Case Study: The Lost HRSG Order Of 1994, A Cautionary Tale In Industrial Sales And Corporate Politics – OpEd
In the high-stakes world of industrial equipment sales—particularly for complex systems like Heat Recovery Steam Generators (HRSGs) in combined-cycle power plants—one lost deal can teach more than a dozen won contracts. This is the story of a promising 1994 opportunity in Turkey that slipped away, not because of inferior technology or pricing, but due to unseen third-party influences and internal politics.
The lessons remain strikingly relevant today.
The Client and the Project
The prospective buyer was a prominent second-generation Turkish industrialist operating one of the country’s largest private iron and steel mills in Dilovası, near Istanbul. Specializing in steel rebars for construction, the company was expanding into captive power generation to escape unreliable grid supply and high electricity tariffs.Initially planning a simple-cycle GE Frame-9E gas turbine setup, the client was encouraged by public authorities to scale up to a full combined-cycle configuration: two Frame-9E gas turbines, two HRSGs, and one steam turbine (S209E configuration). The goal was cost-effective self-generation at scale, targeting ~365–370 MW initially in simple cycle, with plans to expand toward 700 MW. Fuel security was a major concern. Russian natural gas supplies seemed unreliable, Algerian allocations were taken, and Middle Eastern options were costly. The client therefore required gas turbines and HRSGs capable of firing heavy fuel oil (#6) as the primary fuel, not just backup. Soot accumulation from ash-bearing oil firing became a critical technical issue, especially regarding soot blowing/cleaning in natural vs. forced circulation designs. Delivery was extremely aggressive: HRSGs had to be fully installed before the steam turbine arrived on site by end of June 1995, meaning all major decisions needed finalization by late 1994.The Sales EffortRepresenting a U.S. parent company (with a local Turkish joint venture partner boasting an ASME-stamped fabrication shop in Ankara), the sales team engaged actively from mid-1994. Key meetings included:
- September 8, 1994: Delivery of an invitation for the client to visit U.S. fabrication and installation facilities. Discussions covered natural circulation HRSG suitability for heavy fuel oil firing, local Turkish fabrication advantages (dramatically lower labor costs: ~$3/man-hour locally vs. ~$50 in North America), modular “off-the-shelf” designs to minimize engineering, and hybrid contracting to share risks and reduce price.
- September 23, 1994: Detailed technical review with the client’s Deputy General Manager (Energy), Project Manager, and others. Topics included pressure levels (81/7.6/2.3 bar), soot cleaning methods, seamless vs. welded finned tubes, no diverter valve (using take-out elbow removal), budget estimates (~$4 million turnkey per European competitors), and local fabrication potential (U.S. estimates: ~13,000–44,000 man-hours per HRSG vs. competitors’ 33,000–37,000).
The team highlighted advantages: competitive pricing via local manufacturing, shorter lead times, proximity for support, and readiness to adapt modular designs. The client expressed preference for negotiating intensely with one reputable supplier rather than a formal tender, and requested the “keenest” final price by October 21 with minimal negotiation room.Additional side interests emerged, such as future coal-fired CFB boilers and utilizing their underused private seaport for imports.Why the Order Was LostDespite strong alignment on technology, cost savings through local content, and schedule urgency, the deal never materialized. The blog author attributes the failure to “unnecessary third party company politics.” External influencers—possibly competitors, consultants, or other stakeholders—intervened in ways not visible during direct client discussions.
The client ultimately chose another supplier (likely European or Italian, based on contemporaneous hints toward N/E, Vogt, Standardkessel, or Ansaldo licensees).
Key Lessons from the Lost Order
This experience offers enduring insights for anyone selling complex capital equipment:
- Technical Excellence Is Not Enough
Even with solid references, proven natural circulation designs for dirty fuels, modular engineering, and clear soot management answers, external perceptions (e.g., European warnings about natural circulation cleaning) and politics can override facts. - Local Content and Cost Savings Matter—but Politics Can Override Economics
The massive labor cost differential and client’s own fabrication capabilities made local Turkish production highly attractive. Yet third-party influences trumped pure economics. - Aggressive Schedules Create Vulnerability
The client’s need to finalize by end-1994 and install before mid-1995 pressured everyone. Tight timelines favor incumbents or suppliers already deeply embedded with the GT provider or A/E firm (here, GE and Stone & Webster). - Understand the Full Decision-Making Ecosystem
Beyond the direct client (owner, DGM Energy, Project Manager), decisions were shaped by GT supplier guarantees, A/E consultants, public authorities pushing combined cycle, fuel supply realities, and possibly privatization/electricity sales negotiations with TEAS and BOTAŞ. Missing any player risks blind spots. - “Hybrid” or Partnership Approaches Can Be Double-Edged
The client’s desire for cooperation, local fabrication, and lowest price without formal tender created opportunity—but also opened doors for competitors to influence specifications or relationships behind the scenes. - Reputation Helps, but Momentum Wins
The U.S. parent’s strong boiler reputation was acknowledged, yet competitors who had already delivered preliminary proposals and held detailed discussions gained inertia. Early and continuous engagement is critical. - Document and Reflect on Lost Deals
Years later, compiling minutes and details revealed patterns invisible in the moment. Systematic post-mortems turn failures into institutional knowledge.
In industrial B2B sales, especially for multi-million-dollar engineered systems, relationships, timing, and invisible influences often decide outcomes more than specs or price alone. The 1994 Dilovası HRSG opportunity was technically winnable and economically compelling—yet it became a “lost order” that still offers valuable wisdom in 2026.
This article is a reimagined and condensed retelling for educational purposes, drawing directly from the original 2008 blog account. Names of companies and individuals have been generalized where appropriate to the source material.
Like what you read?
Please consider supporting Eurasia Review. Thank you for your consideration!
