTIONS

WORKFLOW BASED ON STATUS
OF INSPECTIONS

PDF REPORT GENERATION

11

CONTINUITY
& expansion
EASTERN EUROPE AND
MIDDLE EAST

12

EASTERN EUROPE AND MIDDLE EAST

EXPANDING VISION
strength of character
TEYMUR ABASOV
Eastern Europe and Middle East

SGS IS ALREADY
RELIED ON
FOR TESTING,
INSPECTION AND
CERTIFICATION
SERVICES BY
CUSTOMERS IN
26 COUNTRIES
THROUGHOUT
EASTERN
EUROPE AND
THE MIDDLE
EAST – BUT THAT
IS JUST THE
BEGINNING.
Teymur Abasov, COO
of SGS Eastern Europe
and the Middle East,
is helping customers
and SGS expand into
new geographies and
emerging markets.

A LEADING INVESTMENT
“There certainly is a great deal of
potential for SGS in Eastern Europe
and the Middle East,” confirms
Teymur on the question of expansion
in the region. “Even during periods of
economic slowdown, the turnover of
goods flowing around the region remains
substantial, and investment continues
to flow into Eastern Europe and the
Middle East. The economic situation in
2013 has not been favourable for SGS,
particularly in agriculture with Russia
and to some extent Ukraine lacking grain
export volumes; and minerals suffering
a slow down in the geochemical market,
but overall we were still able to deliver
growth due to the expansion of SGS’
geographical footprint and our service
portfolio in the region.

SGS is a special
company with a
dedicated recruitment
team and a structured
approach to helping
new employees gain
the skills needed for
the job
“Our focus on continuous expansion
efforts,” continues Teymur, “resulted in
a further strengthening of our positions
for oil and gas in Russia, growth for our
consumer testing business in Turkey,
increased market share for our product
conformity assessment programmes in
the Middle East, and solid contract wins
for our industrial division in Qatar and
Saudi Arabia.”

14

SETTING THE BAR HIGH
“The difficulty in always delivering
to such a high benchmark,” Teymur
explains, “is continually attracting the
high calibre of people you need. The
testing, inspection and certification
industry is very competitive, and so
there is a lot of competition for the
best talent. Luckily, SGS is a special
company with a dedicated recruitment
team, an in-depth training programme,
and a structured approach to helping
new employees gain the skills needed
for the job. And we know which
industries or areas are in demand for
these skills because we have a very
detailed approach to understanding
our customers’ needs. We aim to
provide a complete package – the
people, the technologies and the
customer care.”

COMPLETE PACKAGE
The ‘complete package’ as Teymur
puts it has indeed given SGS plenty
of opportunities within Eastern
Europe and the Middle East. With
SGS’ expansion into the coal business
in Russia, upstream in the Middle
East and consumer testing in Turkey,
Teymur sums up why SGS remains the
global leader, “Our persistence and
strength of character to always look
for new business are the qualities that
make SGS a special company here in
the region, and around the world.”

Our persistence and
strength of character
to always look for
new business are
the qualities that
make SGS a special
company here in
the region, and
around the world

ASSET
MANAGEMENT
CENTRE
serves as the hub for services
to customers worldwide

8 STEP STRATEGY FOR
1 UNLOCKING POTENTIAL

4 TAKING THE LEAD

7 ABILITY TO FOCUS

Identifying upstream as an area of
significant potential for SGS goes
back to 2008. In Eastern Europe
and the Middle East an initial review
demonstrated an opportunity for
additional service providers.

Acquiring new business means
meeting vendor approvals. With
people, assets and technologies in
place, SGS initiated registration and
vendor prequalifications with various
regional operators and national and
international oil companies.

With so many competing players
in the oil and gas industry, any
rapidly expanding business must
remain customer-focused. SGS
demonstrated to customers its ability
to combine responsive and flexible
solutions, while ensuring competitive
pricing and the adherence to the
highest levels of QHSE requirements
at all times.

2 PEOPLE FIRST

5 REPLICATION OF SUCCESS

Successfully entering new markets
needs an expert team. SGS hired
the region’s best-in-class talent,
people who really understood how to
provide solutions for the needs and
challenges of customers.

Growing upstream business in
Eastern Europe and the Middle East
relies on continuity and expansion.
As strategic deployment of
equipment continued, the ability of
SGS to deliver best-in-class services
for customers led to rapid expansion
into multiple countries in the region.

3 STATE-OF-THE-ART
Gaining new customers in the
oil and gas business requires
companies to offer something
unique. SGS already had a full suite
of proprietary solutions, developed
by the SGS Applied Technology
and Innovation Center, such as the
FluidPro PAL™, GasPro™, MiniPVT™,
AutoGOR™, Rapid Deployment Kit™,
GC/GOR™, and others.

21

8 MAINTAINING MOMENTUM

6 ENHANCED CAPABILITIES
Careful management and continual
enhancement of services expand
business growth. SGS expanded its
upstream capabilities by constructing
a reservoir fluids laboratory in Dubai,
which provided well site services
and strengthened SGS' hydrocarbon
metering and allocation solutions.

From 2008 to 2013, maintaining
momentum has been key in
helping SGS benefit its customers'
upstream businesses. SGS has
been successful in delivering
services for the upstream sector
that locate, analyse and extract oil
and natural gas from onshore and
offshore fields. From exploration,
appraisal and development to
production and logistics, SGS
continues to innovate and deliver
advantage through a variety of
services and solutions which cover
the entire upstream sector.

U P S T R E A M
44.956

UTILISATION

16

32.065

PRODUCTION

19

39.098

SOLUTION

20

18

40.078

TRANSFORMATION

37.948

RECOGNITION

15

5

10.811

EVALUATION

1

1.0079

ACTION

13

26.982

MODELISATION


WEAVING ADDED VALUE
EXPANSION
OF SGS’
CONSUMER
TESTING
SERVICES HAS
PROVIDED A
WORLD-CLASS
LABORATORY
IN THE HEART
OF THE GLOBAL
GATEWAY FOR
CLOTHING
MANUFACTURE
AND EXPORT –
ISTANBUL.
Hakan Sebükcebe,
Managing Director of
SGS Turkey, explains
the importance of SGS'
capabilities to keep
pace with technological
advancements and
customer expectations.

GATEWAY TO GARMENT
MANUFACTURE
“Turkey is uniquely placed in terms of
its geography for any company wishing
to manufacture, source or export
textiles and clothing worldwide,” Hakan
offers as the reason why the country
lies sixth in the table of worldwide
clothing suppliers, and second in
suppliers to the EU. “China is the only
country supplying the EU with more
clothing than Turkey,” he continues,
“but opportunities lie not just with the
EU. Turkey’s location offers speed to
market for US companies and Asia is
becoming a growing market too; all
in all it adds up to make Turkey very
attractive. Of course, companies
worldwide need to be sure of the
quality of the product, and that is why
we opened our laboratory back in 2004.
Back then we had a team of 20 people
and a floor space of 500 m2. Today,
we occupy a space of 6 000 m2 and
have 500 employees. If you were to
compare what we started with in 2004
to our laboratory now in 2013 it is like
night and day, and this represents a
significant advantage in the services
we can deliver to our global customers
locally here in Turkey.”

NETWORK KNOWLEDGE
Defining a clear strategy for expansion,
identifying the key players in need
of solutions, and most importantly,
delivering on customer expectations,
have elevated SGS Turkey to the number
two revenue earner for SGS in Eastern
Europe and the Middle East. “We
have experienced fantastic results
here in Turkey with consumer testing,
but it is as much about the strength
of the SGS network as our individual
work here in Istanbul,” Hakan points
out when reflecting on the success
of the laboratory service over the last
decade. “For instance, we drew on
SGS’ knowledge and expertise of the
textile and clothing industries from
our colleagues in Spain and Asia, and
we received strategic input from SGS
16

headquarters in Geneva. Combining our
understanding of the market with what
the customer requires today, and will
require in the near future and beyond,
is part of how we manage our expansion
and continuity. Our insight means we
can become a real partner to businesses
for the long term. We do not just offer
them services, we proactively provide
them with solutions.”

RENEWING TECHNOLOGIES
Investment in the latest technology
advancements for physical and
chemical textile testing such as
gas chromatographs and liquid
chromatographs has given SGS Turkey
world-class facilities. “Most of the tests
we undertake for customers require
sophisticated techniques and
cutting-edge equipment, and because
of this we paid close attention to outfit
our laboratory with the most up-to-date
and recent versions,” reveals Hakan.
“We continuously monitor how the
technologies develop so that when
significant changes offering customers
an advantage come to market we
renew and upgrade our laboratory
accordingly. This means we can always
offer the most reliable results and cost
and time effective sampling. And we
ensure accurate recording and tracking
of samples and results by taking equal
care to keep our IT and back office
operations working around the clock
so customers know their requirements
will be met whenever a need arises.”

A FINELY TAILORED REPUTATION
FOR EXCELLENCE
The success of SGS’ laboratory
expansion has further enhanced its
reputation in Turkey for innovation,
adaptation and excellence. Looking
towards the next decade perhaps
the biggest test for Hakan’s team is
whether the 6 000 m2 of floor space
will be enough to accommodate the
many local and international customers
already choosing SGS as their partner
in the global textile hub of Istanbul.

