with Paul Giovenco, Managing Director & CEO, Giovenco Industries
Giovenco Industries has grown from very humble beginnings into a very impressive company. How would you describe the company to our readers today?
Giovenco Industries is an industrial service provider, and is one of the top four companies within its market segment. The Giovenco brand is extremely good, and has been built up through delivering a quality product on budget. This is backed up by a high quality workforce. As a family company, maintaining a good reputation is key.
The Giovenco group has a number of different companies within it. Consolidation of these companies happened fairly recently. Could you tell us a little bit about that process?
The original group of Giovenco companies was founded by four of the Giovenco brothers, owned by four individual Giovenco families. Due to natural attrition and people passing away, the businesses were eventually passed on to the second generation. In order to consolidate the group, my family and the family of one of my uncles arranged a leverage buyout deal with the National Australia Bank, and now just two Giovenco families own the group.
How easy was it to put those diverse companies together under one roof?
Initially it was something of a struggle, but the company has some independent business advisors that have been working with the board on successful integration strategies. The approach that we took was similar to that of any other business acquisition process, except for the fact that it has been more of an internal acquisition and integration process. It has actually been quite fun.
Have you decided to prioritise certain sectors of the business?
We have, and in terms of our marketing and our increased revenue drive, we are focusing on oil and gas. It came through a three stage process: first finding out in which sector we wanted to work in based on our two work types, construction greenfield projects and maintenance. We needed to work out as a board where our revenue would split between these two business lines. The upcoming capital project work throughout Australia in the oil, gas and mining sectors makes it very tempting to put a sales revenue budget together based on greenfield projects. A business in Australia will only be successful if the future market situation is considered when putting together a business plan.
However, during the global financial crisis, Giovenco was in a fortunate position because a lot of work had gone into securing maintenance contracts. Giovenco holds three-year contracts with Caltex for insulation, painting and scaffolding for both of the company’s refineries. The company also holds a maintenance contract with Rio Tinto Alcan for scaffolding and insulation in Gove, and we have the Dalrymple Bay coal terminal maintenance contract for painting. Giovenco also does a lot of maintenance work with Shell at their Clyde refinery. This business allowed Giovenco to weather the global financial crisis and come out the other side unscathed.
Today is a very exciting moment for the industry as the Greenfield capital expenditure boom has begun. Giovenco Industries has been involved so far through our Western Australia company GIS (Giovenco Industrial Services), which has been involved in the Pluto project as well as with the Worsley Alumina joint venture. The company is also looking at other Greenfield opportunities in the region with both John Holland and Apache Energy.
Giovenco’s strategy to build capital was to start investing in what we sell best. So in the last twelve to eighteen months, the company has been on a top end recruitment drive, and has secured some very experienced senior staff such as Horst Koerner, ex-managing director of Kaefer Australia, one of Giovenco’s biggest international competitors. Horst joined Giovenco six months ago as general manager of LNG and special projects, and will be managing the top end of Giovenco’s greenfield business. We also recruited Alexander Lechner, to our business development department and Michaela John to head our marketing team. This new management team will help to strengthen the company and send it in the right direction for growth.
On the maintenance side of the business, Giovenco’s focus will be on the mining sector, with some planned projects in oil and gas. Large capital projects will be focused on the developing gas industry. Giovenco is in the process of securing a yard in Chinchilla or Roma in order to place a new scaffolding facility. The company is also upping the ante in Gladstone, and our Mackay operation is expanding. This all follows the Giovenco business plan, which is built on good capital maintenance, a focus on oil and gas mining, and strategic placed satellite operations to complement this. This is the company’s plan for growth.
What kind of reputation do you think Giovenco has today within the oil and gas industry?
The company today is both well know and highly regarded. The image Giovenco projects and the reputation we have is enviable within the industry. Although the company has a very solid turnover, I am sure that some of our competitors, suppliers and customers believe our turnover to be closer to the billions than the hundreds of millions. This is all related to the professional and successful image we project.
What do you think differentiates Giovenco Industries from its competitors?
As I said before, it is about delivery and culture. It is about reaching a level where our employees promote our business. I have the faith to bring my employees into safety audits with our main contractors, as I know that the culture of safety is one that all our staff understand. This is important: Giovenco prides itself and even sells itself on that culture, on knowing that we can use our employees to sell our business.
