How a Hungarian company can become a dominant player in a foreign investment giant

The WEST HUNGÁRIA BAU Kft. is working at the Debrecen plant of the world's largest lithium-ion battery separator film manufacturer We talked to Máté Suppán, project manager of the Hungarian construction company SEMCORP Group about the interesting facts and background of the project at its headquarters in Biatorbágy.

As a major supplier of LG Chem, CATL, and Samsung SDI batteries, as well as one of the main suppliers of batteries used in BYD electric vehicles, the Chinese group announced the investment in Debrecen in November 2020.

In the first phase, the construction of a factory on an area of nearly 100 000 square metres was planned in the Southern Industrial Park in Debrecen.

In addition to the production hall, the WHB also plays a major role in the service buildings

Máté Suppán said that WHB entered the project in June 2022, after the civil engineering and precast reinforced concrete construction, having won the first contract package in May. The production hall is one of the main elements of the new plant, with a number of service units for other purposes. WHB has also taken on a role in the latter, carrying out work on the main warehouse and the hazardous waste storage warehouse. They also carried out the work on the sprinkler machine hall, but here, unlike in the other buildings, the deep foundations were also carried out by the Hungarian company.

An even bigger tender was won for the second time

Since the participation of WHB started after the precast reinforced concrete structure construction, their tasks from the shell and core phase included the shell part. "Among other things, we were responsible for the construction of the roof layering; the cladding of the facades with sandwich panels; the industrial floor with the mechanical and electrical mains underneath; and the construction of a very substantial damage control system."

Also part of this package was the post-construction design of the precast reinforced concrete structure.

In addition, in September 2022, WHB won a new tender for the project, which involved a much larger volume of work than the first one. "This included the complete architectural finish, the construction of the cleanrooms and the steel structure, together with the complete electrical and mechanical works."

850 containers had to be placed with well thought-out logistics

However, the logistics challenge was that the production lines arrived earlier than they could be installed. "The 850 shipping containers started to arrive from Asia ahead of schedule from our point of view because of this. We had to manage the covered, protected placement of the high-value production lines with logistics that took hours."

In response to a question, Máté Suppán explained that the technology to be installed in the factory does not pose any extra challenges for them, but rather they have to focus on organisation, coordinating and scheduling the work running in parallel. "For example, when a machine arrives, we have to organise the execution according to a specific organisational plan to make sure that it is in place. And when they want to switch on a machine, we have to have all the necessary elements of the building in place by that time."

Also included in the present package was the complete completion of the central warehouse, the hazardous waste warehouse with mechanical and gas detection systems, and the architectural and mechanical completion of an additional machine room, which does not include active fire protection equipment.

The WHB won a series of tenders after its entry

He stressed that, from the contractor's point of view, it is not an easy task to tender the different sub-processes separately. "With separately broken down contract packages, there are inevitably also ambiguous project elements that have to be agreed in the end, where they should go and how they should be handled. What we find is that the more contract packages there are in a project of this nature, the more gaps in the project that are created that need to be addressed at extra expense."

At the same time, he also pointed out that in his personal opinion it was due to the good performance of WHB that they had won all the tender packages after their entry, except for the technology package, which did not fit their profile.

He pointed out that the SEMCORP plant in Debrecen will be essentially completed with the four contracts awarded to WHB. The Hungarian company's commitment covers a total of 48,000 square metres at the plant.

WHB also won the contract for the design, permitting and implementation of active fire protection systems for all the factories.

Unparalleled volume in Hungary

A further phase was the fourth contract package awarded to WHB for the construction of the energy building. Here, in addition to the deep foundations and the precast reinforced concrete structure, the façade and roof of the building were already complete when the Hungarian company entered the project. "In this building, we are installing, among other things, the process water treatment system and all the systems required for the production processes."

He described the size and capacity of the building as:

"We are talking about an engineering centre of unparalleled volume in Hungary. Suffice it to say that even our experts with 30-40 years of relevant professional experience have already got their heads up about it."

WHB also undertook the construction of a pipe bridge to bring the energy from the energy centre to the production hall.

Both the strong references and the solid financial backing of WHB were decisive

One of the key elements of the WHB's success in the investment described above was the winning of the first tender, so the question arose as to what strengths the company could bring to the table. "Among other things, the fact that WHB is financially one of the strongest, if not the most stable company in the sector and has no liquidity problems, was a big factor."

He added that price competition was very strong when they were trying to get in. "In addition to the above, of course, the references of the WHB and the professionalism of the team that was brought in were also factors in the decision."

Learning about another culture is one of the benefits

In terms of the aforementioned experience capital, WHB has the experience of foreign factory investments, but the Chinese culture and the outstanding construction volume also represent a new line not only for them but for the Hungarian construction industry as a whole. Against this background, the company will gain valuable experience in getting to know a different company culture, which will be of great benefit in the future. "You could already feel the different dynamics and different depths during the first tender negotiations in 2021. In our experience, our Chinese partners also ask for things that are not an issue between, say, a Hungarian and a European company, because our habits are similar."

A further difference is that, compared to European standards, the work processes are more impulsive and hierarchical rather than structured.

Different labour market backgrounds also lead to different ways of thinking. "For example, when you need to accelerate a project in China, it's no problem to bring in 100-200 new people from the labour market the next day. In Hungary, on the other hand, this is completely out of the question in terms of skilled labour."

Another important element he highlighted was the language barrier, which is not easy to overcome. There is room for improvement and potential for all parties.

China trips also help joint work

He also gave an example of bridging the gap. "Where the culture there may have a performance expectation based on a longer working week, we try to make up time on the idle time they have by relying on the LEAN principles."

The deepening of relations has also been helped by the fact that WHB's management, in response to invitations, took part in an extended tour of China last autumn, visiting several Chinese partner companies, and the company's managers made a similar tour of China earlier this year, discussing both current and potential future work.

Almost as soon as the contracts were signed, they had to start

Taking an overall view of the project, the expert also identified the biggest challenge. "It took a lot of grey matter, organisation and a significant network of contacts to keep the tendering process moving around to achieve the number of projects the investor wanted, due to tight deadlines and budgets."

He added that the usual preparation time for a new project element after an agreement has shrunk to practically zero. "We were already on the hotline during the tenders, with our old, well-established partners with good expertise; and once the agreement was reached, we had hundreds of people on the ground within two days."

The entry of companies within the group has helped a lot

WHB's flexibility was also enhanced by the fact that it could rely on its own electrical and mechanical engineering companies within the group: "CLH Kft. has its own air handler production line and accordingly produced a number of air handlers for the project, while WHB Elektro Kft. also acted as the main contractor for the electrical section."

The project was also helped by the fact that TSPC Kft., also part of the group, carried out the entire design work for one of the tender packages. "The in-house designer obviously made communication much more efficient and quicker."

This knowledge can be a big advantage in the future

On the current status of the project, he said that WHB is at about 84 percent completion level for the works it has undertaken. The CATL investment, which is also being carried out in Debrecen and which was launched later than the SEMCORP project, is already an example of the use of the knowledge gained in Debrecen, where the WHB has also been able to play a role. "This knowledge utilisation within the company is also helped by the fact that after one of our contracts here expired, one of our project managers here transferred part of his team to the CATL plant."

Summing up the lessons learned from the SEMCORP project, Máté Suppán said that on the one hand, they have learned about the Chinese investors' expectations regarding the construction of factories. "More importantly, we have gained experience of mentality, cultural specificities and communication. These are factors that will be of great benefit in the future."