Date: April 6, 2022
James Fitzgerald and Patrick Tallon, founders of dual-listed construction and engineering services provider Civmec Ltd, believe in a hands-on approach. The pair, who are long-time friends, advocate playing an active, visible leadership role in the daily operations of the organisation.
“There is no replacement for dedication and hard work. To get a company off the ground you must lead from the front,” noted Fitzgerald, Executive Chairman of SGX- and ASX-listed Civmec. “Leadership is all about trust and doing what you say you will, no matter what you do or look after.”
Tallon, Civmec’s Chief Executive Officer, agreed. “Regardless of what you do, you are in charge of your own actions and decisions, and it’s imperative to lead by example.”
At the same time, criticism is a natural part of leadership. “There will always be criticism and failure,” Fitzgerald pointed out. “Responding the right way, and learning from critique and setbacks, is what truly defines you as a leader. “
“The trick is to try not to repeat the same mistakes,” Tallon added. “We don’t delay decisions because of the possibility of failing. Instead, we share ideas with others before making the final decision. If something fails, we work hard to minimise the fallout.”
An integrated, multi-disciplinary construction and heavy engineering services provider, Civmec was established in 2009, before listing on SGX in 2012 and ASX in 2018.
The Group provides a wide array of vertically integrated services, including fabrication projects, modularisation, shipbuilding, site civil works, structural, mechanical, piping, electrical, instrumentation, industrial insulation and maintenance services to the Energy, Resources, Infrastructure, as well as Marine & Defence sectors.
“Both Pat and I were familiar with the sectors Civmec operates in even before we started the company. We had more than 40 years of industry experience between the two of us by the time Civmec listed in Singapore,” Fitzgerald recalled.
“Having been in our respective trades for so long, we saw huge potential in offering a viable alternative to Australia’s ever-increasing reliance on importing fabricated steelwork for its various industrial needs,” he said.
“The alternative was to provide local expertise in fabrication, and create multidisciplinary service offerings that would address the cross-contractor interface issues that often existed in construction projects throughout the country back then.”
“We had a strong belief in training and developing people from the ground up,” Tallon noted. “This gave us confidence that the journey we were about to embark on would be successful. We also had a vision of harnessing cutting-edge technology to build a business with a turnover of more than A$300 million within three years.”
Civmec has since doubled its turnover – the Group reported a revenue of A$674.2 million for the financial year ended 30 June 2021, up 72% from the year-earlier period. Net profit was A$34.6 million, rising 98% from the previous period.
Established Track Record
Fitzgerald attributes the Group’s success to its established track record as a Tier-1 construction contractor for the energy, resources, infrastructure and defence sectors in Australia. This has kept the Group profitable through the years, enabling it to secure more projects from existing customers as well as opening doors to new clients.
“Our next engine of growth will be maintenance and capital works, which will give us recurring revenues, while we continue to take on construction jobs – our legacy bread and butter,” Fitzgerald noted.
“Many of the plants, facilities and infrastructure we have built and continue to build will require upkeep to ensure they remain shipshape over time. We can also take on capital works, including upgrading or even changing the use of some of these assets, if our clients have such requirements.”
The Group has invested substantial resources in defence, including putting in place relevant infrastructure, to position itself for existing and future opportunities that may arise from the Commonwealth of Australia.
“There’s a huge focus on enhancing the Royal Australian naval fleet. We see opportunities there for us as a sovereign shipbuilder and sustainment contractor as the need arises,” Fitzgerald added.
Civmec also sees huge potential in the renewable energy space, in particular hydrogen and lithium, Tallon said. “We’ve traditionally been involved in construction projects for companies behind fossil fuels. But with climate change driving demand for clean energy, energy companies are pursuing more hydrogen and lithium projects.”
There are about 60 hydrogen projects at various stages of construction or development in Australia and New Zealand, according to data from the Commonwealth Scientific and Industrial Research Organisation (CSIRO).
The arrival of the world’s first liquefied-hydrogen vessel in Australia in January 2022 to ship its maiden cargo to Japan marked the first time liquid hydrogen was transported by sea to an international market.
