Every month we will be posting a Q&A with one of our marine experts in the hopes of giving you the opportunity to get to know us a bit better. This first interview is with our Managing Director, Lachlan Jackson, who goes into depth about the state of the market and trends the business is seeing, heading into the second half of 2016.
What were the challenges, if any, you saw in 2015?
2015 was a great year for us – and I think for a lot of companies in the region. It was a year of expansion, both in our construction and manufacturing businesses. Our revenue growth was over 90% year-over-year. The challenge for us was not only ensuring we had sufficient resources to meet the demand and maintain the quality and performance of our work, but also ensuring we continued to innovate and develop new marine construction technologies and materials. As a company, we pride ourselves in pushing the boundaries and are always looking for new ways to design and construct. I think it’s a classic situation where companies are so busy in the day-to-day operations that they sometimes don’t find the time to innovate. That’s how a stagnant industry is formed where everyone does the same thing and doesn’t try anything new. It definitely was a challenge for us to keep pushing R&D while we were so busy with projects.
Our other challenge in 2015 – and I think it’s an ongoing one with any business – was getting the right people on board, with the right values and skills to support planned future growth. With a growing business, maintaining culture is critical. We’re doing a lot of work this year on our internal culture and to fully bring on board all new people who have joined us in the last 12 months.
How strong do you see the current economy as being? In your opinion, what is the regional economic outlook for the rest of the year and 2017? And how will this affect our industry?
I believe in our industry we are just now seeing the flow-down effect from the low oil prices and a reduction in government spending. Overall I feel the economy is still strong, however, we are experiencing liquidity issues. Memories are still fresh of the global financial crisis, so everyone is acting overly cautious. 2016 is proving more challenging and whilst we are still forecasting revenue growth of over 50%, we are starting to see pressure on both margins and cashflow. This is most evident in our government contracts.
We are re-evaluating our positioning and bringing the focus back to our niche marine services, rather than trying to compete on price and payment terms. In this kind of market, no-one wins from a race to the bottom. It destroys value in the industry, both for our companies and clients as it inevitably leads to a reduction in customer service. Our focus for this year is on consolidating our growth in these niche areas – primarily, our marine piling and installation services, alternative coastal protection methodologies, and marine protection and demarcation barrier range.
The general consensus is that 2017 will be a better year. We remain cautiously optimistic, however, it is still too early to tell.
What is your view on sustainability? How do you think sustainability requirements could be integrated more within engineering and construction processes?
All businesses should make an effort to act and operate sustainably. However, the present economic model of consumerism directly contrasts this, so more efforts need to be made. I fully support endeavors to run sustainable businesses, but the increases in consumption that drive most businesses will always outweigh their efforts, unless there can be a deeper structural change in the economy.
Businesses such as ours that rely heavily on development to reach revenue growth targets need to look to alternate technologies and systems to increase the lifespan of structures, and seek ways to repair and protect rather than replace. In our marine barriers, we produce a range of heavy duty environmental barriers that are designed to be reused again and again, which saves them from ending up in a landfill after a single project.
The irony is that efforts to protect the environment often result in greater waste than the benefit they achieve. We are working heavily to both educate ourselves and develop reusable products. For our piling division, we are promoting the use of pile sleeves that can prolong the lifespan of tubular steel piles, so they do not require replacement as often. We also work with a lot of non-traditional construction materials, such as geosynthetics, which have a lower environmental footprint than the more traditional materials, such as rock, concrete and gabions. In certain instances, these structures have the dual benefit of providing coastal protection as well as providing a habitat for marine life through the growth of soft corals and seagrass. Essentially, they turn into artificial reefs.
It is also great to see a renewed interest across the industry in sustainable and holistic coastal engineering designs – living coastlines and alternative methodologies. I was at a conference earlier in the year where this was a big focus of our discussions and of keen interest to all parties involved in marine construction. That’s exciting for us, as alternative coastal protection solutions are a core of our business and a passion for me personally.