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Interview

with Dave MacKay, Managing Director, PD&MS

08.08.2008 / Energyboardroom

What was the vision behind the creation of PD&MS in 2002, and its main business focus?

PD&MS was created in September 2002 by a team of four friends, each bringing their individual strengths based on a long track record in the industry, to the table. We all remain involved in the company as directors and are very hands-on, which has been one of the keys to its success.

PD&MS primarily provides engineering and full project management support to ‘brownfield’ developments and rig upgrades in the onshore and offshore oil and gas production and drilling industries and marine industries. We saw a niche in the market for smaller types of projects, with quick and cost efficient turnarounds, and started developing this niche service with just 8 people initially. Now the company has grown to over 100 people and a turnover in excess of £15 million. After six years of steady growth, we feel that PD&MS is nearing the upper end of its niche and is now looking at taking things to the next level.

PD&MS is a very dynamic and responsive company. We don’t overanalyse things, just focus on getting things done correctly, safely, efficiently and cost effectively in line with the clients’ needs, in a no nonsense, fit for purpose manner. Typically, we handle between 80 and 100 enquiries per month, for projects of varying content and complexity, for numerous different clients. We can provide a service for as little value as a few hundred pounds, up to £3.5 million or beyond. Our systems have been developed and honed to be as slick as possible, while at the same time conserving a tight control of what we do. We are a BS EN ISO 9001:2000 accredited company, achieving this in March 2006.

What would you highlight as PD&MS’s main milestone and achievement over the last several years of rapid development?

Our main milestone was probably the meteoric growth we achieved in 2006/2007. Our business and turnover took a much more significant leap that year, prompting us to take stock in anticipation of the interest we would in all probability receive from potential buyers of our company. Our reputation and credibility had obviously grown.

Since then, we decided to set more moderate and realistic growth targets such as 15% for year 2007/2008 which will be eventually exceeded also. That meteoric growth in year 2006/2007 was a huge turning point for PD&MS, which eventually led to the acquisition by Wilton Engineering Services Limited (Wilton) in April 2008.

As it has never been our intention to grow to the size of major companies in our field such as typically Wood Group and PSN, our growth strategy instead contemplated the possibility of being purchased by another player when the moment was right. And indeed, in April 2008 PD&MS was acquired by Wilton, a company group based in Teesside which mainly focused on providing high quality fabrication and offshore mobilizations, from its first rate fabrication, painting, assembly and barge/vessel load out facility right on the River Tees.

Which are the main benefits of Wilton’s acquisition of PD&MS, from both sides’ perspectives?

We had been approached by several other players, but ultimately we chose Wilton because it was by far the best fit with PD&MS. The companies have many similarities in terms of their establishment, growth, and management. For Wilton, PD&MS provided an ideal opportunity to enhance its portfolio of services through the acquisition of an established and highly regarded engineering company.

Also, by aligning ourselves to a bigger company such as Wilton, we are able to take PD&MS to the next level and target larger, ‘turnkey’ type projects. Since the acquisition, a whole new stream of engineering opportunities has opened up for PD&MS and, likewise for Wilton, a whole new stream of fabrication and offshore mobilisations is potentially now available. There are also big plans for major onshore developments in the Teesside region, for which PD&MS as part of the Wilton Group, is now strategically positioned and ready to hit the park running.

Our combined capability allows us to target EPIC type projects which may have previously been out of our individual reaches. Our initial philosophy of ‘no job is considered too small’ can now be expanded to include ‘and no job is considered too large’ and we can provide clients with a direct one-stop shop solution which will include design engineering, procurement and materials management, fabrication and FAT, construction and commissioning elements, as a minimum. Previously, PD&MS was able to offer this range of services by using third parties, but now we have the capacity in-house as part of the Wilton Group. It is this broad inter-group capability that we are promoting more and more to clients throughout the industry.

One of the main trends over the last several years in the UK North Sea is the arrival of many independents which are driving most of the new investments in the region. How is working with these ‘new’ players different from the more established companies?

We are delighted to be working with the new players and independents in the UKCS. They tend to place the same value on being dynamic and responsive as much as PD&MS does. The focus is on getting things done, being both proactive and reactive, and ensuring a proper return on investment. These companies are making significant investments in order to upgrade infrastructure in the UKCS, and we are ready to support them with our broad range of services.

In just a few years, PD&MS has managed to build a reputation for itself within the industry in the UK. What is going to happen now that you are a part of Wilton?

There are four companies which now make up the Wilton Group, all successful in their own right and bringing something tangible to the group’s global resources. Each one of us retains our distinctive name and identity, even though now we are a part of a bigger structure and have direct access to a wider range of support and services. For PD&MS it is very important to offer our existing clients a sense of continuity, making our integration within the Group go seamlessly in order to protect the business which has allowed us to get to where we are today.

Which would you highlight as PD&MS’ flagship projects to date, both in the UK and internationally?

One of our major and more recent projects involved a significant upgrade of a drilling rig operating in West Africa. PD&MS carried out the initial rig surveys, the post survey design and interface engineering and also project managed the selected third parties, working very closely with the drilling company. We mobilised engineering, supervisory and construction resources, as well as bespoke fabrications and bulk materials and equipment to West Africa from Aberdeen, with all the difficulty that such an operation entails. Since then, we have carried out other similar projects successfully, also overseas.

As for the North Sea, we are currently coming to the end of another significant platform enhancement project for Apache North Sea Limited in the UKCS. Initially PD&MS’s remit was to simply provide engineering support to the project, but we were gradually given more opportunities as Apache realised the quality and speed of our work, and consequently we project managed the entire emhancement. A great part of our worth to clients is that we are not restricted by onerous and slow internal systems for purchasing, as they tend to be.

To what extent is PD&MS expanding its overseas business, and which are the areas where you see the most potential?

The UK Continental Shelf is, first and foremost, where our core business is. Nonetheless, as drilling rigs are sent to operate all over the world, there is a growing demand for quality service which is not easily found in some regions. That is where PD&MS fits in the international picture, taking on jobs of varying size and complexity. Already we are doing work on offshore drilling rigs and barges in Egypt, Malaysia, West Africa and Brazil.

In the coming years, we see big opportunities in places like Brunei, where we have developed a relationship with a highly regarded local agency; and also as a Group we are interested in Norway, which has a lot of potential still untapped. These are some of the prospective areas we have identified, but in reality PD&MS and the Wilton Group are ready to look into work wherever our services may be in demand throughout the world’s oil provinces.

Though the UKCS is booming together with the rest of the oil and gas industry, there is still some uncertainty regarding what will happen towards the future. What is your perspective on the UK business opportunities for PD&MS in the coming years?

I believe that there is still a huge potential for the recovery of untapped resources in the UKCS. Most of these will be recoverable through some kind of subsea system, as many fields are now being developed through subsea tie-backs to existing infrastructures. Though subsea has not really been our main target over the years, we have in fact completed several subsea projects with success, and looking to the future, this will definitely be an area which we will be developing further. In this regard, our group facilities in Teesside give us ample space and resources to work on subsea engineering, equipment and structures, including the ability to readily load out structures etc onto barges for onward transit directly to location.

What are the key aspects that make PD&MS rise up above the competition with regards to engineering services for the oil and gas sector?

The single most important differentiating factor is simply the speed at which PD&MS reacts to a client’s needs. In the big companies, enquiries have the tendency to go through long and cumbersome initial review processes. On the contrary, we strive to get people on a job as soon as we get off the phone with the client. This capacity to respond quickly has earned us a good reputation and a lot of repeat business, even beating out some of the bigger players in the industry. Other key assets are that we are flexible, don’t expect minimum levels of work from any of our clients and know how to address and deliver numerous, diverse projects at the same time, for numerous different clients. This is an art form in my view, which needs the right people and slick systems of work to execute it. We have those.

In addition, in early 2008 PD&MS moved its offices from an industrial area to a more central location in Aberdeen. This has allowed us to raise our profile and to be closer to some of our major clients. These much more spacious facilities were expected to support our growth plan for two years, but after just six months the offices are nearing full capacity. Therefore, we are looking to take advantage of the room for growth on Teesside for PD&MS.

At a time of skill shortage affecting the entire industry, what does PD&MS offer in order to attract and retain talent?

PD&MS runs a very lean structure from a management perspective. Although all four founders and directors are active and essentially hands on, there is no room for elitism in the company. The management team is very approachable and work side by side with the engineering personnel. The company has created an informal, open and flexible working environment which is highly appreciated. We have regular communications meetings, though it is not always easy to take time out when there is so much work to deal with.

Moreover, as a medium sized company with lean systems of administration and management, resulting in lower overheads, we are also able to reduce our own profit margins in order to pay top rates for talent. That obviously helps attract people, but they decide to stay because the like the way PD&MS works on a daily basis. They have the opportunity to work on a very diverse range of projects, for many different types of clients. We really do listen to the needs of our personnel and in general do a lot of little things that help make the difference, including having periodic social evenings and golf events. We encourage their buy in at every opportunity. Personnel working for PD&MS are known by their names, not a number and we try to work around their personal needs if possible to do so.

What are the expectations in terms of growth for PD&MS over the next 5 years?

Following our joining the Wilton Group, the potential for growth is virtually limitless. We are currently getting our heads together, as a group, in order to come up with a final strategy. We could easily be doubling our size in the coming years in terms of engineering capability; through expanding further in Aberdeen and also having a Teesside based engineering presence. Together, the companies in Wilton Group represent £35 million in turnover, and there is very little reason to doubt that the market will remain buoyant for the foreseeable future.

In your view, how well positioned is Aberdeen to remain a global centre of excellence for oil and gas even as the North Sea enters the second half of its life?

Aberdeen’s oil and gas industry has 30 or even 40 years of experience operating in a very challenging environment. This is why companies here are well prepared to support the search for oil in remote areas and harsher conditions around the world. As for the UKCS, as long as the price of oil remains at high levels, it will be viable to develop marginal fields here is the UKCS which have been left aside for many years. There is also a growing interest in developing gas as its price makes it an attractive business to invest in. Whatever the future may hold exactly, PD&MS will most definitely remain a part of the landscape in Aberdeen for many years on.

What personally motivates you after having managed to create, build up, and successfully sell a company you co-founded?

While working for other companies, we knew our capabilities and that we could do things even better ourselves. PD&MS’s success proved us right, and though it has been acquired by Wilton, we remain committed to making it an even better. Success generates a feeling of satisfaction, and that is motivating us to take PD&MS to the next level.

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