500
laboratory
employees

6 000 m

GC & LC

2

of laboratory
floor space

gas and liquid
chromatography, along
with other high-tech
testing capabilities

GLOBAL
MARKET
ACCREDITATIONS
from TURKAK (TR),
UKAS (UK), DAKS (DE)
and IAS (US)

CERTIFICATIONS
for customers against ISO, BS,
DIN, AATCC, ASTM, and an
array of other international
standards

24/7
flexible,
responsive and
customer-focused
operations

17


>3 600
employees

17 Mio km2

50

cities covered
by a network
of 50 offices

makes Russia the largest country
in the world

6

FROM RUSSIA
WITH COAL
5

TH

largest coal
producer
globally

1981
Operating from
Moscow, SGS
offers quantity and
quality inspection
services of imports
and exports,
conducted in
cooperation
with the USSR’s
Chamber of
Commerce and
Industry

2

ND

largest holder of
recoverable coal
reserves

1990
SGS and
Soyuzexpertiza,
a member of the
USSR’s Chamber
of Commerce and
Industry (CCI),
form a SovietSwiss Joint
Venture – Sojex

173 Bio
short tons of
recoverable
coal reserves

regional hubs

37

laboratory
facilities

MOBILE
laboratories
offering onsite
expertise

20
coal producing
basins

1991–1992

1993

The first major
inspection project
by Sojex is
undertaken for the
control of goods
via the European
Commission food
aid programme

head office
location

Samara, St Petersburg, Novorossiysk,
Novokuznetsk, Chita and Nakhodka

389 Mio
short tons
produced in
2012

MOSCOW

Expansion of Sojex
office network
to include the
Soviet Union’s
major sea ports

Sojex becomes
the new legal
entity SGS Vostok
Limited, a wholly
owned subsidiary
of SGS SA

1994–PRESENT
SGS in Russia
continues to
expand and
evolve services
which increase
operational
excellence for
customers in the
Russian Federation

HOT TOPIC
Coal production in Russia is heating up once again. Russia’s Ministry of Energy has outlined plans for the long-term
redevelopment of the coal industry, highlighting a renewed investment in the rail and sea transportation infrastructure,
and a targeted doubling of coal exports to Asia by 2030. SGS already has a strong coal customer base in Russia for quantity
and quality testing, but with the market shift toward new exploration, SGS has increased its analytical capabilities at facilities
in Novokuznetsk and Chernogorsk. Improvements in sample handling capacity with faster turnaround times, testing in
accordance to the JORC Code and ensuring best-in-class service mean existing, and new, customers continue to benefit
from SGS solutions for coal exploration and expansion.

18

FLEXIBILITY
& collaboration
SOUTHERN
CENTRAL EUROPE

21

SOUTHERN CENTRAL EUROPE

STRENGTH IN NUMBERS
teamwork for business advantage
LADISLAV PAPIK
Southern Central Europe

AS IN OTHER
REGIONS
WITHIN THE
EUROZONE,
LADISLAV
PAPIK, COO OF
SGS SOUTHERN
CENTRAL
EUROPE, IS
FACED WITH
THE TOUGH
CHALLENGE
OF A HESITANT
ECONOMY.

TRANSPARENT THINKING
“Collaboration among the countries
of Southern Central Europe is key to
ensuring the best service for SGS
customers. In the past it has not been
as strong as maybe it should have
been,” begins Ladislav on the challenge
of bringing the affiliates together,
“but what we have now in 2013 is a
transparent and structured process
of communication which gives us the
flexibility to respond faster to customer
requests. From collaboration comes
many more opportunities to cross-sell
our knowledge and capabilities
around the region. At the heart of it is
teamwork. Because our region is small
you would think we would be closer
together in terms of teamwork, but
that hasn’t been the case historically.
To change that we created new
information technology systems and
altered management structures.

We have a
His answer? Collaboration. transparent and
structured process
Ladislav knows for SGS
to prosper each SGS
of communication
affiliate must be ready
to play their part in
the region’s recovery.

“This approach really has made a big
difference, not only for the collaboration
between countries but in our sense
of ‘team’ here in Southern Central
Europe. And the benefit is that we are
all now involved in trying to achieve the
best outcome for customers not just
in one country but across the entire
region. We are all pushing in the same
direction and helping each other see
where opportunities exist and how
our capabilities in one country can be
replicated in another. This change in
thinking has happened in a short space
of time, and very dramatically given us
a renewed impetus to make a bigger
impact, not only here but around
the SGS network.”

22

FLEXIBLE SOLUTIONS
“Restructuring is another area of
collaboration we have focused on in
2013, specifically the restructuring of
our laboratory services in the region,”
Ladislav continues. “Customers expect
testing to be performed by the most
up-to-date technologies and what
we have done here is look at how
our facilities can come together in
order to create a more flexible and
productive solution. For instance, we
had two laboratories in Hungary, one
for food and the other for agriculture,
with the latter offering greater access
to new technologies and service
offerings. So naturally after realising
this, we combined and merged the
strengths of both laboratories into one
multilaboratory. This new facility has
given us the ability to provide a faster,
more efficient solution for customers.
The multilaboratory in Hungary is fully
accredited and offers customers leading
services in consumer product testing
and agricultural testing. Our goal is to
keep pushing forward in the region and
continue to expand our business, deliver
higher levels of service to customers,
and work with all our affiliates such as
Slovakia and Croatia on a blueprint for
how to replicate best-in-class facilities
and services in their countries.”

COMMITMENT TO TEAMWORK
Ladislav knows where SGS needs
to improve in the region and how to
get change implemented. “We are
succeeding here in Southern Central
Europe and committed to teamwork
and collaboration across affiliates,
which is giving customers easier
access to the services they need to
make their businesses more profitable
and productive.”

A TALE OF TWO
LABORATORIES
Getting cost-effective efficiencies
out of laboratory services is a
top priority for SGS in Southern
Central Europe. Identifying optimal
laboratory structures, processes,
mergers and alignments, both
within countries and across the
region, allow SGS to continually
improve quality and turnaround
time for customers. Any change
in laboratory structure or process
relies on the collaboration of the
entire SGS team, as demonstrated
recently in two laboratory merger
projects, the first in Bulgaria, and
the second in Hungary.

SGS
VARNA
LABORATORY

Located in
Varna, Bulgaria
Opened
approximately

15 YEARS AGO
Previously only

agricultural
inspection
analyses
Now, also
environmental
and food testing

PROVIDES
COMPLEX
ANALYSES
for a wide range
of customers
Supports labs
across the

complete
region,
not just in
Bulgaria
Utilises
expertise and
equipment
efficiently
23

SGS
NYIREGYHAZA
LABORATORY

Located in
Nyiregyhaza,
Hungary
Provides

agricultural
and food
analyses
Previously
separate
laboratories for
each area
Now a

MULTILAB
APPROACH
Mainly serves

Hungarian
trader,
retailer and
manufacturer
customers
Optimal use of
SGS CAPABILITIES
High-tech
equipment and
experts in

one
location

SOUTHERN CENTRAL EUROPE

The Czech Republic
is considered to be
the crossroads of
Southern Central
Europe. With motorways
of trans-european
importance connecting
industrial cities both
within the country and
neighbouring regions,
its dense road network
spans more than 750 km
of motorways. The D1
motorway, originally built
more than 40 years ago,
is currently undergoing a
full-scale reconstruction,
in which SGS is playing
a major part.
Known for being made out of slabs
of concrete, the D1 motorway shakes
drivers and passengers on a bumpy ride
across the country. The quality of the
D1 surface has deteriorated badly over
the years, so much so it is now rutted
and pot holed at best, loose across
entire slabs at worst.
The Road and Motorway Directorate
of the Czech Republic (RSD CR)
founded by the Ministry of Transport
and Communications is responsible
for the construction and upkeep of
the road infrastructure. It has embarked
on a huge reconstruction project
with the aim of modernising the D1 to
the safety standards expected today.
The rebuilding is planned over a
number of years, section-by-section,
with the expense of motorway
construction in the Czech Republic
on par with some of the more costly
road construction across the rest of
Europe. Because of this, the RSD
CR has employed strict monitoring
throughout every stage of the project,
to be conducted by an independent
third party. In the case of Section 5
of the D1 motorway from Šternov
to Psáře, that third party is SGS.

24

485
the number of vehicles
per 1 000 people
in the Czech Republic

>750 km
total length of motorways
in the Czech Republic

160 km
section of D1 being modernised

22
SGS construction experts
on the D1 project

19.4 Mio
is the total reconstruction cost
for D1 Section 5 (in EUR)

ŠTERNOV TO PSÁRE
Before any work began on Section 5,
the Construction Supervision Services
(CSS) of SGS evaluated the planning
documents, choice of building materials
and subcontractor capabilities. SGS
CSS is keeping a close watch on the
Šternov to Psáře section of the D1
project to ensure the RSD CR maintains
control over the budget and meets
pre-agreed targets. Specialist engineers
in road construction, geotechnics
and bridge structures, along with
health and safety experts, surveyors
and a range of other highly skilled
professionals complete a team of onsite
SGS personnel for Section 5.
During the project, SGS CSS has
worked closely with the construction
company to perform key evaluations
and confirm the effective completion
of assigned construction activities.
This involves checking the quality of
work and the adherence to prescribed
technological procedures, labour safety
and project design documentation, as
well as overseeing that the terms and
conditions of the contract, the building
permit, current legislation and decrees

are all met throughout the construction
process. SGS also provides support for
the contractor and gives reassurances
to the RSD CR that best practice is
being followed at every step of the
project. Should a serious incident
occur, the RSD CR knows it can rely
on the onsite presence of SGS for the
collection of any relevant information or
analyses, as needed.

