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OMS

OS – How Meng Hock, President & CEO – Singapore

02.10.2014 / Energyboardroom

The president & CEO of OMS OS discusses how the company is parlaying its heritage as a machine shop providing quality tubular and premium equipment products to become a dynamic integrated oilfield service company.

 

In 2010, the company was acquired by Sumitomo Corporation. How has the strategy of the company changed since then?

When the acquisition went through, Sumitomo Corporation acknowledged the brand strength of OMS OS and decided to retain us as a quasi-independent company. Sumitomo Corporation ; one of Japan’s major integrated trading and investment enterprises (Sogo Shosha); has clear motivation for them to retain our name’s reputation. In the last couple of years, our two entities have gone through a period of integration, with the meshing of cultures. Sumitomo Corporation has a vision to move beyond trading and investment to a more industrially focused operation.

When I arrived with the company, a year and a half ago, the decision was made to move from our current business sector- that of the tubular and conductor business and premium connection threading to a wider positioning over the next four or five years. We would seek to be an equipment or oilfield service company provider. The strategy behind this based on a 2019 vision, in which the organization aims to be a dynamic enterprise at the forefront of the oil and gas industry. We would no longer be solely a machine shop but an integrated service operation, combining a tangible and intangible operation. This would provide more value to our customers, and we have started pushing this strategy forward just this year.

In 2011, the business passed the USD 100 million revenue marker for the first time. What is your strategy to build on these gains?

Part of that USD 100 million success comes from activities in Saudi Arabia. That is of course, one of the biggest oil and gas markets, and we have established a local manufacturing base and installed a great deal of new technology in it- welding and machining equipment. We intend to retain and grow this business.

To move to a higher field of operation once again, we must expand from solely being a machine shop. Other than the conductor product, our sales are in effect simply premium threading. We do not own the technology, only license it. To grow we need to innovate products and really provide services that add value to the client on top of that.

Do you have any new product lines moving forward? How are your R&D activities set up?

OMS OS is actively looking at technologies with our parent, Sumitomo Corporation. They are an organization of such scale that they have multiple businesses within that organization. As such, we can capitalize on synergies and avoid recreating the wheel all over again. We hope to have such a product very shortly.

To actually capitalize on our premium offering, we are seeking to expand our business development team. This will enable us to communicate our company’s vision to our customers, both existing and potential. We need to connect with clients better, which will allow us to be more responsive.

With regard to your current products, where do you see principal demand?

On the conductor and tubular side, our products see consistent, high demand from many parties undertaking drilling operations. This equipment has also evolved as such parties move into harsher, deeper waters, and our products need to reflect that.

With regard to premium threading, demand can fluctuate according to the end user- it depends on the connections they are using, and we have to match that requirement.

Geographically, Malaysia and Indonesia and Thailand are centers of oil and gas activity and are thus our principal markets for us in Asia Pacific. Moving forward, Myanmar would be a prime target for us to expand our operations.

With regard to your manufacturing capabilities, you have ten facilities in seven countries, the largest being here in Singapore. What does the city-state mean to OMS OS?

Singapore is our HQ- where we house the engineering and quality assurance teams for example. From here, we provide support to our other locations in order to grow them and bring them forward too. As much as people cite Singapore as an expensive location, it is the starting point for oil and gas businesses. All our clients and suppliers are based here – it is a hub. If one looks at the entire cost-equation, it still makes sense to be here in Singapore.

Infrastructure and the political and commercial environments make Singapore an ideal location to operate from.

Singapore is constrained by space; how are you maximizing the profitability of your current site?

The unique aspect to what we are doing is that we complete the fabrication process wherever we operate. To manage cost positions, there is a fair degree of emphasis on process control and productivity, and machining selection. We typically seek more automated equipment. We do not want to be overly dependent on personnel, especially skilled personnel where there is a shortage of locals in Singapore.

Six years ago, for VAM, you were awarded Best Overall VAM Licensee 2008; what is the significance of this award to the company, and since then, what have you done to continue to focus on the premium end of the market?

In this industry, there are two key fundamentals- quality and safety. This award recognizes our focus on quality. This award, however, was six years ago – before the Macondo disaster. Following this tragedy, things changed. Expectations and standards are higher now, and we are moving to embrace these higher quality and safety requirements.

OMS asserts it is a market leader; how do you differentiate yourself from the competition?

Safety and quality are key differentiators. Our organization is also moving forward based on our human capital- our staff make our business work. We hope to connect more closely with schools and polytechnics to secure the skills we need.

The new quality and safety requirements emerging are not as described by some as road blocks, rather they represent improvement. It is important for our business, in the face of these regulations, however, not to lose the commercial instinct and to remain innovative. The business needs to match customer expectations and still comply with this regulation. Problems are plenty, immediate solutions few. OMS OS wants to stay ahead of competition, delivering value to customers with products that meet or exceed quality and safety standards.

Which milestones do you want to have passed in the next five years’ time?

Firstly, we want to build on our heritage and move forward from our strong machining capabilities to expand into additional services. This will require us to acquire the internal expertise, so recruiting staff will be key. From there, we will need to be dynamic. We cannot be rigid, but our business should be able to capitalize on its strong abilities.

 

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