We have to deliver a project on time and to a high quality, but most of all we have to deliver it safely. When I see employees being safe on my site, I often write to their families to tell them what a good job that person is doing: by driving the importance of safety home to every one of my employees, we can preserve our spirit of safe operation. I don’t feel as if safety should be a trade secret. At the end of the day, we want to ensure that everyone in the industry is working safely.
Giovenco has a solid base of maintenance contracts, and from this position the company will be looking to win new projects. Queensland is a very promising region for you in this regard: where are you going to be focused precisely?
In terms of geographic locations, we will be focused on central Queensland. Our mining thoughts are centred around the Bowen basin, so Mackay and out, and our gas focus will be on the central coal fields and the coal seam area of Chinchilla.
Giovenco recently did some work in a joint operation with Laing O’Rourke on the power station at Dalby. We are also talking to Laing O’Rourke about Kenya and providing them with insulation and painting expertise there. Our other gas sector is Western Australia, and we are investing quite a lot of money over there as well.
Terry Bayliff was saying that Laing O’Rourke do quite a lot of work in partnerships. He told us that such partnerships were extremely important to his company as a contractor, because a successful collaboration gives faith to a client. How important is the partnering process for Giovenco today?
Partnering with our clients, owners and suppliers is what has built the success of Giovenco Industries. Since 2000, some of our main capital projects have been as part of a partnership, such as the construction of the Queensland ammonium nitrate plant in Maura. By engaging in joint marketing presentations with our collaborators, proponents can easily see the value of the arrangement. I agree 100% with Terry. Laing O’Rourke and Giovenco have a very close partnership today: we have been through good times and bad together.
What are your personal ambitions for Giovenco here in Queensland? Which projects do you want to be working on and what would be the ideal position for Giovenco here?
I have some specific personal goals as Managing Director and CEO of Giovenco Industries. The biggest personal goal for me is to continue our incident and injury free operation.
Also, I want to concentrate more on two areas of the business. In an ideal working day, I would like to put 45% of my time into being on site with my workforce, another 45% with my customers, and 10% of my time with my management. My management team is extremely capable and solid: I trust them implicitly to manage and run the business. I see my role as CEO as getting to know the company’s workforce, the people that make it happen, and the people that make it happen by giving me the orders. If I can maintain that and move away personally, I have succeeded.
The other challenge that I am getting personally involved in is where are we going to get the 38,000 people needed in Queensland to complete these projects that are in the pipeline I was recently in the Philippines where Giovenco Industries is now well on the way to establishing a solid training and recruitment facility.
One of the real challenges for Giovenco Industries and every company is that massive capital expenditure is going to take place over the next few years, and rates for workers are going to go up. There is a big question of how to keep supporting our existing customers on their projects when new projects that pay higher wages will draw our workforce away. We need to be able to underpin our existing workforce with migrant labour in order to compensate for this. It costs a lot of money to put an employee into a site, induct him and train him, so we are looking for long-term retention solutions. I intend to get personally involved in this challenge: I am going to champion integration between our Filipino and Indonesian agencies in order to ensure that we can keep supplying the workforce for these projects.
As Giovenco Industries continues to grow, will it be possible to maintain the culture of the company that you have worked so hard to build?
We definitely have the ability to maintain it, and my plan is to do this through a mentoring system. I want it to be clear to our employees that if they see a colleague not following a particular safety procedure, they can feel comfortable in approaching that colleague and informing them of what they are doing wrong. If this advice is not heeded, then that employee should then feel comfortable going to a supervisor, safe in the knowledge that the person being reported will not be fired or blamed, but simply coached and trained.
Creating the right culture at the supervisor level is key to this approach, and our approach to this is to assess our staff based on the comments and input of the team they manage, rather than the manager above them.
Do you have a final message that you would like to share with our readers?
I have noticed recently that at every trade show and conference I attend, recruitment companies are present in an attempt to solve the labour question that is troubling the industry at the present time. I would say to my fellow CEOs that in order to solve their labour issues, they are best to come to a specialist in the industry. Outsourcing from a specialist can be far more effective than recruiting from a firm that is not specialised in the industry. Don’t go to the vet when you need a doctor!