END OF THE ROAD
As with any construction supervision
project, the precise service performed
during the D1 motorway project is
tailored to the exact requirements of
the RSD CR, with the goal of
completing the project in the most
efficient, productive and safe manner
possible. Operating as an independent
third party, SGS is able to work with
the contractors to reduce technical risks
and prevent construction errors through
a process of continuous supervision.
As part of this supervisory role,
SGS also completes and issues all
the necessary final documentation,
certificates and declarations between
the contractors and the RSD CR at
the end of the project.

25

CONSTRUCTING A
TEAM ADVANTAGE

Construction projects within
the industrial sector represent
an area where SGS crossborder and cross-function
teams combine their skills to
deploy the best possible SGS
experts for a given project. The
D1 Section 5 reconstruction
project is just one example.
Similar capabilities from SGS in
Southern Central Europe have
seen talent pooled for projects
in support of the development
of electricity infrastructure
across the Czech Republic,
Romania and Bulgaria for
the Czech energy company,
ČEZ Group. By partnering
with SGS, companies in the
region optimise costs and
maintain schedules for their
respective projects.

ECONOMICS
& creativity
WESTERN EUROPE

27

WESTERN EUROPE

NEW THINKING
excellence in mind
PAULINE EARL
Western Europe

UNCERTAINTY
STILL
UNDERPINS
NEW ECONOMIC
GROWTH IN
WESTERN
EUROPE. SGS
IS CREATIVELY
ADDING VALUE
FOR CUSTOMERS
THROUGH
ACQUISITION,
INTEGRATION
AND
MANAGEMENT
OF BUSINESSES
IN THE REGION.
Pauline Earl, COO of
SGS Western Europe,
knows the challenge is
to think differently and
continue to seek out new
opportunities for growth.

CASTING THE NET WIDE
The testing, inspection and certification
industry in Western Europe has
continued to experience difficult
times in 2013. With the depressed
economy of the eurozone and supply
chains shifting to emerging markets,
investment in areas requiring the skills
of a company like SGS has slowed.
“We have had to think wider, as far
as casting the net, and really look at
our structures and services to ensure
they are aligned with the changing
marketplace,” begins Pauline, “because
that reflects the economy and the
opportunities to identify potential areas
for acquisition. But it is important not
to forget that acquiring new companies
in a complex economy is just the start
of the journey. Here at SGS we take a
very detailed and responsible approach
to the integration process that follows.
For SGS to remain as the world’s
leading provider in the sector, we need
any acquisition, and the unique value
it brings to our customers, to find its
place in our network as quickly as
possible. That requires our people to be
creative in how best to manage, how
best to integrate, and how best to bring
to market the new services, and the
new people and cultures which come
with acquisitions.”

BIG IDEAS
Spain is one country where the effects
of the economic downturn have been
well recorded. This is also a country
where SGS has initiated and completed
its biggest acquisition to date: the Euro
180 Mio deal for the vehicle inspection
business of General de Servicios
Inspección Técnica de Vehículos
(ITV) SA, a subsidiary of Fomento de
Construcciones y Contratas (FCC)
SA. “Spain has had its own specific
challenges regarding integration and
to tackle them we put together a
multidiscipline team to handle that
phase of the acquisition,” continues

28

Pauline, “and they did a fantastic job on
many different levels in consolidating
all of the testing stations. Acquiring ITV
meant taking on 43 vehicle inspection
centres spread across six parts of Spain,
which employed 660 employees. We
now operate in seven areas in Spain
and perform over 1.6 million inspections
per year. The process of integrating a
company of that size has given us an
amazing insight into how to creatively
get the best out of acquisitions, not
just in Spain but other countries in
the region.”

NEW ENTHUSIASM
Encouraging and motivating employees
to bring new ideas and look at new
ways to tackle challenges for growth
and added customer value is not an
easy task when the economic reality
limits what can feasibly be achieved.

We have really looked
at our structures
and services to ensure
they are aligned
with the changing
marketplace
“You have to keep them motivated
and not dampen their enthusiasm,”
reassures Pauline on how SGS retains
the creative spark that makes the
difference in a downturn economy.
“We always talk about a funnel process,
where you simply generate more ideas
than you need for new services, and
then over time you return and refine
them and the ideas naturally narrow
down to a few that are going to be very
successful. That is what SGS does well
here in Western Europe – pinpointing
what services customers are going to
need and finding the right acquisition to
increase our capabilities in those areas.”

ENVIRONMENTALLY
DRIVEN EXPANSION

INDUSTRIAL
BUILT VISION

The acquisition of County
Durham based MIS
Environmental in September
2013 enables SGS to offer a
more comprehensive package
of Environmental Services
in the UK, where customers
were already looking for
extensive environmental
analyses on specific projects:
consultancy services,
asbestos management, and
environmental, health and
safety testing. The integration
of SGS MIS Environmental, as
it is now known, with existing
chemical testing and climate
change programmes gives
Environmental Services in SGS
UK a full value chain solution
for customers.

With three UK laboratories, MIS
Testing, acquired in September
2013, has been integrated as
SGS MIS Testing and continues
to offer leading mechanical
testing and machine services
such as tensile testing at room
and elevated temperatures,
impact testing from room
temperature to -196°C, izod
testing, hardness testing and
visual weld inspection, as well
as non-destructive testing
(radiography, magnetic particle,
ultrasonic). The acquisition
increases SGS’ understanding
in the sector and brings 55
new employees with a wealth
of knowledge into SGS UK,
supporting the global vision of
building SGS Industrial Services
throughout the network.

29

ROAD
ON THE

In Spain, as in many other
countries, the government
requires all car owners to put
their vehicles through annual or
bi-annual vehicle testing to ensure
that they conform to regulations
for safety and emissions.
The acquisition of General de
Servicios Inspección Técnica
de Vehículos (ITV) SA began an
extensive integration period for
ITV operations and employees
into SGS Western Europe.
FROM ONE TO SEVEN REGIONS

The acquisition of ITV vastly changed
the scale and complexity of SGS’
operations for vehicle testing in Spain.
ITV added 43 inspection testing
centres, and 660 new employees to
what had been previously a small SGS
offering in the region. “SGS had been
working in the statutory inspection
testing business in Spain for 20 years
at the time of the acquisition,” explains
Alejandro González, SGS Spain
Automotive Sector Manager. “However,
at the time we were only operating
one small concession in one part of
Spain, so we were looking at ways to
develop our automotive business. The
acquisition of ITV brought with it a
very rapid expansion, with at least six
contracts almost immediately added
to our customer base.” ITV allowed
SGS to service customers in Aragon,
the Canary Islands, Madrid, Valencia,
Castile-La Mancha, and the Balearic
Islands. “Throughout the whole
integration process our focus was on
providing customers with a consistent
service,” continues Alejandro, “and
nothing in ITV changed drastically.
Instead, we monitored performance
and service delivery. Once we were
through the initial phase of the
integration it gave us a chance to really
start offering a more beneficial service

to the public. With expertise from ITV
integrated into the culture of SGS and
our best in class thinking, we were able
to provide a truly world-class service
and begin developing new ideas.”

DAILY SAFETY CHECKS
SGS testing stations in Spain perform
mandatory safety and emissions
inspections on a daily basis. Tests
cover tyres, brakes, direction alignment,
lights, exhaust emissions, noises and
odours. Up-to-date facilities and the
latest technical equipment allow precise
measurements to be recorded such as
tyre tread depth, brake effectiveness,
and emissions residues. As there is
little room for human intervention
the data generated is always reliable
and guarantees vehicles remain in
accordance with government regulations
and within technical specifications.

basis. And here too, we have a great
potential to grow. More and more
vehicles owners need our service,
and as a result we are increasing our
service capabilities.”

DRIVING SATISFACTION
“Over the past three years, we have
moved ITV through a full integration
process,” concludes Alejandro. “What
this means in practice is that now
each employee, across the board,
realises that the SGS culture is at the
heart of everything we do. Being a
part of SGS has continued to build
ITV’s capabilities and customer
service levels. We now have an
extremely robust network of vehicle
testing centres delivering excellence
on a day-to-day basis across Spain.”

A REPUTATION FOR QUALITY
“Demand is growing,” Alejandro
explains, “and we have just recently
opened two new testing centres as a
result. In Madrid, where we previously
operated as a government granted
concession, as is the case in many
other areas of Spain, we are now
looking at an open market scenario.
This gives SGS the opportunity to
expand market share by attracting new
customers because of our reputation for
quality and integrity. Customers, by that
I mean vehicle owners, can go now to
any testing centre in Madrid but we are
really promoting our reputation so that
they know the service from SGS is the
best in terms of ease of testing, wait
times, accurate results, and so on. Our
new facility in Madrid gives us more
capacity, increasing it by 40 thousand
inspections per year in addition to the
200 000 inspections we already carry
out there, and an ability to target a
more highly populated geographical
area of the city. We also have a second
new centre in Zaragoza, where testing
centres still operate on a concession

31

7

areas of Spain have SGS
testing centres

1.6 Mio
inspections per year
performed by SGS

WESTERN EUROPE

STREETSMART

F R LIFE
The statistics for deaths and
injuries on Irish roads have been
improving every year since the
government set a target of no
more than 252 per annum by
2012 – a figure it achieved three
years ahead of schedule in 2009.
The Road Safety Authority (RSA)
in Ireland is the government
agency responsible for making
Irish roads safer than they have
been for many years. RSA’s next
challenge? Reducing the reported
statistics 30 percent further.
CREATIVELY EDUCATING
ON ROAD SAFETY
Education is seen as an essential
component of safety by the RSA.
It is developing and implementing
information and education campaigns
targeting groups as diverse as young
males, truck drivers, farmers, and
children. As a creative way to educate
the latter on a very serious topic,
SGS brings road safety to life for young
Irish school children through an engaging
initiative called ‘StreetSmart’.

