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The process is the thing for AllAlloy
THE pieces are falling in place for local small and medium enterprise AllAlloy. With almost eight years of solid experience under its belt - during which the firm actively boosted its branding and established its distribution network - the company is now ramping up a segment it has been quietly building and strengthening - its own brands.
It is a plan that has been in the works from day one - Revolt, its oldest brand, was started almost as soon as the welding equipment and solutions provider was established and focuses on accessories. Its other brands include Revosafe, which focuses on safety products, and Sqwincher, under which it distributes hydration products including ready-to-drink isotonic beverages which are sold as powder concentrate and liquid concentrate.
"We have had an office in Malaysia since the day we started. In Australia, also, we are selling a lot of our products," shares Victor Khaw, general manager at AllAlloy.
"In Indonesia, we just (established a) JV (joint venture company) so we're going to sell a lot more of our products there. We are (also) going to do one in the Philippines to sell our brand of products."
It is a fine line to toe, ensuring that the products the company designs and commissions are not in direct competition with the products it distributes, especially as its principals are well-established firms with long histories and that it is selling at the top end, which is limited in whichever market it enters.
One of the new products it distributes, for instance, is an automatic pipeline welding system which elevates the operator from being a welder to a technician.
"The technician can operate this system and the system can operate five or six times faster than the existing manual method," says Mr Khaw of the system which is aimed at offshore customers. The operating cost for an offshore barge is about S$250,000 per day, says Mr Khaw, so being able to reduce the timeline for a job from five months to a month-and-a-half is something all customers are keen on.
But as hyped up as the company is about this new system, AllAlloy is already in talks with the manufacturer to make a "B-grade" version of the system, one that may be slightly less effective, but is a lot cheaper.
"We are asking them to make a system - not so advanced, but a lot cheaper - so that all SMEs can use it. This system costs 200,000 euros (S$305,300). If you go to an SME and say one system costs S$300,000, they will have to think three times, four times, five times! But if we can bring it down to half the price, it's still expensive, but if the price is lower, maybe we can rent it out to SMEs and if after six months they find it's good, they can buy it over," says Mr Khaw.
Helping other SMEs move up the productivity ladder is something that clearly informs the firm's decisions with regards to products it distributes and designs. Although AllAlloy's customers include large shipyards, ensuring that it has a product line suited to SMEs is also key.
Another product designed with SMEs in mind is a mini submerged arc system which AllAlloy designed to be low-cost and energy efficient. In addition to being suitable for the smaller work spaces that SMEs typically have, it is able to use standard power sources. The company has sold about six such units; each unit is about S$18,000.
AllAlloy has clearly benefited from the productivity drive that Singapore has embarked on. When the firm first started in 2008, it was posting revenues of slightly over S$10 million, a figure which shot up to S$25 million in 2009. The next quantum leap was in 2012, when its sales turnover surged to more than S$40 million.
The geographical breakdown of its revenue streams similarly underwent a metamorphosis.
Prior to 2012, revenue streams were equally split between Singapore, Malaysia and Australia, says Mr Khaw. In FY2012, Singapore constituted over 60 per cent of sales by region, a figure it retains to the last financial year.
But while there is still space for improvement, sustaining the level of productivity improvement gets increasingly difficult as the baseline moves upward. The other problem, notes Mr Khaw, is the sluggish market the industry faces.
"Oil prices have been low for many months . . . but do you see companies here laying off workers? You don't . . . because a lot of companies are frightened that when they send their foreign workers back, they will not be able to get their quota back again. So today (even if) you're still working at this productivity level, your volume of jobs has gone down (but the number of workers remains the same). Even if you're not doing anything wrong, your productivity next year will drop."
This is a multi-faceted problem, particularly for the marine sector which will see its foreign worker quota reduced by 10 per cent next year and a further 20 per cent in 2018.
"This means their productivity must increase by 30 per cent, which we find close to impossible. We have been to yards around the region and even Europe. We find the yards here are quite good already, so even if they can improve their productivity we believe it won't be in the region of 30 per cent. So what we are doing is helping them redesign their jobs to make locals want to work in it. If you can hire more locals, even if your foreign dependency ratio drops, your total number of staff can be retained."
And by focusing on processes rather than products and helping customers change their welding processes to improve their productivity, AllAlloy has built its clout.
Says Mr Khaw: "Our industry is not a big industry. We are differentiated from the rest because we're the only welding house that has an E50 award. Now, when we talk to overseas people, we are eight years old so there's a bit of track record. But when we were two years old, people would ask, Can we trust them?"
To that end, AllAlloy has won recognition in the form of awards - in the very first year of business, the firm clinched the Emerging Enterprise award which it went on to win for two years running; this year marks the fifth consecutive year it has clinched the Enterprise 50 award.
Casting its eye to the wider market, AllAlloy sees a number of overseas prospects. These include the potential of starting a welding business in China and looking for opportunities in Myanmar.
But it is not in a rush, and is biding its time. After all, the best gains can be found in the process.