Flotech

Going global

The challenge

The product is 1,000 tonnes of heavy machinery which is to be designed in Auckland and built in Singapore.  It then has to be shipped to Dubai for final adjustments before being delivered to the client - a Norwegian multi-national company working off the coast of Africa.  For many companies, this would appear to be an insurmountable challenge.  For Flotech, this is part of their core business.

John Dolan, Flotech’s Director of Global Operations, says the manufacturing company has shown over the last 22 years that being experts in their field and working with the best partners around the world can succeed. 

“We have been successful for a long time but business has really taken off in the last three or four years.  For most of the company’s history we had around 40 staff, steady customers and fairly steady work.  What we have done now is find a nice business formula which suits where we fit in the world.  We are basically exporting 80-85% of what we produce,” he says.

Global partnerships

There is a strong focus at Flotech on ‘adding value’.  A major contributor to Flotech’s success in gas compressors is their supplier, the global giant GE.  John explains the process:  “We have a great relationship with GE.  They make the basic gas compressors which we then take and turn into customised products for customers.  We design piping, separation, control systems, add customised safety features, and ‘package’ the compressors with motors or engines to suit the customer’s application.  The final product is about 20% GE, 80% Flotech.”

Working so closely with GE has several advantages.  “We get a lot of repeat business because GE makes a good product and we make it better.  Critically, we also get plenty of referrals from GE.  We are one in a select group of ‘packagers’ who have chosen to deal exclusively with them.   Most of the ‘packagers’ around the world also work with GE’s competitors.  GE refers possible sales to Flotech because they know we will use their gear.  They are much less likely to do that for a company who may take the business to their competitors.  It’s a mutually beneficial relationship,” John says.

Even niche markets can be huge in the market Flotech operates in.  The 1,000 tonne piece of machinery described at the top of the page is a re-injection compressor system for a floating oil platform.  Flotech has completed several of these very large, US$20m, two-year projects.

Meeting the needs of the future

They also have an eye towards growth areas in the future.  Already, one third of the company’s business is connected with bio-gas.  John says the philosophy is simple:  “As fossil fuels become more expensive, bio-gas will become more attractive and should just take off.  It has a great future.  We are in there already working on units which can produce high-quality methane from landfills, sewerage plants or even farms.”

“As material degrades, it releases methane and carbon dioxide.  Some landfills already use this mixed gas to power their plants.  However, if you want to use methane as vehicle fuel or put it in a pipeline, you have to take the carbon dioxide out.  That is the most valuable use of methane.  If it is pipeline quality (meaning the carbon dioxide has been removed) then it can be used for many applications.  We have developed a way of doing this using a water-based technology which utilises low levels of power and water.  The technology will become more viable as energy prices go up,” John says.

This technology was used on a bio-gas project in Madrid which, at the time, was the world’s biggest project of its kind.  On the strength of their work there, Flotech won a contract for a plant in Germany that is two-and-a-half times bigger.  The German company wants to build a number of facilities so John’s prediction of a great future for this venture seems assured. 

“Europe places a high value on renewable energy so tapping into gas from degrading biological matter is highly valued there.  Germany is looking to reduce its heavy reliance on Russian gas and wants to be 10% self-sufficient.  Bio-gas is one way of doing it and it will probably become even more important in the future,” John says.

They won’t just be looking for the massive European projects though.  John believes Flotech has identified an “untapped need for small units (micro-units) suitable for a sewerage facility, say, in three or four dairy farms or a small town.  The technology is basically proven.  Flotech has developed a couple of innovations to simplify the manufacturing process and improve profitability.” 

They are making use of the research and development tax credits and have applied to FRST for support.  The intention is to mass-produce micro-units at a competitive price.

Building and managing a specialist team

Managing 150 staff spread across Europe, Australia and New Zealand is not easy.  The sales force is closely linked electronically by phone and email and the Auckland-based sales director constantly travels the world touching base.  There is also a sales conference every year where everyone comes together.
“Our work has a large technical component which is normally undertaken in Auckland.  We can develop different specifications to meet different customer needs.  Our staff will then prepare a package - including the drawings – and we can usually come to a deal with the customer.” John says.

One of the biggest challenges is building a team to cope with the growing amount of work Flotech knows is coming.  “We are actively positioning the company for growth.  We are ‘manning up’ to meet future demand.  Like many industries, we know how hard it is to find skilled people in project management and engineering.  They are just not around which makes it really hard to find replacements when people leave.  Our solution is to build up our team from the bottom.  It’s a good fix and the best way to ensure we have those key people going forward,” John says.

“We hire a lot of engineering students in the holidays for work experience.  Some come back every year and when they graduate they work for us.  We sponsor the Auckland University race car in competitions.  It’s a very serious competition but the business advantage is that we have a lot of interchange with the university and the students.  It is a way of getting our name in front of engineering students which means we get a much better selection of students to pick from later,” he says.

Flotech has a rapidly expanding graduate programme.  All the graduates go round the business spending six months or so in each area - documentation, design, purchasing, project management and the factory.  As a result, John says that within a couple of years they will all be very versatile and able to be deployed anywhere.

Cleverly, Flotech uses the fact that the graduate programme might involve working overseas as an incentive.  “It can be quite appealing,” says John, “like getting your OE working for Flotech.  We even have several company apartments which are like little hotels.  People can enjoy living there.”

Deloitte already ranks Flotech as one of the 50 fastest-growing companies in the country.  With the big European projects signed, the bright future of bio-gas and the development of versatile young workforce, the next couple of years for Flotech could be huge.