SMARTER KIDS, SAFER STREETS
Aimed at three age groups – four and
five-years old, five to eight-years old,
and the eight to twelve-years old group
– the StreetSmart programme delivers
a specific series of interactive, and
memorable, activities and role-plays.
The central prop for the four to
eight-years old group is a ‘Streetscape’
map, which laid out on the floor
measures 9 metres by 10 metres.
The Streetscape has all the typical, but
in miniature, street scenes one would
expect including traffic lights, pedestrian
crossings and buildings. In addition to
the Streetscape, the older age group is
shown a series of real-world scenarios
filmed on actual city streets, and then
asked what constitutes safe and unsafe
pedestrian behaviour.
Working together with the teachers,
SGS’ education team actively engages
the children in real-life road safety
scenarios via the Streetscape in school
halls or playgrounds, throughout the
course of an action-packed day.

32

STREETSCAPE
CHARACTERS

LOOK LEFT,
OR RIGHT?
Children are
quizzed on a range
of common road
safety issues,
allowing the SGS
educators to guide
them through
the right way
of doing things

SGS educators
involve children in
the Streetscape
by assigning
each child a role:
pedestrian, cyclist,
or motorist; and
getting them to
carry out everyday
tasks in order to
learn from their
own experiences
and those of their
classmates

DRIVING, CYCLING AND WALKING
STORY TIME

There are ‘walking cars’, ‘standup bikes’ and ‘costumes’ such as
nurses, doctors, fire officers, or
ambulance drivers; and by interacting
within the Streetscape children gain
an understanding of how vehicles
and people must stay aware of one
another to lessen the danger of being
on the road

Children are encouraged to discuss road
safety topics related to a series of short
stories which the SGS team use to help
prompt the children’s thinking

UNDERSTANDING TRAFFIC

‘PERSONALISED SAFETY
LICENCE’ AWARD

Sitting children behind the wheel
of a toy car helps them learn to
understand the traffic conditions from
the perspective of a driver, and begin
to understand how difficult it can be
sometimes to see pedestrians and
other road users

After children have successfully
completed the road safety activities
each one is given a reward, and
reminder, in the form of a ‘personalised
safety license’ award

THE RULES OF THE ROAD
The fun-filled educational programme
leaves children with a thorough grasp
of road safety, cycle safety and how
to travel in a safe manner in a car or
bus; and all the rules of the road they
learned can be immediately applied in
real world situations

TEACHER SUPPORT
SGS has developed a teachers’
handbook as a guide to each part of
the educational programme which
includes all the background information
needed to educate children on safe road
behaviour

33

REGIONALITY
& transparency
AFRICA

34

AFRICA

CONTINENT OF COMPLIANCE
changing expectations
FRED HERREN
Africa

THE AFRICAN
CONTINENT,
THE SECOND
LARGEST IN
THE WORLD
COVERING OVER
20 PERCENT
OF THE GLOBE
AND WITH AN
ESTIMATED
POPULATION
OF OVER ONE
BILLION PEOPLE,
IS A REGION
SET FOR MAJOR
CHANGE IN
THE DECADES
TO COME.
In the emerging
economies of Africa,
each having distinct
regional rules and
regulations, Fred Herren,
COO of SGS Africa,
is reducing risk and
increasing consumer
confidence through
services which make
compliance an accepted
part of everyday life.

MIDDLE WAY THINKING
“If you look at the region it has an
ambitious and hard working
middle-class, and an entrepreneurial
style of government thinking which
encourages new services from the
private sector," elaborates Fred, on
the middle-class and governments of
Africa. "These add up to a region that
is demanding higher quality consumer
goods, safer transport infrastructure
and monitoring, and more efficient
government services. For SGS,
the new middle-class and proactive
governments are great news, because
they directly impact testing, inspection
and certification.

We see a chance to
really diversify our
offerings and partner
with customers
across Africa
“When the quality of consumer products
or the service in the hospitality industry
affect tourism and trade, or the amount
of revenues generated by government
come into question, the only way
to answer these is through solutions
which offer transparency. And in Africa,
where each country is its own entity,
we offer our customers, the consumers,
manufacturers or the governments,
the chance to shine a spotlight on
what is happening and create a trust
between all the stakeholders.”

TECHNOLOGIES FOR TOMORROW
“We are presently in more than 35
countries,” Fred continues, “and of
course we are still very much involved
in basic commodities and the like, but
on the other hand we see a chance
to really diversify our offerings and
partner with customers across Africa
and provide services and solutions in
manufacturing, the hospitality industry,
government institutions, and many more
industries. This diversification drastically
evolves SGS’ traditional inspection
based services towards a much broader
range of solutions supported by stateof-the-art technologies. By focusing our
efforts in this way, we are better placed
to respond to our customers in the
industrial, mineral or agricultural sectors
who need to make best use of any
recent technological development that
gives a competitive edge. We are finding
that customers are incorporating SGS
services into their operations and this is
helping us expand our footprint across
the continent. Local entrepreneurs
and enterprises are often the most
stimulating and demanding customers,
and in 2013 rarely a day has gone by
without someone approaching us to
discuss a novel idea or service. People
may still think of Africa as a ‘developing’
region, but already the technology
infrastructure exists to pay employees
via mobile phones, taxes on the internet
and more. Africa is one of the continents
where ideas for SGS services of
tomorrow receive the fastest and most
enthusiastic response from around
the network.”

In 2013 rarely a day
has gone by without
someone approaching
us to discuss a novel
idea or service

36

BALANCING THE
HEAVY COST OF GOODS
TRANSPORT IN KENYA
LEGAL ROADS
“Vehicle and road safety is another
area where SGS has been very
successful in helping governments
bring transparency into action. In the
Ivory Coast every driver now has to
come to an SGS testing station, and we
test their vehicle for road worthiness
before they can purchase a road tax
‘vignette’ which demonstrates their
vehicle is road legal. We provide this
same service in other countries such
as Algeria, Morocco, Argentina, and
Chile and what is interesting is how
many vehicles actually comply with the
requirement: in Chile it is 100 percent,
in Switzerland around 96 percent, and
in the Ivory Coast it started at around
20 percent but is now nearly 50 percent
compliance. Most people want to know
their car is safe, and we offer that trust
and transparency to them.”

Most people want to
know their car is safe,
and we offer that
trust and transparency
to them

The upkeep and maintenance
of road infrastructure is a
significant burden on any
government’s finances.
In Kenya, where road
construction costs nearly
CHF 1 Mio per kilometre,
the National Highway
Authority has taken steps to
minimise the damage caused
by overloaded trucks by
introducing new weighbridge
technologies, which speed up
the process and reduce the
risk of corruption.
For the last three years, SGS
has worked with the National
Highway Authority. In 2013,
SGS now operates a network
as the sole provider in Kenya
for the service, with 11 fixed
weighbridge stations in 9
locations, and a further 6
mobile weighbridges as and
where needed.

AFRICA'S ‘CAN DO’ ATTITUDE
“In Africa,” Fred concludes, “SGS is
matching the continent’s ‘can do’
attitude and is enabling more
opportunities for customers in
the region to demonstrate their
commitment to making compliance
a change for good.”

150 000
trucks weighed
per month

OVERLOADING
Trucks have been
detected carrying
up to 125 tonnes,
compared to the
limit of 52 tonnes
– equivalent to
the road damage
of 6 or 7 lorries

800
trucks fined
per month for
overloading

DRIVE-BY
WEIGHING
Weighing
technologies
placed into truck
lanes preassess
traffic on the
roads, giving
authorities a
chance to detect
overweight
vehicles

AVOIDING
RESTRICTIONS

MOBILE
WEIGHBRIDGES

Some transporters
illegally unload
additional cargo
and reload
it on leaving
weighbridges via
an accompanying
vehicle

Moveable
checkpoints
placed near to
existing stationary
weighbridges
help catch trucks
opting for ‘escape
routes’ or illegal
unloading/
reloading practices

AUTOMATIC NUMBER PLATE RECOGNITION
Loops and loggers capture trucks and all other traffic
using the highway for a more accurate census count, with
automatic number plate recognition, infrared and CCTV
cameras assisting the tracking of vehicles around Kenya

37

AFRICA

SGS

MAURIT US
Taking a market-by-market approach led the SGS team in Mauritius
to identify a huge local opportunity for SGS expertise: hospitality. As
one of the main economic pillars for the country, Geraldine Koenig,
SGS Systems and Services Certification Corporate Project Manager
(Hospitality), recognised just how perfectly placed SGS is to support the
high-end resorts and hotels that need to consistently exceed consumer
quality and service expectations, while ensuring risks are mitigated.

THE STANDARD OF PARADISE
Mauritius, famed as one of the world’s
top luxury tourist destinations, offers a
paradise of lush forest, wild waterfalls,
unique flora and fauna, rocky mountains,
and white sandy beaches that stretch
as far as the eye can see. However,
as the country feels the pinch of the
global recession and the competition of
less expensive destinations, the local
hospitality industry has to align itself
to the highest international standards
of service expected by guests and tour
operators. As in any high-end destination,
industry needs to ensure that every
review is outstanding and no guest leaves
feeling unsatisfied, which is where SGS
has made the difference in the Mauritian
tourism sector.

