Going Places

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-By John Boley

Berg Engineering is going places. Literally. This provider of high quality, low cost solutions for process customers will be 40 years old in December and is spreading its footprint across Australia and south east Asia from its base in Queensland. According to Wayne Needs, Berg’s General Manager for Sales, Marketing and Business Development, until recently the company had been very focused on a relatively small geographic area in south east Queensland. “Probably 90 per cent of the revenue from our Brisbane operation comes from within 300 kilometres of the Brisbane factory and the same can be said for the Gladstone facility. So we are focusing, from a business development perspective, on taking the capability of the company out further and wider geographically.”

For example, Wayne points out, Berg is a premium slurry valve refurbisher for Queensland Alumina Limited, the world’s largest alumina refinery in Gladstone and the nearby Rio Tinto Aluminium Yarwun refinery. But there are numerous other aluminium refineries where Berg is not currently working, including several in Western Australia. Berg is today, the largest slurry valve refurbisher in Australia.

“So we are looking at expanding the engineering capability that we provide in the southeast Queensland aluminium industry into Northern Territory and Western Australia.” The same can be said for Berg’s representation in other industries such as power generation, where the Brisbane facility is particularly active. Berg carries out a lot of refurbishment of high end critical assets such as turbines when major companies shut down every 12 or 24 months.

“Again, we have been very focused on the geographically local power industry, but we have not stretched our tentacles out into the other power generation sites around Australia. So we are starting to focus on places where there is a very strong presence of coal fired power stations and we are moving our expertise into those areas.” