Offshore market opportunities beckon for wastewater treatment

This article originally appeared in Process magazine which I edited for Reed Business Information

Aquatec-Maxcon is a successful Australian water treatment technology and equipment manufacturer which has grown form modest beginnings in a 90sqm terrace house in Sydney’s St Leonards. It is now a large operation with offices in North Ryde, NSW, a four hectare fabricating plant in Ipswich, Queensland, and an estimated 50 per cent of the Australian municipal wastewater treatment market.

Now supplying internationally through its 80 per cent share of Aquatec-Maxcon Indonesia, the company anticipates more than 30 per cent of its income will be coming from offshore markets within the next five years.

While Aquatec-Maxcon’s managing director and founder Tom Lawson is happy to provide an insight into the company’s success and its philosophy, he is also concerned about the future for water treatment manufacturers in Australia, particularly with regard to current State Government purchasing policies and the consequent inroads recently made by foreign owned companies into the Australian market.

“Our company has grown in two areas – the Sydney office started in 1981 as Aquatec Engineering and in 1985 I sold half of it to Maxwell Contracting, which was a Queensland-based company who had already been in the water/wastewater industry for more than 10 years.

“The marriage has been very fruitful as the skills of the two companies were highly complementary. Aquatec had specialised more in process engineering – we were small but focused – whereas Maxcon was more of a steelwork fabricator with designs for physical separation upstream and downstream of biological treatment processes. It was  reasonably substantial but had never done a lot of marketing, nor had much exposure to overseas technology.”

One of Aquatec’s big specialties had been aeration equipment for biological treatment of wastewater and this, explains Lawson, is still a mainstay of its business:

“The bottom line is to design aeration systems at lowest possible cost – not just the capital costs of putting them in, but also lifetime costs – more effective systems which deliver the same amount of oxygen but less electric power.

“I’m a frequent traveller so I know what technology’s coming out of Europe and that’s helped our ability to keep up with the latest systems. For example in 1986 we got the exclusive agency to market compressors and blowers manufactured by HV-Turbo A/S. They’re a Danish company and their advanced technology now delivers the highest efficiency available.”

Lawson says a number of very large aeration jobs came up once Maxcon was behind the company. It subsequently won small business awards, turnover increased and there has been an upward progression since. In 1992 the second half of Aquatec was sold to Maxcon. The new structure was headed by Aquatec Environmental Ltd, a holding company which owns 100 per cent of Aquatec Maxcon and 100 per cent of Maxcon Industries.

Five years after Lawson founded Aquatec, the company had moved from St Leonards to North Sydney where it started out with 140 square metres and expanded to 2000. In 1991 it moved again, this time to Roseville with 275sqm of office and another 275swm of warehouse, where it stayed for three and a half years. The present site in North Ryde has 700sqm of office and 700sqm of warehouse.

Lawson explains how the company’s Queensland fabrication plant is involved in product supply: “The realities of transport of big steel structures means Maxcon Industries in Queensland makes the gear if the job is local, while if it’s in Tasmania for example we get a local company to do the fabrication.”

There are more than 100 shareholders in Aquatec Environmental and the company is wholly Australian owned. Approximately 70 per cent is owned through an unlisted public company and 10 per cent through staff – “We encourage the staff ownership to the degree we can,” Lawson says.

For the last few years the group has turned over around $20m, around $9m of which has been generated from the Sydney office. The remainder is from Ipswich and is split approximately $6m from wastewater, $2m from potable water and the balance from steelwork fabrication, for example for power station development in Queensland.

“Because we have to tender for nearly everything our turnover often varies,” Lawson explains. “This year it’s been extremely successful. We expect more than $30m from group turnover and $15-16m of this from the Sydney office.”

Aquatec-Maxcon’s philosophy is to build up assets in Australia and as part of that policy both the Ipswich facilities and its Sydney office premises are wholly owned.

“We’ve attained a permanency here,” Lawson says, “and it’s big enough for our envisaged future expansion. The building cost around one and a half million to buy and Ipswich was four and a half. So now we have substantial Australian fixed assets. This helps to show clients we’re serious and here to stay and we’re substantial.”

Technological independence

The company is also spending on R&D in an effort to become less dependent on overseas technology.

“While to an extent we’re still dependent, we try to do as much over here as we can,” Lawson says. “For example while we’re still importing diffusers from Europe we already do part manufacture here. We also have the exclusive agency for HV-Turbo blowers which are from the biggest European supplier of this high rotational speed equipment. It makes little sense to attempt to build this high technology precision equipment in a market of Australia’s size.”

Lawson says the market for wastewater treatment is a strong one: “In any city you have industries producing wastewater and the authorities in charge of sewerage systems often insist on pre-treatment – certainly in Brisbane where we worked for Fosters’ Brewing about 18 months ago, building a $3m wastewater plant in Yattala. We’ve done the same thing for Cadbury’s in Tasmania and Mars in Ballarat. If you’re dealing with higher strength industrial wastewater it’s very difficult to get enough oxygen in so then you switch to anaerobic treatment which is really quite tricky technology because every wastewater is different … some are more responsive to biological treatment than others.”

In line with this Aquatec-Maxcon has recently acquired a US aerobic system called Air-O-2, though, Lawson says, “We would like to be as Australian as we can, doing R&D to maximise Australian content and to be less dependent on overseas technology, but without being stupid about it. We’re keeping our eyes on overseas and when we see something we can’t realistically do here then we use it.”

Market size and potential

“The wastewater industry is not necessarily as much a high growth market as some think it is,” Lawson stresses. “Australia is 18 1/2m people and the reality is that controlling pollution has been recognised as a priority over the last 20 years so billions have been spent on it already.

“Having said that, there is still money being spent on the highest standards of pollution removal. Also in wastewater and not being taken out is nitrogen and phosphorous and the Environmental Protection Authority, particularly in Queensland is making moves to remove these.

“Another area which has a lot of potential is upgrading of plants built more than 15 years ago. This could be a more than $50m pa market in terms of equipment.”

Another market the company has moved into is Indonesia, which despite its higher population is far behind us in pollution control, according to Lawson. “They haven’t yet got to the point of stopping pollution before it happens.

“At the moment they’ve only got 10% of what they need there in wastewater so over the next 10 years it’s a huge market that the Japanese and the Europeans are all beating a path to, and our choice is whether to carry on operating in our backyard or join the push.”

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