CONFIDENCE IN EXCELLENCE
“There are a number of different players
in the tourism industry,” explains
Geraldine, “and each has to be sure of
the exacting standards of the end product.
Tour operators buying packages to be
sold on to other operators, or directly
to consumers, need to be confident
in the products they are buying and
selling. They need to know that the
product agreed during a purchasing visit
remains consistent with what is delivered
throughout the contract period. It is
important too for insurance companies to
be assured that all necessary health and
safety measures are in place. Because

of these factors, operations teams in
resorts are under pressure to prove due
diligence, service levels and standards
to all stakeholders: within their own
international organisations, the tour
operators, and the insurance companies
to name just a few. SGS provides
that link to transparency needed to
demonstrate compliance.”

PROTECTING EVERYONE
Many safety requirements in the
hospitality industry have been driven
out of a need to protect both guests and
employees. Above all, guests want a
safe place to stay. Legionella and other
water-borne illnesses, alongside the
risks associated with faulty gas boilers,
are a constant cause of concern for
hoteliers, wherever they are in the world.
Similarly, the worry of a food-related
contamination is a major fear as an event
can ruin the reputation of even the most
established organisation. “Our services
fall into three main categories,” Geraldine
continues, “safety, sustainability and
service. When it comes to safety, we
conduct Performance Assessment
Audits, where we become the eyes and
ears on the ground for the operations
teams within large organisations. Our
experts arrive at resorts unannounced
to the local management, and proceed
to audit and undertake tests in order to
verify the correct standards are being
met. Samples are sent to our laboratories
and analysed for 100 percent accuracy in

38

our findings. For sustainability practices,
hotels place a great deal of importance
on environmental issues, as they use a
lot of water and energy. We help them
find ways to operate more efficiently and
implement more effective Environmental
Management Systems. These systems
allow our customers to have measurable
targets and environmental commitments,
which they can use to gauge operational
excellence. In service, we quality
assess resort operations and support
the delivery of a consistently high-level
of service by providing expert training
of employees via our SGS Academy
courses, as an example.”

VALUED EXPERTISE
With services spanning many sectors
in the hospitality industry, SGS has
assembled a best-in-class team of
experts to consult and train customers
in how to operate to the highest
benchmarks for excellence. “We have
great relationships with our customers
as they’ve seen the value of SGS
expertise for their operations,” Geraldine
concludes. ”As well as helping them
meet an ongoing need for assurance, we
continually communicate to them our
reviews of regulations and best industry
practices. Our service for customers
adapts and develops in accordance with
how the hospitality sector as a whole
improves the quality of its service to the
tourism industry.”

STAY HAPPY – BEACHCOMBER HOTELS
Recognised as a pioneering hotel group at the forefront of the Mauritian luxury
tourism sector, Beachcomber Hotels has partnered with SGS for a number of
years. Initially, SGS only provided food safety assessments in one hotel. But, in
an attempt to implement best practices to satisfy tour operator requirements, this
eight-strong hotel group called on SGS for more and more monitoring of its safety,
sustainability and service levels; in order to ensure the same high standards across
all locations. With some of the finest resorts in Mauritius owned and operated by the
Beachcomber Group, and over 2 000 rooms for guests, the relationship with SGS is
essential in maintaining and reassuring the tourism sector that guests stay happy.

SAFETY

2 000 rooms operated by the
Beachcomber Group

SUSTAINABILITY

SERVICE

FOOD SAFETY

ENVIRONMENT

QUALITY

• Hospitality Excellence Programme

• Good Environmental Practices Audit

• Compliance Training

• ISO 14001 Certification and
Gap Analysis

• ISO 9001 Certification and
Gap Analysis

• Management Standards Training

WATER SAFETY

• Training on ISO 14001 and ISO 15001
• Carbon Footprint Assessment

• Legionella Risk Assessment
• Legionella Testing
• Water Monitoring

HOUSEKEEPING
• Good Spa Practices Audit

39

• ISO 9001 Training

TRAFFIC REPORT

AFRICA

TANZANIA HAS SEEN
PHENOMENAL GROWTH IN
THE TELECOMS INDUSTRY
OVER THE LAST 10
YEARS. WHILE THE FIXED
NETWORK IS LIMITED,
MOBILE SERVICES HAVE
RAPIDLY EXPANDED. THE
TELECOMS INDUSTRY
MAY HAVE KEPT PACE
WITH DEMAND BUT THE
GOVERNMENT HAS NOT
ALWAYS BEEN ABLE TO
REAP THE FULL REWARDS
OF INCREASED TRAFFIC.

48 Mio
population of Tanzania (45% are
under 15 years old)

27 Mio
subscriptions to fixed (0.6%) and
mobile networks (99.4%) in
Tanzania (June 2013)

363%
increase in telecoms subscriptions
from 2006 to 2013

DIALLING IN REVENUES
Based on license agreements telecoms
operators pay tax at a set rate related to
income, but without accurate telecoms
traffic information it is impossible for
operators and governments to be sure
payments and revenues are accurate.
The Tanzania Communications Regulatory
Authority (TCRA) relied in the past on
operators to submit accounts of their
revenues. In theory these numbers
should be correct, however a number
of factors meant operators and the
government of Tanzania were not earning
the full quota from calls on the network.
Monitoring and supporting roaming
calls require a significant investment in
technologies and upgrades to network
infrastructure. In addition, implementing
sophisticated network management

systems needs a team of highly trained
technical staff, another factor that
telecoms operators do not always have.
Without the transparency given by
technologies and expert staff, telecoms
fraud can easily go unnoticed at a major
cost to all stakeholders through lost
earnings and network disruption.

LEADER IN TANZANIA
Following SGS’ already successful
maintenance project on the International
Gateway Traffic Monitoring System in
Rwanda, SGS launched an even more
comprehensive project in Tanzania: the
SGS Telecom Services Project.
As a first-of-its-kind service in Tanzania,
SGS partnered with a leading technology
provider, and completed phase one of the
implementation on 1 October 2013 when
40

call monitoring went live. The full scope of
the service covers multiple areas:
• International Gateway Monitoring
• National Interconnect Monitoring
between Operators
• Anti-fraud Services
• Automatic Device Detection and
Central Equipment Information Register
• Mobile Monitoring Services
At the heart of the telecoms infrastructure
created by SGS and its partner is
the ‘Network Operating Center’ and
‘Transmission System’. This enables the
Tanzania Communications Regulatory
Authority to generate reports and invoices
for government taxes and vastly improves
the interconnection infrastructure for
international telecoms.

EMPOWERING
KNOWLEDGE
In South Africa, unemployment
is estimated at 25 percent but
the mining, energy, engineering
and construction industries still
struggle to fill vacant positions
with skilled employees. The
SGS Academy partners with
organisations to develop the skills
of their employees. Drawing on
knowledge of worldwide industry
best practice from across the
network, the SGS Academy
empowers individuals and
formalises knowledge through
51 different courses, the majority
of which focus on health,
safety, environmental and quality
risk management.

ACTIONS MEET WORDS
Behaviour-based safety programmes
apply the science of behavioural change
to real world problems. The SGS
Academy Behavioural Based Safety
Zero Harm Observation and Coaching
Training course gives attendees
the ability to observe the behaviour
of others, and trains them in the
interpersonal and coaching skills to
be able to deal with addressing any
issues. For safety training, this is
an increasingly popular approach
as it monitors individuals in the
workplace, with follow up training
used to encourage and develop
consistent, safe behaviour.
Recognised as particularly effective
in the mining industry, where
operations are largely people based,
behavioural safety programmes have
helped the industry rethink risk and
not view it purely from a technical
or engineering standpoint, but from
the wider perspective. In South
Africa, this course has become one
of SGS Academy’s most popular.

HEALTHY
EATING

PREVENTION
FACTORS

TAKING
RESPONSIBILITY

CONTINUAL
LEARNING

The Foundation
for Food Safety
Certification
(FSSC) developed
the FSSC
22000 for food
supply chain
manufacturers,
and SGS
Academy teaches
participants the
importance and
implementation
of food safety
management
systems for
organisations.

Learning how to
prevent major
incidents by
understanding
the root causes of
previous accidents
is the goal of
the Root Cause
Analysis Method
(RCAM) course
which develops
industry-specific
risk assessment
techniques.

ISO 26000 guides
organisations in
ways to operate
an ethical,
transparent
and socially
responsible
business. SGS
Academy’s ISO
26000 courses
explain the internal
audit process
and how to
implement socially
responsible
systems.

The SGS
Academy
continually
updates courses
by listening to
feedback from
businesses and
participants
on what future
trainings are
required to
further excellence
in their
organisations.

41

EVOLUTION
& innovation
NORTH AMERICA

43

NORTH AMERICA

AN UNCONVENTIONAL PATH
energising the future
JEFFREY McDONALD
North America

IN THE LAST
FIVE YEARS
NORTH AMERICA
HAS SEEN AN
UNPRECEDENTED
EVOLUTION IN
THE OIL AND
GAS INDUSTRY:
A SHIFT IN
FOCUS, AND
FORTUNES, TO
UNCONVENTIONAL
RESERVES.
Jeffrey McDonald,
COO of SGS North
America, has evolved
SGS services in parallel
with the ‘unconventional
boom’ and is helping
to position SGS as a
technology innovator and
end-to-end value chain
partner for the oil and
gas industry.

EVOLUTION IS REALITY
While experts continue to debate
whether the shale oil and gas revolution
in North America can really deliver
on production estimates, the reality
remains that the energy market in the
region is certainly evolving towards
self-sufficiency, if not outright global
dominance. For SGS, active in North
America for nearly a century, it means
change has been inevitable. “I think one
of the key things we are aiming to do
in the oil, gas and chemicals market is
to reinvent ourselves,” begins Jeffrey
on how SGS has responded to the
energy revolution. “With the advent
of shale oil and gas, the amount of
imports coming into the US over the
past five years has been in decline. The
problem for SGS is, with our oil and gas
business originally set up to provide
verification and validation of imports,
now they are declining, and likely to
continue doing so, we need to rethink
SGS' approach to our traditional service
offerings. Unconventional reserves
have a much wider requirement for oil
and gas, industrial and environmental
services. In order to help customers
gain a competitive advantage in this
unconventional energy revolution,
we are tapping into the entrepreneurial
spirit SGS is known for and planning
new services, some of which will be at
the cutting edge of the industry. SGS’
Applied Technology and Innovation
Center in Houston is already helping us
achieve this and providing innovative
services for upstream exploration,
which in turn are helping the oil and
gas industry look at SGS services in
a different, more value-added, way.
Energy companies now come to us
for state-of-the-art equipped mobile
laboratories which can operate
anywhere, and sophisticated portable
calibration devices which are bringing
new flexibility to services.”

44

PARTNER WITH INTEGRITY
Exploration ultimately leads to
production and the need to transport oil
and gas is another area where SGS is
hoping to attract new customers.
“In North America, midstream pipeline
and processing infrastructure is not
as advanced as it should be,” explains
Jeffrey, “and this means customers
are not fully realising potential returns.
Some estimates in North America
put the figure required in midstream
investment at USD 200 billion over
the next twenty years. Because the
exploration and production of oil and
gas now takes place in non-traditional
locations there are no pipelines to
service the industry, meaning you have
a very real infrastructure challenge
in getting oil and gas to a refinery,
or a storage facility. Added to that,
the pipeline infrastructure that is in
place is now deteriorating because of
its age. Our investments in acquisitions
are building SGS' pipeline integrity
expertise so that in the future we can
offer more services in this segment.

In North America,
SGS is a true
partner to business
throughout the entire
hydrocarbon cycle,
conventional
or unconventional
“We already have some of the most
advanced and innovative services to
support pipeline operations including
materials testing for fabrication and
assembly, and asset integrity solutions
for failure analysis or decommissioning.
And when the product does make it
to the refineries, like the ones of vast
scale on the Gulf Coast, we have plant

FAILURE
PREVENTI N

and terminal operations for barge
loading/unloading and railcar switching
which create further opportunities
to increase productivity for customers.
In North America, SGS is becoming
known for technological innovation,
which further adds to our reputation for
a commitment to quality and excellence,
and our deep understanding of the
global market.”

>1 930
employees in Canada

1918
SGS established in New York

>5 200
employees in the US

>480
employees in Mexico

>205
employees in
Central America

45

SGS conducted root-cause analysis
of two major accidents, which
occurred in Pemex facilities during
2013. From around the network,
SGS assembled a leading team of
fire and explosion engineers, safety
experts, geologists, and structural
engineers, all with solid experience
in the investigation of similar
events in the oil and gas industry.
The expert team reviewed onsite
damage, interviewed witnesses,
looked into policies and procedures
in place at the time of the accidents,
and undertook a full mechanical
integrity review including the
collection of materials samples.
Normally a preventive process to
warn of the potential of failure and
possible danger, this time around
the SGS team needed to simulate
how the explosions happened and
what their impact had been using
specialised software. By drawing
on their leading knowledge in
materials testing the team were
finally able to determine how and
why failures occurred. Based on the
findings, Pemex is implementing
an action plan that consists of more
than 40 separate follow-up actions,
and requested SGS to conduct
operational and mechanical integrity
studies at other Pemex installations.

NORTH AMERICA

WATER
TESTING

SERVICES AT
THE WELLHEAD

UNCONVENTIONAL AND CONVENTIONAL CAPABILITIES

SGS is innovating every day
so that it can deliver state-of-theart and best-in-class solutions
for upstream and midstream
unconventional and conventional
oil and gas assets. From water
testing to wellhead inspection for
shale plays, to pipeline integrity
and plant and terminal operations,
SGS continues to develop a
portfolio of services which go
beyond customers’ expectations.

SGS provides aqueous testing
for the oil and gas industry to
demonstrate the quality and integrity
of flow-back and produced waters
in order to help customers minimise
their environmental impact during
operations and maximise the longevity
of assets.
• Prevents corrosion and scaling
build up issues

SGS offers asset integrity inspections
of wellhead equipment to verify
upstream assets meet the American
Petroleum Institute’s standards.
In addition, SGS provides other
specialist services such as the
introduction of guided wave
non-destructive testing and tablet
based inspection data capture
systems for upstream applications.

• Creates historical data trail for
monitoring and reviewing trends
• Reduces chemicals usage and costs
• Detects environmentally sensitive and
unsafe contaminants
• Monitors microbial contamination
to prevent asset degradation

2011

10x

4

SGS initiates a shale flow-back
fluid project

growth in aqueous testing during
the last two years

shale plays covered by SGS
services in aqueous testing

46

• SGS has introduced laser scanning to
measure external corrosion and dents
• SGS performs radiography
examinations and state-of-the-art
NDT testing

REFINERY

TRAINING
FACILITY

PIPEPLINE
INTEGRITY
SGS works with several owners of
pipeline transportation infrastructure
in the US, Canada and Mexico.

SGS is committed to training new
employees and has established a
custom-built facility in Oklahoma,
which ensures capable, knowledgeable
and qualified technicians who can
deliver or recommend a wide range
of advanced inspection techniques
as per customer requirements.

• SGS qualifies welders for increased
access to skilled employees
• SGS combines pipeline inspection
with data management which is a
value-added service for customers

SGS acquired Petroleum Service
Corporation (PSC), a private plant and
terminal operations services company
founded in the US in 1952. Plant
and terminal operations services are
unique within the SGS network as,
rather than being traditional testing,
inspection and verification, plant and
terminal operations services provide
personnel who conduct product
handling operations at oil refineries,
chemical plants, and terminals,
and for major barge lines.
• SGS PSC is the oldest and largest
barge tankerman service in the US
• SGS PSC operates one of the largest
crude-by-rail terminals in the US

FIELD
SERVICES

LABORATORY
SERVICES

TECHNICAL
SERVICES

meter calibration, service,
installation, sample procurement
(crude oil, condensate,
natural gas), monitoring

full range of hydrocarbon analysis
(crude oil, condensate,
natural gas), water analysis

hydrocarbon production allocations,
process flow analysis, facility
assessments

47

SGS PSC is responsible for all types
of product handling services, including
loading and unloading railcars and
trucks, switching (‘shunting’) railcars
inside facilities, marine dock (‘jetty’)
operations, operating tank farms,
warehouse operations, and other site
logistics activities at more than 75
marine dock facilities in North America.

SGS PSC TRAINING
ACADEMY

BARGE TO
REFINERY

RAIL TO
REFINERY

NORTH AMERICA

SGS PSC operates marine docks,
loads and unloads barges and
ships, and manages other site
logistics activities for a large
number of leading companies.
Many operations have been in place
continuously for more than 20 years.
SGS PSC employees are an integral
part of customers’ daily operations.
• 2 400 employees across more
than 60 sites

SGS PSC runs one of the only schools
approved by the United States Coast
Guard for the training and licensing
of ‘tankermen’ – the SGS PSC
Tankerman Career Academy – which
is helping to meet the growing needs
of the domestic tank barge industry
for skilled and qualified personnel
in the safe transfer of hazardous
materials on and off of tank barges.
• Liquid chemicals
• Refined products
• Liquefied gases

500 000

38 000

railcars estimated loaded and
unloaded per year

barges loaded and
unloaded per year

48

APPROVED
by the United States Coast Guard
for the training and licensing of
‘tankermen’

MAIN US SHALE
PLAY LOCATIONS

BAKKEN SHALE
North Dakota

MARCELLUS
SHALE
North/Central
Pennsylvania

HAYNESVILLE
SHALE
North
Louisiana

PERMIAN
BASIN
West Texas

EAGLE FORD
SHALE
South Texas

49

SYNERGY
& realisation
SOUTH AMERICA

51

SOUTH AMERICA

CULTURE, CHANGE AND CHALLENGE
meeting potential
ALEJANDRO GOMEZ DE LA TORRE
South America

SGS IS RAPIDLY
EXPANDING IN
SOUTH AMERICA.
Instilling SGS’ culture
of excellence into every
service has allowed
Alejandro Gomez de la
Torre, COO of SGS South
America, to offer better
synergies and better
solutions for businesses
in the region.

50%
increase in revenues for
SGS South America during
the last two years

17
lanes of vehicle testing –
the biggest SGS statutory
inspection station anywhere
in the world

CHALLENGING CULTURES
“In the last two years in South America,
SGS has increased revenues and
employee numbers by 50 percent,
and made three significant acquisitions
in Brazil,” begins Alejandro. “So, in South
America when we talk of opportunities,
we are thinking about the potential
cross-business and cross-regional
synergy still to be realised. In 2013,
we integrated six companies. The
interaction between SGS management
from different countries allowed us
to expand our understanding of our
business and potential opportunities
across the region. Of course, this
undertaking has presented several
challenges. Some of the companies we
acquired significantly increased the size
of SGS in South America. For instance,
in Chile we integrated 2 000 new
employees to the Group. Integrating
companies poses a challenge not only
because of the potential large scale
of the acquisition, but also due to
the fact that each company has a
completely different culture from SGS.
We addressed this with the help
of SGS Human Resources.

