with John Chan, Country Manager, Intertek
We see that Intertek group grew its global sales revenues by 7% in 2009 and now completed 3 acquisitions in 2010 already. What role does Singapore play in this and what is your outlook for the remainder of the year?
J.C.: Intertek provides quality and safety services in more than 100 countries for a range of different industries. In Singapore, our services for the Oil& Gas sector make up around 80% of in-country revenues, with our services in Industrial, Consumer, Commercial & Electrical product, Analytical Services and Minerals markets making up the balance. In Oil & Gas specifically, our business grew well in the difficult years of 2008 and 2009, due to ongoing demand for analytical testing of commodities by local and international companies that are trading through this region. Our key services in Singapore include Inspection related testing as well as ‘Free-Standing Testing’ (FST) which refers to non-inspection related testing work. Our Cargo Inspection services certify the quality or quantity of oil and gas products to give the trading parties an independent verification of what they are buying or selling.
Our Inspection work has grown significantly as Singapore has seen a considerable increase in terminalling capacity in the last couple of years. Over the past 18 months we have added capacity to our Inspection services by way of both people and facilities to capture this and today Intertek is one of the, market leaders. It is a competitive market, with four other players operating. Our focus is on differentiating through excellent service delivery and adding complementary skills and service lines that clients can benefit from.
Our FST side of the business comprises has also experienced continuing growth during the global economy downturn and we operate in mixture of segments in gas, upstream, specific outsourcing and problem-solving projects and so on. We see that our clients, particularly international O&G clients with operations in Singapore and needing greater amounts of ‘spot’ or project-based testing support over time to help them meet new regulations, biofuels needs or refinery trouble-shooting. Free-Standing Testing could possibly be identified as a key area of potential that we can continue to grow.
In a report published on Intertek’s website, it was argued that companies can outsource more of their current in-house testing activities to reduce expenditure on non-core activities and move fixed costs to flexible ones. What have been some Oil & Gas outsourcing success stories in Singapore?
J.C.: Intertek Singapore has a large project coming up with a leading local/international player in the oil & gas industry, to which it will act as an exclusive service provider of testing services for its in-house needs in Singapore.
When building such track record, it is important to consider the future spin-off potential of such collaboration. Our goal is to help our client.
There is no doubt that price is still a driving factor in the decision-making process, but the relationship with the client and truly understanding and acting as an extension of their business is what is critical to our outsourcing work. It is thus the relationships that really drive the business at the end of the day.
Intertek has also continued to grow its oil and gas services through acquisition. How have such acquisitions reinforced your position to better serve your customers and how did they allow your branch to perform better?
J.C.: We acquired Union Lab in 2007, which was very successful because it was a good fit into our existing structure to enable us to continue expanding our Fuel Oil Blending capabilities. We wanted to increase our offering in this segment to our existing clients so by acquired Union Lab. Some of the people were former employees of Intertek and with Union Lab having a similar model, there was a clear fit between both companies. We have also acquired more upstream and analytical oil and gas expertise which we continue to sell to clients on a global basis. Some of our acquisitions in the North of UK have knowledge, about bacterial pipeline issues for example, that we offer our clients here locally. Our global network and flow of expertise is quite international. Our team here in Singapore has the full power of a global network of knowledge about oil & gas testing issues that may be new or emerging ones for our clients here. In 2010 we acquired French oil and gas testing and inspection company ETSA in France.
Another recent addition lead to offices for Aptech in Singapore…
J.C..: The expansion of Intertek APTECH into Singapore is part of the Intertek’s growth in engineering and Asset Integrity Management services in Asia. Their expertise and services are of special importance to the oil and gas industries.
In Singapore, Jurong Island is known to be quite a unique cluster of expertise with a remarkably high level of efficiency and reliablity. How can Intertek play a role on enhancing this cluster by improving its reliability and keeping its standards high?
J.C.: Intertek’s strategy is straightforward and focuses on acquiring the best people for the right jobs to drive the business forward. The operational staffs play an important role to the company’s growth. These people whom are in very close contact with the customer can help to make a difference in terms of service quality, and building up business rapport and relationships.
