with Jim Davidson, Managing Director, ACI
What was the story and vision behind ACI’s creation in 2004?
ACI was part of the coatings division of Rolls Wood Group for 10 years, where at the time, the coating technology was primarily used to repair and overhaul gas turbine generators. The Rolls Wood Group decided to introduce the technology to the oil and gas market back in 1997, and created a new Surface Technologies division, which had the majority of its customer base in oil and gas, with a small 5% minority related to gas turbines. In 2002, there was a factory fire, which affected the coatings division and at that point, I approached Rolls Wood Group and asked if they would consider selling off the oil and gas coatings business. I was eventually invited to tender for the business along with other Aberdeen and international businesses. I and my business partner Simon Cheyne put a successful bid together over 2004, and subsequently transferred personnel, assets, and associated IP to Portlethen. Since that time ACI has increased in size from an initial nine employees to 17. As we speak today, the company is recruiting another two posts in engineering and administration, and will add another two engineers by the end of 2008. Under the Rolls Wood Group, annual turnover was £650,000, which has since doubled to £1.3 million, with high expectations for the next few years, with our new InnerArmor product likely bringing the company to the £3-4 million bracket.
What is ACI’s technology advantage?
ACI specializes in high-performance coatings. The majority of the coatings ACI provides prevent wear, corrosion, and erosion in numerous parts across numerous sectors, although our focus has been on oil and gas just because of our location. ACI’s core business is High Velocity Oxy Fuel spray, but plasma and wire arc sprays are both important, and there is a new addition – the InnerArmor division, which is different from the core technologies. InnerArmor extracts carbons from gases and uses an electrical charge to create an inner coating as hard as diamond. This coating can extend the shelf-life of products dramatically.
How did InnerArmor technology arrive at ACI?
The technology emerged from the semiconductor industry, via a Californian company called SubOne Technologies which had developed similar processes for machinery in that sector. The directors of SubOne realized they could create a coating with an application to the oil and gas industry, which was chosen because of the likely readiness to accept a high-performance coating technology. SubOne’s technology was picked up by ITIEnergy in Scotland and it then looked for companies here to bring it to the marketplace. After a few visits to California and seeing the laboratories in action, I thought it had real potential, and the rest is history.
Since then, SubOne has expanded considerably, growing from eight to 40 employees and moving into a 24,000 sq. ft. factory, to take the company on a global scale and introduce coating partners around the world.
As one such partner, can you clarify the role ACI plays in that global network in disseminating the InnerArmor technology?
ACI is under license to operate the technology in Scotland, although the company can take on work from anywhere as long as the work is done in Scotland. ACI also has an understanding with all other coating partners that gives the company rights to service a territory. ACI is very keen to expand, and there’s no restriction in this regard, because ACI has first right of refusal on the granting of any new licenses globally. This means that if ACI chooses an area, wherever in the world, we could get a license sooner than anyone else.
There’s no doubt of interest, although ACI has found a slow uptake to get parts coated and into field for trial, and following through to production order. It’s an ongoing process, and has taken longer than the three to four months first anticipated. We are finding Norwegian customers are reacting much quicker. For example, ACI completed a field trial in Norway in July 2008, and followed up with a production order in September, which represents a comparatively fast turnaround time. In 2009, there should be much more work, with interesting tools coming up in both Scotland and Norway, as well as other sectors, geographically and in terms of the industries we work with.
Other than these two core locations, where do you see the most likely geographic expansion for ACI?
ACI is hoping to maximize the Aberdeen and Scottish base first, although there are opportunities elsewhere. I am going across to the Middle East next month to gauge the market, where I think there’ll probably be a good uptake for the technology. So far Norwegian companies are the most receptive, but InnerArmor is attractive regardless of geography, especially to tool rental companies.
With many millions in potential savings, where’s the disconnect between the obvious benefits InnerArmor provides and companies getting on board to take advantage of the favourable cost-benefit equation?
The technology has to be ready and in a position to be able to serve these markets, so at this stage ACI is gauging the UK market size, getting machines manufactured, people trained, and the infrastructure to handle sizable orders,. We are getting there and have plans to expand within the next few months.
In terms of making that investment, what kind of partners is ACI seeking out to aid with this expansion?
There is potential for joint venture, but at the current time, ACI is looking more immediately for personnel expertise, in the form of engineers, preferably with a chemical and mechanical background to operate machines; there’s quite a learning curve in this new technology, and it’s not just a push button process. It’s important to understand the chemistry underlying InnerArmor and how the gases are reacting inside the vacuum chamber, which constantly change at differing atmospheric pressures and temperatures.
What is your vision for ACI over the next five to 10 year time horizon?
Over this time, ACI will retain and aim to grow its presence in Scotland and probably construct facilities to complement that somewhere outwith the UK. Manufacturing plays a big part in where coating is performed. Countries in the Middle East, America. Canada, or even Germany and Italy all seem to manufacture at much lower costs than the UK, so all these locations are potentially attractive for larger manufacturing locations, and where ACI needs to position itself.
What is your final message to readers of OGFJ?
ACI is right on the cusp of a major growth phase. There is a large degree of interest and it’s important to put the infrastructure and proper resources in place that we need to support that growth and the new clients we will be working with.
ACI is definitely a young, growing company with high ambitions. We have a fantastic skills base and a strong team with numerous years of experience in high-performance coatings. When people want to engage with us, we don’t disappoint. ACI prides itself in quick turnaround, high-quality products, at a very competitive price.