with David Ong, Founder / CEO / Managing Director, Excel Marco
As a way of introduction to our readers, can you briefly elaborate on the elements that drove you to leave Triconex, a multinational company, and start up Excel Marco about a decade ago?
Before founding Excel Marco, I had a small system integrator company for about a year until it was bought over by Triconex, which in turn resulted in me joining the latter. From there on, I spent around nine to ten valuable years with Triconex which benefitted me significantly and served as a precious learning school. While I was very grateful for what I could learn from Triconex, it was my entrepreneurial drive that eventually led me to look into starting a new business on my own. I did not have any investors from inception, whereas I had to find projects first. The first step was to find customers in order to lay the foundation of a new solutions provider to the oil and gas industry. It was only later on that new partners and financial investors joined as cashflows became increasingly important when projects grew in numbers and size. It is very unlikely to receive upfront payments, which prompted me to look into additional sources of funding.
How did you manage to establish an international corporate structure and how did you create your team to support this?
As I used to work for an international company before, I wanted to create a venture with a similar image. It was important to identify from the start how to establish a multinational company, rather than a family business. Family is of course the foundation of a country, but in order for a company to grow, you need to recruit people based on their capabilities rather than on grounds of family ties.
From the early start of the company, it was important to send a strong signal to the staff that Excel Marco had the ambition to become a global player. With this mindset, the company managed to slowly but surely attract some of the biggest players in the industry such as Total and Shell. Attracting these players required a lot of convincing and was very challenging without an extensive track record. Therefore, before even moving into oil and gas where the entry barriers are very high, Excel Marco started off with projects in waste water treatment and the semiconductor industry. The friendship and the trust gained and developed over the years from its extensive business network gave Excel Marco the opportunity to attract more complex projects and grow the business further.
What were the key success factors that allowed Excel Marco to successfully enter the oil and gas sector, following the initial projects in the water treatment and semiconductor industries?
There are two main factors that played an important role in building Excel Marco’s track record, which are experience and network. Even if a potential customer trusts you entirely, they will not work with you if you are inexperienced. This particularly applies to our business of engineering solutions where technical knowledge is of utmost importance.
Even when I moved to a sales position just before setting up Excel Marco, I had been in a technical engineering position before. Whenever I was involved in a sale, I had the reflex to act as a technical rather than a sales manager. I based myself on the belief that when you can offer the client the right solution, they will want to have it. Excel Marco approaches its customers in the same way. As the company has the capabilities to offer its clients the right solutions, it does not require a hard sell strategy.
The second element essential to establishing good track record is the network. It is not about what you know, but who you know and who knows you.
We also see that you have been training your staff to become acquainted with the technology and products of Siemens, one of your important partners. What enabled you to partner up with Siemens and how has this cooperation benefitted Excel Marco?
The way Excel Marco became involved with Siemens is partly by chance when the latter acquired USA-based Moore Process Automation. When I was still working at Triconex, Moore was one of the competitors and active in the same industry of safety systems, emergency shutdown systems, fire and gas systems, and so on. Even though Excel Marco maintained a very good relationship with Triconex, it was not possible to use their products as they sell these systems themselves. As a consequence, Excel Marco started using Moore’s systems which later on drove Siemens to convince Excel Marco to use their products.
The Siemens model is similar and complimentary to the one of a solutions-provider such as Excel Marco. Rather than working directly with customers, Siemens prefers to work with partners such as ourselves. This approach allows them to sell the products that come forth of their core competence, technology, while players such as Excel Marco translate this into a solution. This is a model that has proven to work out very well and is again a proof of the importance of having a strong network in this industry.
With many different players such as the shipyards, the commissioners, the operators etc. involved in the construction, commissioning and operating of vessels and rigs, who pulls the strings for your demand?
It depends on the market sector. For the offshore business, there are two sides: one is the exploration which includes drilling rigs, semisubmersibles and so on while the other is production comprising FPSOs, FSOs, wellhead platforms, central processing platforms and so on. For the exploration side of the upstream part of the value chain, the shipyards are Excel Marco’s customers, while the owners in turn pull demand by placing orders with the shipyards. Next, the shipyards place their orders through vendors of which Excel Marco makes up one part. Rig models are generally built repeatedly with only slight variations in options and Excel Marco has been successful in penetrating some of these accounts at the beginning of the construction boom in 2004.
On the production side, it was already clear before I set up the company that shallow water reserves would be depleting, resulting in an increasing importance of the FPSO business. Therefore, I started networking very early with various people in this industry to better anticipate future demand. The company was able to penetrate into SBM Offshore and, subsequently, Modec in collaboration with Siemens. These orders are placed directly by the FPSO contractors rather than the shipyards. When Excel Marco executes an installation in Keppel shipyard, the order will not have been placed by Keppel itself but by the actual contractor instead.
While Mr. Choo Chiau Beng argued that Brazil would be one of the main growth markets for Keppel, we have also seen you travelling repeatedly to this BRIC country. What will be Excel Marco’s entry strategy for this market?
While the complete strategy has not been worked out yet, Excel Marco has started its research on this market. Brazil will see a very promising stream of investments in our industry in the coming years. Initially, an estimated USD 174 billion of investments were planned, whereas this number has recently been revised to USD 220 billion in recent reports!
