A strong theme among Ernst & Young’s western region finalists for the Entrepreneur of the Year is the technology businesses that have developed to service the resources sector.
A strong theme among Ernst & Young’s western region finalists for the Entrepreneur of the Year is the technology businesses that have developed to service the resources sector.
The likes of Matrix Composites & Engineering CEO Aaron Begley, Argon CEO and chairman Paul Deuchar and Gene Kostecki, chairman of Alloy Steel International, are all at the cutting edge of technology in their fields, supplying specialist equipment or services to the mining and petroleum sectors.
Their stories, which are varied, reflect a similar experience at WA Business News where the recent Rising Stars winner was Velocious, a designer and manufacturer of specialist equipment for deep sea applications by the oil and gas industry.
This genre of business belies the view of many in the community that the resources sector simply digs up rocks (or drills for oil and gas) for export.
That view, often exacerbated by politicians who are jealous of the profits that the resources sector generates or protective of existing non-resources industries, is often held by those who are too remote from where minerals or petroleum extraction takes place to understand the challenges involved in this business.
The increasing difficulties and rising costs in extraction and logistics are presenting new opportunities to those who service the sector and provide innovative solutions to difficult problems.
Take ASX-listed Matrix for instance. Aside from a specialist engineering capability, the company offers specialised products and services to the upstream and downstream sectors of the oil and gas sector.
The company claims to be a global leader in the field of composite materials and polymer technology for engineered product applications.
Like many in the sector, Matrix is not just taking advantage of local opportunities in the fast developing North West. It has a European sales office, several authorised agents in various regions and it recently opened an office in Houston, where it hopes to take its services to the many global petroleum players that are based there.
“We will continue to grow our distribution network,” Mr Begley said.
“We want to own that network, as opposed to having agents.”
To those who don’t understand Matrix’s field of technology, it might be described in the very simplest of terms as plastics.
Formerly known as Begley International, the group employs 450 people, mainly at its Malaga and Henderson premises and has a market capitalisation of about $600 million.
Mr Begley said the Australian Marine Complex at Henderson where the group had relatively recently set up shop, was a growing hub for the oil and gas sector which he believed would be a strength for the company and the state.
Furthermore, he notes that the access to marine facilities is a competitive advantage in the sector, especially given the company exports 95 per cent of its production.
“In our business we are the only people who are near a dock,” Mr Begley said. “So there are some real opportunities for us to grow.”
Applecross-based Argon has a broadly similar approach to Matrix, with a highly visible technology offering alongside a traditional engineering services business.
Argon’s unique area of operation is robotics, using automation that is common in some manufacturing industries and applying it to areas such as minerals processing.
The group – which claims to be the first ISO-accredited robotics company in Australia – has a core team of about 15 employees but reckons as many as 1,200 people are effectively working for it in workshops around the state.
Building anything from sampling equipment to surveillance systems, the mining sector is the company’s only customer. It also does work for areas such as the food industry and defence, including a fully automated practice range treadmill for SAS troopers to hone their skills with live firing.
Argon’s Mr Deuchar sees opportunities to expand his mechatronics business as well as the engineering services, which have become part of what the company offers as a natural fit to using robotics to solve problems.
Mr Deuchar said he was trying to identify and gain access to investment capital to allow Argon to push some of its more advanced technological services where it believed there were opportunities.
Finding funding was a challenge, he admitted.
“I have never had problems finding people,” he said.
Alloy Steel International’s Mr Kostecki has a slightly different story.
A boilermaker with an interest in metallurgy, Mr Kostecki invented an alloy more than two decades ago, which he claims provides significant cost savings in processes where wear and tear is a significant problem.
Alloy Steel employs more 55 people and turns over $25 million, 40 per cent of which is exported.
Its founder believes the group is on the verge of significant growth offshore, planning to increase exports of its patented product to 80 per cent of sales over the next two years as it seeks to penetrate new markets.
Mr Kostecki said the company was investing in its research and development capacity in Australia, as well as its local service centre in Malaga, while looking to put some production offshore, most likely in Indonesia, before expanding beyond the region.
“Over the next three to four years we’ll probably have plants in South America, North America and Europe,” he said.
Mr Kostecki describes Alloy Steel’s opportunity as limitless because it replaces a universally used technology, weld overlay, that has been in use for 60 years.
Alloy Steel has mustered a notable board, including Atlantic managing director Michael Minosora, Evans & Peck principal and former WorleyParsons director, David Mofflin, and KordaMentha insolvency expert Brian McMaster.
In addition, former Wesfarmers executive and Westnet Infrastructure Group CEO, John Cleland, was on the board until he left the position of CEO in May.
