NFM for sale from insolvent Chinese owner 20 Sep 2018

Financial insolvency of its Chinese parent company NHI has resulted in French TBM manufacturer NFM negotiating with new investors to keep its French office and manufacturing base in Lyon and Le Creusot. NFM became part of the NHI Group in 2007 when the objective was for NFM to introduce NHI to TBM manufacture and for NHI to become the number one TBM supplier of TBMs in China with design remaining in France and principle components manufactured in the La Creusot factory going to China for assembly into Chinese manufactured shields and other large Chinese-manufactured elements. NHI was also interested in the NFM nuclear manufacturing expertise for China’s nuclear power construction program.

NFM TBMs are currently in operation across the globe including on the Tideway project in London

Promising relations at the beginning, according to NFM CEO at the time Luc Devaux, became strained in 2011 when NHI imposed a business strategy to double turnover with the same staff. “This was not possible and disagreeing with this strategy I left the company in 2011.” The NFM business continued in the intervening years with significant TBM order successes in China, Hong Kong, Australia, Egypt and in Europe but financial troubles for NFM were mounting.

Early in 2018, NHI sold its NFM Energy Business Unit to French oil and gas industry specialist REEL and adopted a new strategy to concentrate its efforts solely on the underground construction market. “In June 2017, I was asked by NHI and agreed to come back to the position of CEO for NFM to oversee this new strategy,” said Devaux, “but at the time I did not know of the financial status of NHI. I became aware of this when the state banks of China refused to restructure the NHI debt earlier this year.”

State-owned NHI factory now in receivership

Insolvency of a large Chinese heavy industrial manufacturing enterprise is something of a new phenomenon. According to information on its website, NHI (Northern Heavy Industries Group Co Ltd), is a wholly state-owned company which, after taking over NFM in 2007, became one of the top 500 Chinese enterprises and ranked among the top three heavy machinery industry manufacturers in China with a facility that covers an area of about 1 million m² and has more than 10,000 employees. The insolvency administrator is in negotiations with Chinese banks to reduce the debts of the NHI Group and will participate in a process of find a new shareholder for NHI Group to replace the current shareholder, Shenyang City.

When the insolvency of NHI became clear, NFM, which had retained all its intellectual property and its office and manufacturing base in France, began the search for a new shareholder to keep the company viable. “We have a deadline of end of October to conclude a sale from NHI,” said Devaux, “and we are in talks with four interested parties. Due to confidentiality clauses I can say no more than that. We are currently in the process of due diligence with these potential shareholders and are hopeful of a successful outcome. No one in NFM in France has left the company and all obligations to our current TBM customers are, and will be honoured. We have the liquidity to meet all these obligations, and to our staff. We are also being supported in our efforts by the French State.”

NFM TBMs are currently in operation across the world with two machines working on the Thames Tideway sewer project in the UK, on metro contracts in Singapore, on the Grand Paris Project in France, on the Cairo Metro in Egypt, and on highway projects in Hong Kong. Recently completed projects include the Northern Line Underground extension in London, four double shield machines on the Sydney Metro, a mega-diameter machine for a railway project in Sicily, and another mega-diameter machine of more than 14m diameter working on a highway project in Hong Kong. At present, the second NFM machine is in assembly for excavation of the long Semmering railway tunnel in Austria. The first TBM for the project was launched in August this year (2018).

In a statement in February 2018 following the implementation of the new marketing strategy, CEO Devaux said; “focusing on our core business activity will enable us to leverage our expertise on the European market. We are resolute and confident for 2018.” In a phone interview, Devaux told TunnelTalk that he is positive for the future. “The tunnelling industry, and the TBM tunnelling industry in particular, is growing and growing rapidly. It is important for the global industry that competition among TBM manufacturers is maintained to control prices, encourage research and development and ensure service and support of TBM customers. We remain confident of the future for NFM.”

Search the TunnelTalk Archive for other NFM, Robbins and TBM project news and developments.