Taking the reins of a company during the onset of the COVID-19 is, to put it lightly, no easy task. But it’s a challenge Hengyuan Refining Company (HRC) CEO Erkki Ranta happily took on. A results-oriented leader, he saw a lot of opportunity in the Malaysian refining company formerly known as Shell Refining Company.
“When I got this opportunity, I carefully looked through recent years’ annual reports and saw that in the beginning of the ownership change in 2016, HRC was starting to have positive results,” he says.
“Parallel to that, there was an encouraging investment program that began in 2018 and still continues to date. The refinery safety results were excellent and the people were committed and competent too. Based on that, I saw great opportunities for the future of the company.”
While the foundation was strong, Erkki noticed some areas where he could use his expertise to help the company improve. He’s held a variety of engineering, executive and directorship roles over the past 29 years and brought with him vast experience in the oil and gas industry.
Thanks to this, Erkki knew exactly how to propel HRC to its future success. “I saw that we could improve our leadership behaviours, operational excellence and supply chain management while developing our strategic aims for the future,” he says. And then COVID-19 hit.
While the pandemic didn’t throw Erkki’s entire future plans for the company out of the window, it undoubtedly had an impact on them. “COVID-19 certainly affected the business, despite its being classified as an essential service,” he explains.
“Our first priority was to ensure our people’s health and safety. By doing that, we were able to make sure that we could operate smoothly without any imposed COVID-19 infections or threats that would shut down our production. Our third priority was to adapt and ensure that business profitability continued in this very different market situation brought on by Malaysia’s lockdown.”
However, before the government’s lockdown orders, HRC initiated its own safety measures. “We were very proactive, putting in place new measures before the government issued the lockdown,” he says.
The strategic framework we are following helps us see what is important and shows us how we can create good business opportunities in the future.
“The Malaysian Government implemented the Movement Control Order on 18 March. HRC put in place our Split Resource Operations program just a few days before the Movement Control Order was implemented, which stated that half of our people would work from home and half would work from our plant. Doing this ensured we had every available resource necessary to tackle the situation.”
It’s a situation that Erkki also noted was rather unique to HRC. The company, unlike its competitors, has contract support. Basically, HRC was able to easily deliver its products because roughly 90% of its major customers are located within Malaysia.
The company was, however, impacted by lower national refining margins, which was reflected in the lower demand for traffic fuels. Erkki can proudly say that HRC has successfully managed operations during the pandemic – there have been no positive COVID-19 cases in his team – and he looks forward to implementing new measures and strategies to improve the company over the next couple of years.
“We still have three major ongoing investment projects with a target completion of early next year. That’s our main focus at the moment,” he says.
“We are also concentrating on improving our internal working processes while also achieving cost-efficiency improvements. It’s something we’re calling Operational Excellence Improvements. We’re also using digitisation to enhance various parts of our work processes to help us become faster and simultaneously reducing manual work in certain steps.”
HRC is also focusing heavily on its next steps. By renewing the company’s strategic framework, Erkki says they are able to concentrate on the most important elements necessary for the company’s ongoing success.
The framework, consisting of five components – people and leadership; operational excellence; healthy, safety, environment and compliance; stakeholders; and future focus – will be important in moving forward.
“The strategic framework we are following helps us see what is important and shows us how we can create good business opportunities in the future,” he says.
Culture is key
While the framework helps map out the journey, Erkki believes the company’s culture is the shining star that leads the way. “The key to success is corporate culture,” he says. “This very much relates to our people’s behaviours and, especially, how our managers and leaders are acting, day in and day out. It’s also the willingness of everyone to support the strategy.
If you’re not able to change your work processes and your thinking, then you will not survive. Culture gives a sense of urgency to change, I believe.
“What is also very clear is that transformational processes and transformational changes are needed to survive because competition is always going to be tight, and even tighter in the future. If you’re not able to change your work processes and your thinking, then you will not survive. Culture gives a sense of urgency to change, I believe.”
To begin enhancing the culture at HRC when he signed on, Erkki quickly began initiatives to foster higher levels of communication that would ultimately drive change. “Last year, we launched our new corporate values and began communicating them frequently, discussing what they mean to our organisation internally,” he says.
“I also started publishing a monthly CEO letter for the entire organisation, which pinpoints some of my opinions and thoughts.
“In the second quarter, we also began holding afternoon chats, where some management team members go online to discuss our values and organisation virtually. There’s also an open question and answer session during which people can ask the management team direct questions. I really encourage open communication from bottom to top and vice versa.”
At HRC, one of the perks Erkki noticed was the sense of loyalty among the staff. It’s something that had been fostered since the company’s earliest beginnings in 1960. “Our people are very committed here,” he says.
“We have many generations, even three generations, of employees working in the refinery. It’s given us an inherited partnership culture where people are willing to do things to ensure that we are doing good business here.”
Powering human connections
HRC is nestled in the beautiful Malaysian west coast town of Port Dickson. The seaside town features sandy beaches stretching along the coastline, a wildlife reserve and an enchanting 16th-century lighthouse.
For the people at HRC, having the company’s headquarters in such a special place reminds them of their responsibility to Mother Earth and to each other. “Our purpose is to power human connections,” Erkki says.
“And when we are here in the iconic landmark Port Dickson, we are embedded in the economic and social fabric of the district. “We want to work very hard to be a responsible corporation and corporate citizens in this region. This means that we want to impose the smallest possible environmental footprint, while making positive contributions to the state and national economy. At all times, we hold ourselves to the highest ethical and governance standards.”