In addition, Australia is home to an increasing number of lithium plants, as lithium exploration and mining gain traction with electric vehicles (EVs) becoming more mainstream.
The Group recently won a major contract to build a refinery in Western Australia to convert lithium concentrate into a high-purity compound used for making EV batteries. The refinery is slated for completion in 2024.
While the outlook is bright, there’s always competition in the industry, Fitzgerald acknowledged.
“As there are a number of contractors like us servicing many of the world’s leading energy and resources companies operating in Australia, we are up against competition to secure work,” he noted.
“We’re competing not only for work, but also workers. As you can imagine, ours is a labour-intensive business. Labour is no longer as readily available as it used to be because of travel restrictions and border closures brought about by the pandemic.”
Any sharp and sustained decline in demand for these natural resources could also pose a risk to the Group. “When oil prices collapsed in 2014-2015, energy majors slashed capital spending as production ground to a halt. Many service providers in the supply chain were hit badly during then and in the years that followed,” he recalled.
“That was one of the reasons we diversified into other sectors like infrastructure and defence. Doing so has given us exposure to both private and public spending. We see this as an important strategy – if private clients slow down their capex, public spending by the government will generally kick in to stimulate the overall economy.”
Another risk diversification strategy adopted by the Group was to expand the fabrication capacity of its flagship plant in Henderson, Western Australia.
“We installed what we call an assembly and sustainment hall – this is Australia’s largest undercover modularisation and maintenance facility, with enough space to house the equivalent of 12,000 passenger buses,” Tallon pointed out.
“With this facility, we can build and maintain large vessels, as well as complex modules for various energy, resources, and even infrastructure projects,” he added.
“This gives us leeway to take on projects from various industries, and from both private and public sectors. In that sense, we can spread our risks so we don’t become too dependent on any particular industry or sector during a downturn.”
For Civmec, health and safety rank at the top of its Environmental, Social, and Governance (ESG) considerations. “Our health and safety systems are ISO-certified. We also care for the mental well-being of our employees, especially at a time when the pandemic has curtailed physical contact,” Tallon noted.
“For the environment, we have an ISO-certified management system to help us identify, understand and handle environmental challenges. Our energy inputs are high, given the nature of our business. To be more environmentally friendly, we’re exploring the use of solar energy. For a start, within our upcoming facility at Port Hedland in Western Australia, we’re planning for it to be equipped with solar panels.”
While the day-to-day operations of the Group remain a dominant aspect of their lives, both Fitzgerald, 58, and Tallon, 52, make it a point to set aside time for family. Both have three children each, aged between 18 and 28.
“Always look after your health, your family and as best you can, those around you,” Fitzgerald noted.
“In this life you will always run into problems. Don’t make reactive decisions every time a problem occurs. Instead, let some time pass, and mostly you will find the problem isn’t as insurmountable as it might first appear.”
Last but not least, diligence and commitment are vital to working out the best outcomes for everyone. “Remember that there is no substitute for hard work,” Tallon added. “It’s often better to be sorry for doing it than to regret not having a go at it.”
Civmec is an integrated, multi-disciplinary construction and heavy engineering services provider to the Oil & Gas, Metals & Minerals, Infrastructure and Marine & Defence sectors. Headquartered in Henderson, Western Australia, Civmec has regional offices in Newcastle (New South Wales, Australia), Gladstone (Queensland, Australia), and Port Hedland (Western Australia). The company is listed on SGX (Singapore) and ASX (Australia). Its core capabilities include heavy engineering, shipbuilding, modularisation, SMP (structural, mechanical, piping), EIC (electrical, instrumentation and control), precast concrete, site civil works, industrial insulation, maintenance, surface treatment, refractory and access solutions.
The company website is: civmec.com.au
Click here for the company’s StockFacts page.
For the half year ended 31 December 2021 financial results, click here.
First published on SGX website on 11 March 2022
About kopi-C: the Company brew
Text: Jennifer Tan-Stanisic
Photo: Company file
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