We know our process
works because
we stay in close
contact with
customers and listen
to what they need
“For example, our integrity training is
a key factor in any acquisition, as it
communicates the culture of SGS to the
acquired companies. Trainings, work
sessions and communication efforts are
all implemented to ensure operational
managers understand our expectations
and culture. We also make the effort to
learn from the acquired companies, as
this helps us expand our competencies
and can unveil business opportunities,
or recognise potential synergies that

52

may not be obvious at first. All of this
helps improve efficiencies and aids
productivity, both in our own processes
and those of our customers. And we
know our process works because we
stay in close contact with customers
and listen to what they need from SGS,
and how well we are meeting their
expectations. We have made many
new connections in the region and
these have opened up new services
and solutions in areas ranging from
industrial to environmental, to oil, gas
and chemicals.”

MILESTONE EXPANSION
“One example of where we have realised
a new business opportunity in the region
is the acquisition of Enger Engenharia
SA (Enger), a leading engineering
consultancy company, based in Sao
Paulo, Brazil. Incorporating what Enger
does into the SGS network allows our
portfolio to cover project supervision
and management, as well as technical
consultancy for infrastructure, building
and industrial projects in the following
phases: feasibility, construction and
operation. This represents a milestone
for SGS South America's industrial
service offerings and really gives us a
strong foothold to leverage our skills in
hydraulic plants and oil and gas facilities
and in the transport and infrastructure
sectors. So that is a very real instance
of how successfully integrating one part
into the network has a massive effect on
realising a much bigger growth potential.”

ROOTED IN TRADITION
Alejandro adds, explaining how SGS
has been mindful of traditional services
while it continues to look for new
growth opportunities, “Our matrix is
changing as far as the services we
provide in the region but we have been
careful not to neglect our customers
in SGS’ traditional business lines. In
inspection services for automotive and
vehicle testing we are in the process of
finishing three large statutory inspection

stations, one of which is the biggest
project of its kind for SGS anywhere
in the world, with 17 lanes of testing.
Similarly in agricultural services, we
have managed to expand our traditional
business through a new project for field
trials in Brazil, a service that simply
did not exist in the country before we
introduced it this year. These projects
are the result of researching the SGS
network, and identifying investment
coming into South America specifically,
and finding solutions that really offer
something unique to the industries of
the international and local customer.”

SGS is finding
solutions that
really offer
something unique
RESPONSIBILE FOR BETTER
“With the scale of expansion and
growth here in South America, SGS
has a responsibility in terms of our
commitment to the new employees
brought into our Group,” Alejandro
says of what SGS must keep at the
forefront of any expansion. “We
know it takes time to get used to a
new working culture, and accept and
integrate the SGS way of doing things
into daily routines. But in return, SGS
offers employees a place where there
are many benefits: career development
and personal development in skills and
leadership abilities, opportunities to
gain international experience, training
in different areas of expertise such
as integrity, health, safety, plus the
chance to become a leader, manager
and more. SGS opens doors for people,
as you would expect from a company
that is best in class and a world leader.
The better we can be at realising the
potential from each employee, and the
more we can create synergies between
management and services, the higher
we can continue to set the bar for
success in South America.”

BUILDING
A BETTER
SAO PAULO

>550 000
homes built
and sold by
the CDHU

The state of Sao Paulo has the largest slum population in
South America. Life in a slum (known as a ‘favela’ locally)
is hazardous, unhealthy and often provides only limited
access to basic services such as sanitation. SGS, in
collaboration with the Housing and Urban Development
Company of the state of Sao Paulo (CDHU), is providing
construction supervision, project management and
associated services for CDHU’s large-scale housing
project which aims to build 12 647 homes and give a
better standard of living for the favela population.
The CDHU has housed over 2.2 million people to date,
making it one of the world’s largest housing organisations.
It has been a customer of SGS Enger Engenharia –
acquired by SGS in May 2013 – for 29 years and benefits
from the combined expertise of the entire SGS global
network. SGS supports the CDHU in the management of
the favela programme at each stage of its implementation:
planning, management and feasibility studies during
development, project management, tracking of
construction inspections, permits, and compliance with
all necessary regulations. Beyond the new construction,
SGS offers the population affected by the relocation a
comprehensive social care programme, which makes
the sometimes challenging move from perhaps the only
home people have known an empowering and positive
experience. Change can be difficult and every person
relocated is able to access training and other services that
helps them adjust quicker to the new environment and
social setting provided by SGS and CDHU.
53

>2.2 Mio
people
housed by
the CDHU

SOUTH AMERICA

560 000

830 km

barrels per day pipeline
capacity for Ocensa

total length of
the Ocensa pipeline

OIL
FIELD
TO
OCENSA
TO
OCEAN

Colombia’s average
crude oil output for 2013
is estimated at 1 007
million barrels per day,
up 7 percent on output
in 2012. Considerable
government investment
is planned for oil
explorations and
production in 2014, and
the growth in this sector
means an increasing
need for infrastructure
(i.e. pipelines, terminals,
storage and pumping
stations) to transport,
refine and export oil.
SGS ETSA is part of
the solution.

54

GROWTH TARGETS
As Latin America's fourth-largest
oil producer, Colombia has been
pushing to grow oil reserves and
production. Over the past seven years,
oil production has doubled as the
government has provided the market
with an improved tax and royalty rate
structure, and found ways to tackle
guerrilla attacks on pipelines, with
support from the US, Colombia’s main
export market.

LOCAL EXPERTISE
There are six major oil pipelines crossing
Colombia, which take oil from the
inland fields to the coast. Four connect
to the Port of Covenas, a Caribbean
export terminal, one of which is the
Ocensa pipeline. Ocensa runs 830 km
from the Llanos Basin fields of Cusiana
and Cupiagua to the Port of Covenas.
The increasing need surrounding
pipeline infrastructure prompted SGS
to acquire Estudios Técnicos (ETSA)
SA, a Colombian-based engineering
project supervision and management
company. ETSA served the energy,
infrastructure, construction, and public

6

major oil pipelines
cross Colombia

services sectors from its headquarters
in Bogotá. With over 50 project offices
throughout Colombia, SGS ETSA, as it
is now known, allowed SGS to diversify
its service offering in Colombia and
meet the demand for construction
expertise in oil and gas infrastructure.
With the integration of an established
and locally known company, SGS ETSA
immediately entered the market able
to give customers the advantage of
local personnel who understood the
challenges of construction in Colombia,
but now with the full backing of the
SGS network to improve efficiencies
and maintain quality.

A PERFECT PARTNER FOR OCENSA
Enrique Chávez, Managing Director of
SGS Colombia, knew that the sheer size
of the Ocensa project fitted well with
the approach of SGS ETSA. “With the
acquisition of ETSA," Enrique explains,
"SGS Colombia had all the expertise,
personnel, procedures, and know-how
to provide a full range of engineering,
construction supervision, project
management and consulting. This is
why SGS made the ideal choice for the

Ocensa project. The Ocensa pipeline
has a capacity of 560 000 barrels per
day and accounts for around 60 percent
of total oil production in Colombia. SGS
ensures the best standards are being
continually met in all modification work
being carried out at seven storage
stations, pumping stations, and a
maritime terminal for oil dispatch and
reception. The project expands the
existing pipeline capacity by 35 000
barrels per day.” Enrique continues,
“Our team of 30 inspectors, under the
guidance of a project manager who
has extensive experience on similar
projects, gives Ocensa the supervision
it needs over the next two years in
the civil, mechanical, instrumentation,
control and electrical infrastructure,
and fire fighting protection segments.
Our skilled team is on hand every
day to make sure the Ocensa project
meets all relevant regulations and
quality standards, and realises an on
time and on budget success story for
construction in Colombia.”

55

PROJECT MANAGEMENT
Keeping the Ocensa project on
schedule, while reducing technical
risk and preventing construction
errors requires continuous
supervision: SGS ETSA ensures
construction conforms to specified
documentation and permits.

QUALITY ASSURANCE
Every aspect of the Ocensa
infrastructure has to meet stringent
regulations and requirements:
SGS monitors construction against
compliance with contractual
agreements, quality standards and
applicable laws and regulations.

NON-DESTRUCTIVE TESTING
The equipment and assets
associated with the Ocensa
infrastructure must operate
safely and efficiently: SGS NDT
inspectors perform examinations
to detect possible failures and
defects and assure standards are
met at all times.

COMPLEXITY
& expertise
CHINA AND
HONG KONG

57

CHINA AND HONG KONG

FIRST IMPRESSIONS
lasting relationships
HELMUT CHIK
China and Hong Kong

DURING THE
LAST 20 YEARS,
SGS HAS
SUCCESSFULLY
BUILT AN
ESTABLISHED
AND TRUSTED
NETWORK
IN CHINA.
A focus on hiring the
best of local talent, and
supplementing regional
expertise with SGS’
global understanding,
has given Helmut Chik,
COO of SGS China
and Hong Kong, a
unique ability to help
customers navigate the
complexities of doing
business in the region.

LOCAL INVESTMENT

ONE INTO MANY
“When our customers first begin to
explore the possibilities of business
in China and Hong Kong, they often
think of the region as one single
market,” explains Helmut of how the
region is viewed, “and while there
is overall communist party rule for
regulations across the country, individual
provinces might have very different
interpretations of the same regulation
and implementation guidelines.

