Investments will support the sector development in 2018

Q: Mr. Andronescu, you stated once that you found out about CHEP in the early 2000’s. If you look at Romania then and now, how would you characterize its evolution, in terms of economy, opportunities, obstacles?
Gabriel Andronescu: In the early 2000’s, while I was living abroad, every time I came back to Romania, even if I was only missing for a few months, I noticed there was something new. During the last 15 years the country witnessed one of the most spectacular evolutions, both in the visible areas, such as real estate, retail, technology, but also in the more subtle domains, such as people mindset and mentality. This dynamic change, which created challenges and opportunities, was a very good reason for me and for other young highly skilled professionals to return to Romania and try to make a positive impact: one example would be attracting foreign investors, who played a very important role in the modernization of the economy and the country in general.
Q: For a company that has a worldwide overall tradition of more than 140 years, why do you think CHEP has reached so late our country and what is your personal role in putting CHEP on Romania’s map?
Gabriel Andronescu:  CHEP was founded in the 1940’s by the Australian government and later acquired by Brambles, which indeed has this long-standing tradition of more than 140 years. The company has expanded gradually on all continents, playing an important role in the modernization and evolution of the Supply Chain in the respective countries. Still, it makes sense to enter a country when a minimum set of conditions are met and this is why Romania was put on the CHEP map later than other countries.
When geographic expansion into Eastern Europe was considered by the company, I made the Romanian market analysis and developed the business plan. After the management decided to enter our local market, I enthusiastically accepted to lead the founding of a sustainable business here.
Q: Since 2012, CHEP Romania has managed to dramatically increase its turnover. Please tell us how did you do that, what are the ‘’secret’’ ingredients for such an increase and please give us a short overview about CHEP Romania.
Gabriel Andronescu: These ingredients for success are quite commonsense ones, but powerful when put together: a clear vision and strategy for sustainable long-term development, a fantastic team who put all their enthusiasm to make it happen, a customer-centric approach and a mindset of innovation.
CHEP Romania has become a leading player in the local Supply Chain market, creating value along the whole Supply Chain through solutions for higher operational efficiency, cost optimization, better consumer experience in the store, sales increase, more efficient promotions, positive environmental impact, among others. We are proud of the trust we’ve earned and of the partnerships we’ve developed in the market with some of the largest FMCG and automotive manufacturers, but also with small and mediumsized producers, with all the existing international retail chains in FMCG, but also with the local retailers and distributors, with logistics service providers. The company plays a very active role in promoting eco friendly industrial activities, provides support for the development of the first food bank in Romania and acts as a responsible member of the local community, through many volunteering activities in the social, environmental and education areas (one example: teaching students and young professionals about certain topics or skillsets useful in their future professional careers).

Q: The more money poured in, the more business is reflected by the retail sector. Romania is going through an interesting combination that mixes historical low interest rates, consumption fueling and even some tax cuts. Please give us some arguments for this working on medium time or please share us your opinion if you think the opposite.
Gabriel Andronescu: There are many economists and practitioners warning about the risks of an unpredictable fiscal policy, which sometimes seems not to take into account the long-term negative effects on macroeconomic stability. I agree with their opinion and I strongly believe that our country needs a coherent development strategy, stimulating investment in the areas of competitive advantage and in developing the infrastructure. Then, with the raise in productivity, disposable income raise also
becomes more sustainable and the economy hopefully gets into a virtuous circle (assuming that no major negative shocks come from abroad) and the resources for paying the ever-increasing pensions, from public or private sources, are likely more satisfying. Stimulating consumption on the expense of investment and without better productivity cannot work on medium term.
Q: CHEP provides solutions to meet business requirements of its customers from aerospace, automotive, chemical, to consumer goods, fresh food and manufacturing. Can you tell us the top three sectors that you consider to be ‘’the most dynamic ones’’ in Romania? What does this distribution tell you about the present and about the future economy?
Gabriel Andronescu: Clearly, among the sectors we activate in, some of the most dynamic in the last few years were retail (with a continuous advance of international and local retail FMCG and DIY chains), automotive (with a plethora of investments surrounding the main 2 car manufacturers) and Supply Chain (whose evolution is directly linked to the evolution of the previous 2 sectors, among others). This evolution was natural, considering the need for modernization of the economy, as well as the significant gap compared to the same sectors in Western Europe. Looking through the same lenses, until convergence with the European Union averages will occur, it is expected that these sectors will continue to grow, even if possibly at a smaller pace than until now. At a deeper level, all three sectors will benefit from a better infrastructure, more developed local production and higher disposable income, which will help them grow in the local market.
Q: What does it mean to be a pallet provider in Romania in terms of quality, cost and value, service and innovation and corporate responsibility?
Gabriel Andronescu: CHEP is a solutions provider, pallet rental being the most visible element of this eco-system. We are a Supply Chain integrator, reaching all its segments, from the producer of raw materials and packaging, to the manufacturer of finished goods, the logistician who stores and transports the goods, the distributor and retailer who sells the goods, and last but not least, the final consumer. We are promoting collaboration and innovation among all these Supply Chain companies, as a means for achieving better efficiency, cost optimization, sales increase and a better environmental footprint.
Some of the clear benefits of our solutions translate into increase of product availability on- and offshelf and, therefore, more satisfied shoppers, as the standard quality guarantees less load damage and less associated costs. Due to our in-store expertise, we are going a step further by developing a promo-tracking solution with great impact in replenishment efficiency and increase in sales.
Furthermore, all these solutions are sustainable by definition, proven by the recent award received as no 1 in the Dow Jones Sustainability Index and also, if we speak local-specific, the great advantage that we offer to all our customers is that of exempting them from the contribution to the Environmental Fund, an expense that represents an increasing percentage from the total logistics costs.

Q: What’s your view on employment, trade and investment for Romania in 2018 and please give us your point of view regarding the evolution of your business sector in 2018.
Gabriel Andronescu: Investments represent the key: public investment is essential for major projects development and private investment is linked to a predictable and positive outlook of the economy and fiscal measures. Employment increasingly represents a problem, the outlook being not so promising unless we succeed to offer solid reasons to young generations and good professionals to stay in Romania (higher education system needs adjustment to tomorrow’s labor market) and in parallel attract “useful migration”.
Trade is vulnerable if macro-economic stability is lost, due to internal or external factors. Overall, unless the needed adjustments are made, I believe that on medium term we could face the risk of another economic downturn, more severe than during a typical declining phase of the economic cycle.
Supply Chain sector faces particular challenges, among which I can mention fuel price variation (caused by external factors and excise regulation) and a shortage of drivers seen in various countries. Again, investments (for example, logistics facilities needed for retailers’ expansion) could be the element supporting the sector development in 2018.
Regarding CHEP Romania, we estimate to continue the growth, keeping the same year-on-year average above 20% as until now, by continuing to be the forefront of building better Supply Chains of tomorrow.