Localised servicesApril 25, 2017
TOGY talks to Mortimer Buckley, regional general manager of SPX FLOW, about the company’s activities in Abu Dhabi and the region, the needs of his clients, industry drivers and opportunities in the region. SPX FLOW is a manufacturing company specialising in flow control and process technology products for multiple industries.
Headquartered in North Carolina, SPX FLOW has been active in the UAE since the mid-1990s. The company operates in the UAE through its subsidiary SPX Middle East. It offers repairs, overhauls and other related services from its service centre in Abu Dhabi, which was opened in late 2016.
• On client demand: “Clients are not prepared to wait for [service companies]. They want localised capabilities and localised expertise.”
• On older equipment: “A lot of the oilfields have installed bases that are quite a number of years old and they want to take the same equipment and modify it in a way that allows them to operate at a different performance level or operate at a different pressure point.”
Buckley also discussed the drive to be based more closely to clients, the new technologies clients are interested in and opportunities in the market. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Mortimer Buckley below.
What is SPX’s footprint in the region?
SPX FLOW has been in the Middle East region for a number of years. We’ve been in Saudi Arabia since the early 1980s and in the UAE since the mid-1990s. What has changed over the past few years is that our clients have requested we be closer to them. Today, having our sales engineers or application engineers or design engineers flying from Europe and the USA to satisfy clients’ needs is no longer acceptable.
Clients are not prepared to wait for it. They want localised capabilities and localised expertise. Over the past few years, that has very much driven our strategy of expanding geographically with a number of offices and presences, as well as expanding our actual technical capabilities.
We have formed regional capabilities for project management, design engineering, application engineering, field service engineering and all the support functions of HR, finance and other administrative support.
We have also created businesses around the Middle East. In Saudi Arabia we have two businesses, and in Abu Dhabi we opened a new service centre in mid-2016. This facility is focused on servicing equipment in the oil and gas industry, primarily our equipment, but also our competitors’ equipment.
What were the drivers behind opening a business in Abu Dhabi?
SPX FLOW has opened quite a number of service centres globally. Likewise, we opened a new service centre in the North Sea (Aberdeen) and in mainland Europe and the USA.
We opened a service centre in Dammam, Saudi Arabia in the past year also. We have two new businesses in 2016 and we intend to expand more in the Middle East in 2017.
The driver is very simply that we want to be closer to our clients. Our clients want us to be on their doorstep.
Who are your clients?
With SPX FLOW it’s extremely diversified. Our markets fall into three main groupings, which are: the oil and gas market, the industrial market, and the food and beverage market.
In the oil and gas market, [our clients are] every large IOC and every large NOC: Saudi Aramco, ADCO, PDO, Qatar Gas, KNPC, Ras Gas. Over the past 20 or 30 years, SPX has purchased and acquired multiple legacy brands with longstanding approvals.
We have 15 different brands that are ADNOC approved, and 18 brands that are Saudi Aramco approved. We have substantially long histories with these end users, and we have substantial install base with them. The difference now is that we are present locally to support them.
What new technologies are your clients looking for?
One of the pieces of feedback we get a lot is related to efficiency. Clients want more usage out of the assets, or usage of the oilfields. We have a range of different products for that. For example, our SPX Bran & Luebbe Vector range of pumps is specifically for enhanced oil recovery. It’s a very niche product with a very small footprint and very high efficiency. It focuses on getting more oil from the wells quickly as they deplete over time.
When we move to the solutions side, the thing that we hear a lot from our clients is that they want a partner who will give end to end ownership of the products. They want to have their assets up for as long as they possibly can to do more with less. We offer health care packages, predictive maintenance packages, field services and onsite products, HSC and upgrades.
Many firms have older equipment, particularity in Abu Dhabi. A lot of the oilfields have installed bases that are quite a number of years old and they want to take the same equipment and modify it in a way that allows them to operate at a different performance level or operate at a different pressure point. These are the types of services we offer. It’s not just about the product itself, it’s about the complete package.
How different is the Abu Dhabi market compared to others where SPX FLOW is present?
There are a couple of high level differences. One is that the clients are quite disconcerting in terms of knowing what they want. In North America or Europe, there is an expectation, to an extent, that the client will turn to you and say give us the product for this application, you are the experts so give us what we need.
In the Middle East it’s the opposite. There are significant players like Saudi Aramco or ADNOC with their own engineering and technical capabilities and they decide the specifications for themselves. They say these are my specifications, this is the perfect solution, offer me something that matches this. It’s slightly different.
That requires a company like SPX FLOW to be quite flexible and adaptable to the local product; we have to adapt it and localise it to suit the specific environment we’re selling it to, as opposed to just saying here’s our package and here’s our solution, here you go. This is why you see that a lot of what we do offer is engineered-to-order or semi-engineered-to-order, we adapt it to suit the client. That is one of the biggest differences.
The second difference is less technical and more cultural. There are differences between the Middle East versus the Asia Pacific versus North America, it’s very relationship driven. Business everywhere is relationship driven, but in the Middle East it is more so. It’s about reputation, clients want to know that you are going to stay. They don’t want someone who’s going to come and go.
That’s one of the things that we clearly emphasise. We’ve been in Saudi Arabia since the 80s and we’ve been here in Abu Dhabi since the mid-90s. We have been supplying the region for many years, and now we are expanding our localised capability. The clients want that reassurance; they don’t want someone who is just going to give them a product at a low price then leave and it’s done.
There is more of the relationship-driven element and more of the personal element in business in the Middle East versus some of the other areas where SPX FLOW operates.
Where do you see market opportunities?
The price of oil has had a considerable impact in recent years, and 2016 was a difficult year on new equipment. The impact on budgets in certain countries, Kuwait, Qatar and Saudi Arabia in particular, have caused delays in overall project investments.
What has also driven these delays has been a movement towards more services, more enhancements and more upgrade projects. There have been fewer brownfields and significant developments, but more expansion of existing assets.
From our point of view, this is perfect timing to invest because we can see the focus of all our clients’ needs at the moment. That focus will swing back and they will need the larger projects in the future, but in the short and medium term they need people who can help them with the assets they have and to get more of them. That’s one of our primary drivers.
Where did you open the two new facilities?
We opened a facility in Dammam in Saudi Arabia last March and the facility in Abu Dhabi in mid-2016. We are currently looking at Iraq with a strong possibility of opening [a facility] there this year. Iraq is a focus area for us.
We see Iraq as a strong potential market for us, there are a lot of synergies with the products we offer. There are obviously challenges to operate there, but that is part of business and you have to figure it out.
We have an install base in Iraq and long-term relationships with some of the large end users, both national end users and international players. We go into Iraq quite regularly; we have a presence there and do activities there. We are looking at whether it makes sense to establish something more permanent.
What do you look for when entering a new market?
When we look at markets globally, one of the first things we look at is demographics and the relative maturity of the country’s assets, particularly for oil and gas. The power industry is quite a large sector for us and the GCC in general has and will have significant capacity constraints in relation to the amount of power it has. We see opportunities in nuclear power, which is coming to this region. It’s not going to arrive tomorrow, but over the next few years they will be starting activities here in the UAE.
This is going to drive a whole new market sector. With requirements for new skills, the end users are going to have to look for reliable and reputable companies, and it’s going to be about reputation and past history. A nuclear reactor is somewhere where you need to have safety and you need to have assurances that the companies you are dealing with have significant track records. We expect considerable changes in the power sector.
You mentioned products earlier. One of the product lines that we have is specifically tailored towards combined cycle and conventional power plants. What we’ve seen is that the change in demand has gone from constant to very cyclical demand, particularly as you bring things like solar plants and different types of renewable technology. That has caused the need for the different kinds of products that we have.
On the oil and gas side in the region, obvious areas of high potential growth are Iran, Iraq and, to a lesser extent, Egypt.
Saudi Arabia, Abu Dhabi and Kuwait are certainly players and we continue to develop there. Iraq is probably the country with the greatest potential, notwithstanding the political challenges there. The oil is still there and it will have to be developed sooner or later. It’s about being there, being present and being part of that development, finding options that can satisfy our clients.
For more information on SPX FLOW in Abu Dhabi, including the company’s efforts to establish service centres in the region, see our business intelligence platform, TOGYiN.
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