Civmec boss thrives on innovation, keeps moving

INVESTORS might perceive Australia's commodities boom to be over. Chinese demand has slowed and resources giants are scaling back on investment. But James Fitzgerald has just got started.

By constantly thinking about how to build things better and faster, the executive chairman of mainboard-listed Civmec Ltd is leading the Australian construction and engineering company from strength to strength.

"It's how you do the work - you have to be different. We always try to put in innovation. We always sit with the client and help them solve their problems," Mr Fitzgerald says, speaking to The Business Times in a recent interview at the company's headquarters in Perth, Australia.

Civmec decided to list here last year as it was backed by Singaporean investors.

By saving time and costs, and delivering projects on time for giant resources clients like Chevron, BHP Billiton and Rio Tinto, Civmec ensures a steady pipeline of work for many years to come, he says.

Asked if the work will dry up, Mr Fitzgerald points to a high capital expenditure base for oil and gas, increasing demand for iron ore and expected civil infrastructure works for the next few years - areas that the company specialises in. Earlier this month, Chevron signed a deal with Japanese utility company Tohoku Electric Power for it to buy liquefied natural gas (LNG) from Australia for 20 years. Civmec does not just service new projects coming on, but also extensions to old ones.

"People say you'll run low on work. People have been saying that my entire life; it doesn't happen. You'll keep working. A new generation comes on that always wants to improve on their parents - there are always people developing and upgrading and wanting a better life," he says.

Civmec has experienced exponential growth since it was set up a few years ago. Its latest reported revenue - a record $406 million for the full year ended June 30, 2013 - was up 23.5 per cent from $329 million in 2012 and significantly higher than the $61 million in 2011 and $22.3 million in 2010.

Net profit was $36 million, up 19 per cent. The company declared a dividend of 0.7 cent a share, compared to 0.6 cent a year ago. Civmec's stock is now trading above 70 cents, compared to the 40 cents it listed at last year.

The growth should come as no surprise. Mr Fitzgerald, 50, is a 32-year veteran of Australia's construction and offshore industry. Brought up on a farm in Ireland, he says he "started welding as a little kid". He shifted to Australia when he was 19, worked in construction, and then founded resources contractor Ausclad Industries (AGC) in 1988, which became a subsidiary of Singapore Exchange- listed AusGroup Ltd.

In 2008, Mr Fitzgerald, then executive director, left AusGroup amid a dispute. He set up Civmec the following year. Civmec was acquired from Australian Exchange-listed VDM Group and merged with construction company Ballymount Enterprises, run by a sub-contractor he worked with, Patrick Tallon. Both Mr Tallon and Mr Fitzgerald now hold 19.5 per cent of Civmec each.

"I was turning 50 and asked my wife if I wanted to take that risk. But she said I haven't done too bad so far . . . if I had a solid company in Australia, I could give something back to community and train the locals. It's a good legacy to leave."

Today, the company's order book stands at $200 million. One key competitive advantage the company has, Mr Fitzgerald says, is its main office and factory site by the coast at Henderson, a suburb south of Perth. The port is right next door, making shipping of constructed infrastructure hassle-free, lowering costs.

The strategic area was acquired by luck. In mid-2009, when Civmec was looking for a place to build a factory, government agency Australian Marine Complex happened to have that site for sale.

"We can make things here and just deliver it to site. If there's something wrong on the site that doesn't fit, and if it came out of China, by the time they communicate to China to get them to manufacture it, it's weeks lost. We can make it that night and send it the next day," he says.

One way which the company ensures prompt delivery of contracts is the close tracking of every component, cost, material and man-hours required for every project. Stainless steel tags help with the electronic tagging for some components that are put through high temperatures. "Most companies get the job, do it, and then count the money," Mr Fitzgerald says.

"For us, if something is 50 per cent complete but we spent 60 per cent, then we know we're slipping. Maybe we haven't put in the right people. We can also work on the method.

"Ultimately, we want to deliver a good product for clients, on time, on budget with good quality. That's why we spend so much time on this. After that, you'll get another job."

Civmec currently has the capabilities to build infrastructure for civil works, precast and fabrication works for everything in the iron ore mining process short of drilling and blasting, and various assembly and site works for the LNG sector, such as piping installations. The company is expanding from its Western Australian base to Darwin in the Northern Territories of Australia.

In the future, it will look at expanding overseas, such as Singapore, Malaysia, the rest of South-east Asia and Africa. Its new Henderson headquarters has four floors, but currently only the first floor is used to monitor operations, giving it plenty of room to grow.

"We are not beating drums about it. M&A companies and fund managers are approaching us with potential opportunities, but we haven't seen one yet that we're comfortable with," Mr Fitzgerald says.

Meanwhile, he will be building Civmec, one contract at a time. "You can't be stagnant. Once you reach a certain level, it is always in human beings to step up . . . not that we build something and that's it. I wouldn't be happy with that."