To understand each
province's local
thinking, you need
to have ‘guanxi’
“So, the complexity faced by our
customers is how to understand each
province's local thinking and interpretation
of business practices. To do that here
in the People’s Republic of China, you
need to have ‘guanxi’, which is difficult
to directly translate into English but
can be thought of as the need to build
relationships for business success. That
is what SGS has focused on achieving
over the last 20 years, and today we have
the people and expertise to guide our
customers through the local rules, the
different local cultures, and introduce
them to the local business community.”
58

While the market in China is still not
100 percent open, Helmut knows SGS
needs to keep building its network and
investing in local talent. The inhouse
18-month ‘mini MBA’ programme,
which selects and coaches the most
promising employees, is now entering
its ninth year. The programme is
clearly working, demonstrating higher
retention rates from graduates, and
further consolidating SGS’ expertise
and value-added potential to customers.
In a region so reliant on relationships,
SGS is certainly one for the long term.

TRADING PLACES
Insight and understanding have allowed
Helmut and his team to successfully
expand services and solutions away
from China’s historical export focus
towards newly emerging opportunities
in the domestic market. “Four or five
years ago, we were mainly the leading
solution provider for trade-related
services. Our customers relied on us
for many solutions in export services.
However, we decided that in order to
sustain our leading position in China, we
had to also penetrate the local domestic
market. Rapid urbanisation and a
growing disposable income have meant
an increasing desire for consumerism.

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

20

years of success for SGS
in China and Hong Kong

“For instance, the region has grown
into the biggest automobile market in
the world. We recognised the potential
in this market and for a number of
years we worked to build up our auto
components laboratories and capabilities.
Our forward thinking has given us the
ability in 2013 to offer our customers the
largest auto parts testing network here
in China. In any major car manufacturing
city or province, there is an SGS
presence. In terms of market share,
we are now the leader, with nearly all
OEMs and manufacturers requiring our
services. Why? Because we invested
in technology, people and network
coverage, but we were also careful not
to forget and work with the local car
manufacturing community.

Our forward thinking
has given us the
ability in 2013 to offer
our customers
the largest auto parts
testing network
“Our automobile expertise in E-mobility,
materials testing, electrical and
electronics testing, and others prove
a real advantage for our customers
in the world outside and inside China.”

THE WHEEL OF TRUST
Automotive companies typically source from a very large
and diverse number of suppliers, and SGS, as the biggest
independent laboratory network for automotive component
testing in China, has helped local suppliers meet the many
challenges of manufacturing components to domestic or
international regulations. SGS ensures the quality, safety and
reliability of locally sourced components, which can range
from plastics (i.e. dashboards, steering wheels) to metals
(i.e. doors, panels) to electronics (i.e. instrument panels, engine
management systems), so that components can meet local and
international standards and OEM-specific inhouse benchmarks.
SGS’ global relationships with major automotive companies
and local presence in all of China’s automotive manufacturing
provinces offer a trusted bridge for delivering excellence in
China’s automotive industry.

59

CHINA AND HONG KONG

Manufacturing in,
distributing from,
or importing into
the People’s Republic
of China is one of
the most challenging
and complex consumer
testing and certification
scenarios in the world.
However, partnering with
SGS’ multidisciplinary
and extensive testing
network opens a
doorway to unparalleled
value-added services.
60

quality
assurances

for customers
on incoming
materials and
chemicals
used in the
manufacturing
process. The
certification mark
demonstrates
products are

QUIET
NIGHTS

PLAY

SAFELY

GREEN

WALK

SUN

SAFE
NANJING

XIAMEN

LOCATIONS

NINGBO

LABORATORY
NETWORK

8

of strict

BIGGEST
TOY TESTING
LABORATORIES
IN SHENZHEN

SGS China
and SGS
North
America

offering
chemical testing
capabilities to

has resulted in
SGS’ laboratory
in Shanghai
becoming the
first Chinese
testing facility
certified by the
US Consumer
Product Safety
Commission
(CPSC) for the

ensure
the safety
of toys destined
for the domestic
and international
market.

ENVIRONMENTALLY

SAFETY
TESTING
OF CRIBS

FRIENDLY

and free from
hazardous
chemicals.

destined for
sale in North
America.

QINGDAO

testing methods
of bacteriostatic
value against
international
industry
standards.

POPULAR

due to concerns
about the
dangers of
excessive
exposure to the
sun. Originally
a niche market
for baby clothes
and children’s
swimwear,
UV fabrics can
now be found
in entire adult
UV protective
clothing lines.
SGS testing
for UV fabrics
IMPROVES
QUALITY AND
PERFORMANCE.

Collaboration
between

GUANGZHOU

SGS applies

qualitative and
quantitative

facilitates the
implementation

SGS has
one of the

CHANGZHOU

the most
demanding
of workouts.

SGS
ECOSECURE

Ultraviolet
(UV) protective
fabrics are
becoming more

HANGZHOU

Getting hot
air out into
the open and
away from the
skin keeps the
wearer dry and
comfortable.
Functional
breathability
claims need to
LIVE UP TO
CONSUMER
EXPECTATIONS,
which is why
manufacturers
rely on SGS
testing of
water vapour
permeability
of textiles.

Antibacterial
treatments
(including
anti-odour
systems) keep
clothes fresh
and functional,
even during

SHANGHAI

HEAT.

STAY FRESH

BREATHE EASY
Strenuous
exercise in the
outdoors means
one thing –

CNAS

CMA

GB 18401

SGS is accredited by the China
National Accreditation Services for
Conformity Assessment (CNAS)

SGS is accredited by the China
Metrology Accreditation (CMA)

SGS performs testing to China’s
National General Safety Technical
Code for Textile Products

61

COMPETITION
& differentiation
EASTERN ASIA

63

EASTERN ASIA

REGION ON THE RISE
high-growth potential
DENNIS YANG
Eastern Asia

EASTERN ASIA
IS RAPIDLY
BECOMING A
DRIVING FORCE
IN THE GLOBAL
ECONOMY.
‘The world’s workshop’,
as the region is often
referred to, needs now,
more than ever, services
that prove quality, safety
and reliability for its
goods, exports and
manufacturing processes.
Dennis Yang, COO of
SGS Eastern Asia,
is differentiating SGS
from its competitors
by striving to be firstto-market with solutions
and services with
high-growth potential.

FIRST-MOVER ON
INDUSTRY CHALLENGES
“Eastern Asia is experiencing rising
urbanisation and an increasing
consumption of consumer goods
and personal technologies. This has
been helped by an expanding middle
class,” reflects Dennis on the shift
in population location and power.
“Industry is accommodating the new
demand. Government incentives
are encouraging technology firms to
manufacture higher added-value goods.
Infrastructure developments continue to
expand. Exports are up. Growth is up.

We have to
continue offering
more solutions,
more services,
in more industries
“All in all, Eastern Asia has weathered
the financial storm and its aftermath
far better than western economies.
Some countries, such as Japan, are
now reawakening and reaffirming their
position in the global economy. For
SGS, with change comes competition.
For us to remain the leading testing,
inspection and certification company in
the region we have to continue offering
more solutions, more services, in more
industries, and always look to be the
first-mover on industry challenges.”

64

LONG-TERM INVESTMENT
Areas where SGS has already
established a strong reputation for
solutions that deliver competitive
advantage to customers – wireless
technologies, medical devices, food
testing and materials testing – are
examples of how Dennis’ leadership
has continued to keep pushing SGS
forwards. “If you look at construction
materials testing,” Dennis continues,
“then it is easy to compare our growth in
the region with Eastern Asia's economy.
We began materials testing over
20 years ago. At first it contributed only
a fraction to our revenues. Today, the
service has gone from 2 employees
to 800 employees. Our investment
in providing solutions has matched
the commitment of the governments
to grow their respective country’s
infrastructure. Because we have
continually increased the scope of our
services, we now have region-wide
leading materials testing capabilities
in serving industries ranging from
construction, transport and marine,
to oil and gas. We are not a new
player in Eastern Asia. SGS is a
byword for quality and safety in many
countries in the region – which is a
reflection of our long-term investment
in delivering excellence.”

Because we have
increased the scope
of our services, we
now have region-wide
leading materials
testing capabilities

FOOD
TESTING

Flour, rice, ice cream and
cooking oil have all recently
hit the headlines in Eastern
Asia. Why? Food safety
concerns. SGS has made its
own headlines too, by playing
an important role in the quality
testing of local food products.
In the region, SGS is educating
consumers on food safety
via business-to-consumer
campaigns, working closely
with university programmes
to develop the food researchers
of the future, and creating
state-of-the-art automated
sampling systems for faster,
more accurate results.

65

MEDICAL
DEVICES

Demand in emerging markets
for medical devices is increasing
year-on-year, especially in
Taiwan where the population
by 2025 will be deemed
‘super-aged’ (i.e. more than
20 percent over the age of
65). SGS has closely followed
government schemes to
encourage local companies,
and new start-ups, to transform
themselves into high-tech and
high added-value medical device
manufacturing and R&D experts.
The result of the incentives
is 705 medical device-related
companies now in Taiwan and
revenues from medical devices
estimated at CHF 2.46 billion
a year. SGS, as one of the
few members of the ROC
Taiwan Technical Co-operation
Program (TCP), offers medical
device companies in the region
indepth knowledge of local and
international medical device
certifications in order to facilitate
speed to market and entry into
the global supply chain.

SGS 2013 Annual Report Business Review

SGS 2013 Annual Report Business Review

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SGS 2013 Annual Report Business Review