Without the local content law, Excel Marco could do the job from Singapore and build everything in its home market. Nevertheless, the company will have to move into this market to be a qualified player in Brazil and avoid heavy penalties. The plan for Excel Marco will thus be to localize by first setting up an office in Brazil. The scenario will be one of setting up the company all over again, except that this time it will be done remotely. In spite of this, our experienced office in Singapore will support the challenges that need to be overcome in a tough market such as Brazil. In addition, the company is also financially sound to support the entire operation.
While you say the company is financially healthy, many of our interviewees have suffered severely from the global financial crisis. How was Excel Marco affected?
Today, the company is financially sound but, clearly, it also suffered from the recent downturn. Excel Marco saw a doubling in its growth for three consecutive years until 2008. For the past two years, the growth rate flattened because of the economic downturn. As project volume decreased, the industry saw a drop in prices as the different players became more aggressive in their tenders for new projects. Excel Marco has been affected but will not be brought down by the difficult economic times. In the meantime, the company is getting ready for the future by streamlining its processes and becoming more competitive. As soon as the next construction boom comes, Excel Marco will be ready to ride the wave again. The cyclicality is a normal feature of the industry, it is merely the challenge to estimate how long each cycle will take, as it is sure that Excel Marco is here to stay.
Five years ago, you stated that the safety first culture in Asia had not reached Western levels. Did you see an evolution in this regard for the Asian markets and to what extent did this affect your growth potential?
For Excel Marco, opportunities arise from imperfections and if everything would be perfect, the company would have no business. In the context of safety, it is important to create awareness and if you compare these levels of consciousness worldwide, it is fair to say that Asia is still lagging. However, even the leading markets such as the USA with some of the highest standards in place are not necessarily flawless, as the recent Deepwater Horizon catastrophe has shown. In the short term, there will of course be some budget cuts and a decreased activity in deepwater drilling, but the long-term upside of this unfortunate event is that it has once again increased awareness worldwide. As a result, the industry will need to look into further investments into new technology without comprising on quality. Overall, there is room to grow.
The disaster in the Gulf of Mexico will indeed lead to more stringent measures. How will these translate into new opportunities for Excel Marco?
Excel Marco focuses on applying automation technology to protect assets, in particular in the process industry. Such events increase the market size, causing demand to go up. As new regulations come along, capital investments need to take place accordingly. Nevertheless, when done right, operating expenses can actually come down. That is because, in theory, safety should be considered as a saving rather than a cost. Nevertheless, this message is easier said than done. In order to even start talking about quality, the shipyard needs to win the tender first which is often done through aggressive pricing.
Two important markets for you are obviously the UAE and China. When interviewing Kenneth Lee of Norr Systems, he commented that 60% of his revenue came from China, while the UAE is bigger for you. What is the relative importance of both markets for you?
Excel Marco has less business in China, even though that market has a lot of potential. My theory is that if I only have two hands to harvest, I will first pluck the low-hanging fruits before looking for the ladder to climb the tree. Even though the UAE is more distant from Singapore than China, the access to that market has been facilitated through networking. China will be growing slowly, together with Brazil. In terms of market share, I would like to see Brazil becoming bigger. The reason for this is the fact that there is a better recognition of quality and a higher willingness to pay for the services Excel Marco provides. China is much more competitive.
Both Brazil and China are obviously difficult markets to penetrate. One way to deal with market peculiarities is to partner up with local players. How important is this for you and, in addition, what would you look for in a partner?
Excel Marco is currently exploring the option to either use partners or to sail as the sole captain. For these particular markets, it enjoys my preference to talk to potential partners. However, this thought process is still at an early stage as Excel Marco is now identifying what model works best for the company.
One key challenge many of our previous interviewees have mentioned is to have the right talent to drive their companies forward. Many of your employees here are foreigners, so how do you find, attract and retain these people?
At first instance, I will look for people that I know directly or indirectly through business contacts. If these people work for friends or friend of friends, you will of course need to ask yourself if you can approach them without burning any bridges. You will need to identify what is best for that particular person and let him or her make the decision. Apart from that, it is important that people fit in the team.
Back in the time when you started the company, what were your main ambitions, are you satisfied with what has been achieved today and what remains to be done?
Looking at where Excel Marco stands today, I am only slightly satisfied. Entrepreneurship is a never-ending journey! Rather than this being related to my personal ambitions, I am mainly saying this because the company still has a lot of potential and a significant share of the market remains to be conquered. A leader must have the vision to see what is not visible today, similar to Christopher Columbus and Marco Polo, after whom the company was named! Not only as a company, but also in life, we should all be as curious as Marco Polo.
In the coming years, I would like to take the company global with a well-established set-up across the world. Excel Marco will also increase its scope to make sure that when the industry think about our type of solutions, they will think of Excel Marco first. With its qualified people, Excel Marco will be able to realize these ambitions. They are the real heroes of this success story.
Do you have a final message you would like to send out to the readers of Oil and Gas Financial Journal, on behalf of Excel Marco’s operations in Singapore?
The industry should work with companies that can bring value, not only in the short term but also in the longer term by establishing strong relationships. If most companies operate in this way, the overall efficiency in the industry will increase. When a company keeps changing partners and pursues the lowest price alone, it will soon run out of business partners. Pertaining to the industry as a whole, I would say never compromise on safety because life is more precious than anything else.