Customers today rely on us to provide reliable and quick turnaround time services. Our people are professionally trained and constantly upgraded with the latest knowledge to provide extensive analytical solutions.
In addition, safety is an aspect that is closely looked after on a daily basis and is reinforced by continuous training for both new and existing staff.
How do you deal with the skill shortage in the industry and how do you manage to attract the right people?
J.C.: Particularly on Jurong Island, there are skill shortages. Intertek is very fortunate in that we have a good employer-brand, respected management and receive applications on a regular basis. Our employees are treated well which is an aspect the company pays a lot of attention to. We organised many different events and have various initiatives to make the workplace a more enjoyable environment.
Recently, the company participated in a community event to help raise funds for the needy families in Singapore. Besides that, Intertek also organizes safety days. At Intertek, the environment encourages learning and promoted safety days which are all great incentives to keep our staff aware of enhancing safety in the workplace. We really want to make sure that there is a good environment in place for everyone to grow.
Naturally, the company also tries to have other social events in place, such as team bonding and social get together. We strive to be the leading employer in the area, both so that our staffs are happy and committed but also to appeal to talented staff out there that we may want to attract.
Another way to give back to society is through environmentally responsible corporate behavior. Now that the oil and gas industry is increasingly looking for greener solutions, where can Intertek add value?
J.C.: Intertek has a number of green campaigns in globally as well as in Asia. One of the most recent one is our carbon-offset program, helping customers to contribute their part to the environment by being carbon neutral. When clients buy our services, we give them a measure of the carbon dioxide omitted through the work they have requested we do; by way of an off-set certificate and he option to offset it through a registered offset partner and off-set projects. We launched the program in China this year and are steadily rolling it through the rest of Asia and globally.
Intertek provides advanced technical services supporting biofuels testing and research, wind energy, solar energy, restricted substances compliance such as RoHS and REACH, and more.
In the Consumer, Commercial & Electrical product sectors, Intertek is offering many services that support greener products and operations by our clients including environmental auditing, testing the emissions and chemical qualities of products to help clients develop more environmentally friendly ones. Environmental regulation continues to increase and place increasing pressure on our clients in many sectors – we continue to roll out new services to help them meet these challenges.
What remains to be achieved for the Oil, Chemical & Agri division at Intertek Singapore?
J.C.: Intertek Singapore is focused on growing the business. In just five years, the staff headcount in Singapore has doubled to 400 employees. We also see growth from Intetek’s Malaysia operations. The synergies with the offices and laboratories in Intertek Malaysia and in Intertek Singapore will benefit our customers. These synergies will allow our operations in both nations to grow at the same time.
Intertek’s locations for the petroleum, chemical and agricultural industries are advantageous for clients, allowing rapid inspection and testing at storage terminals, refineries, chemical plants, etc. Intertek grows with its customers as well as with its customers’ customers.
Service turnaround time is critical, and is a key element to better service the customer base. In the industry, time is money so it makes common sense to place laboratories near the client’s activities and locations. Naturally, one cannot be present everywhere, but the limited size of Singapore is an advantage for Intertek. With strategic laboratory and office locations, Intertek serves clients in the entire Jurong Island complex.
If we would come back in 5 years from now, where would we see Intertek Singapore?
J.C.: Probably offering more bundled, complementary services to clients in the sector for all of their testing needs, up and down the supply chain. We’ll no doubt continue to expand locations and capabilities whenever we see a possible opportunity for us to grow and extend comprehensive services across to our valued customers regionally and globally.
Do you have a final message you would like to send out to the readers of Oil and Gas Financial Journal, on behalf of Intertek’s OCA operations in Singapore?
J.C.: Intertek is driving the creation of synergies within the group. As we move forward, the company is integrating the different back office functions into One Intertek. Another aspect is the creation of synergies of cross-selling. The addition of Intertek APTECH for example, creates synergies for the Intertek Oil, Chemical and Agri division because, very often, the customers are the same. By presenting a more complete package, Intertek can provide clients enhanced value with one-stop services, expertise and solutions. These synergies provide Intertek the opportunity and capacity to grow in the future.