It’s a feeling that extends holistically to the company’s employees. “Sustainability also means that our people think that HRC is a desirable workplace,” Erkki says. “And that means they feel enthusiastic about coming into work each day.”
More than a beautiful location, it’s also a logistical dream come true and HRC’s leg-up on the competition. “Our big advantage is our logistical benefit because we are located close to Kuala Lumpur. We have oil pipeline connections directly to Klang Valley, which is also a very big advantage,” Erkki says.
“We have access to the sea, we have a good harbour, and we can use different feed stocks and crude oils from the region. Then, we also have the opportunity to export and transport our products to the domestic markets in various areas in Malaysia and the South-East Asia region.”
Innovating a better future
The demand for renewable, carbon-neutral energy solutions isn’t going away any time soon. In fact, it’s only growing stronger. In the US, for instance, transportation is the number one contributor to emissions, yet it only contributes 16% of total emissions worldwide.
Meeting enviro guidelines
HRC integrates environmental and social factors into the way it plans, designs and makes investment decisions for new projects. To ensure it reduces any potential negative impacts on the environment and surrounding communities, the company takes the following measures:
• Safeguarding the health and safety of employees and surrounding communities
• Reducing disruptions to the communities
• Lowering harmful air emissions
• Reducing impact on biodiversity
• Using less energy, water and other resources
• Managing waste responsibly
According to Bill Gates in his recent Gates Notes post, detailing a zero-carbon world, he writes that “decarbonising how we move around is essential if we’re going to get to zero net emissions”.
And the solution for doing that isn’t about getting people to move around less. As the world has seen under COVID-19’s cruel grasp, economies suffer when people are forced to stay close to home.
Instead, it’s imperative to find ways to continue to travel – just in a more planet-friendly fashion. HRC recognises the urgency for global efforts to mitigate climate change issues and ensure environmental protection.
The company remains committed to managing its greenhouse gas emissions by improving energy efficiency and integrating its management into all business activities. In fact, the company has invested US$135 million for refinery upgrades to meet Malaysia’s Euro 4M specification, requiring sulphur content to be less than 50 parts per million in volume.
Along with meeting these new sustainability requirements, the upgrades will also include other state-of-the-art technologies which allow the refinery to increase its annual gasoline production.
It also permits the use of a broader range of crude oil, ranging from low-to-medium sulphur content. This gives the company a higher bargaining power to negotiate for better prices, helping it optimise profitability margins.
Moving forward, HRC is wholly focused on implementing several main projects and opportunities to build an even more sustainable future. “The trend is obvious – traditional traffic and transportation fuel demand will not grow due to the development of cars and alternative transportation fuels,” Erkki says.
“That has encouraged us to begin thinking about different areas like petrochemicals and low-carbon gas for power generation in the future.” Erkki also reveals that the company is committed to using innovation to stay ahead of the curve in all aspects of the business, not just in protecting the planet.
“Innovation is very important to us,” he says. “Since the new major owner came on board, a significant amount of resources has been put in to ensure much-needed future investments and successful merging of management for the company. By doing this, we believe we will be successful now and in the future. Innovation is, especially in this very tight market, essential for finding new creative ways to be agile and operate in moving market situations.”
HRC is a company which understands that strategic partnerships are a main component of its ongoing success. That’s why it insists on honesty, integrity and fairness in all aspects of its business – the foundation of any strong relationship.
“We have a lot of win–win collaborations,” Erkki says. “For instance, HRC has strengthened its relationship with our neighbouring refinery. It’s an important area to continue to have mutual operational safety and environmental benefits.”
We have a diverse team here in our organisation, and diversity is key to creating something new. I get excited seeing new results and, hopefully, better results.
And from a collaboration point of view, these relationships have been imperative to navigating the pandemic. “It’s very important that we’ve been able to share some proceeds and see what has been created in other oil refining companies,” he explains.
“We’ve been able to see how others are performing. From that perspective, collaboration is a very important part of this kind of industry.” As a longstanding and valued part of the Port Dickson community, the company is also passionate about supporting the local community.
“We are working with local suppliers,” Erkki says. “We’re also looking to strengthen our supply chain management by widening possible alternative windows – this procurement process improvement is a major part of our future development. We also see that we can use more globalisation and gain benefits from possible new contracts abroad. Internally, we have also discussed the development of our contract and procurement process. And there are areas such as agility, cost-efficiency and digitalisation on which we must focus in the near future.”
The future is what excites Erkki the most about his role. “I strongly believe in our future achievements,” he beams. “We have a diverse team here in our organisation and diversity is key to creating something new. I get excited seeing new results and, hopefully, better results. I’m very results-oriented. I was a marathon runner when I was younger, so every improvement gives me great satisfaction.”
He also loves waking up, knowing that he will learn something. Each day is different at HRC. Even more, each day brings new challenges with it. While some might be discouraged by the effort required, Erkki becomes energised by it.
“I’m eager to learn new things every day, especially from my colleagues,” he says. “Working with new people and a new culture is very encouraging. With a background in Europe and Asia, working here allows me to see how people think differently. It’s exciting. Using my experience to create and implement new ideas with the team and our board of directors is very interesting. I’m grateful to be able to work for HRC and be responsible for building a sustainable future for the company. It’s a great journey to gain new experiences in my life.”
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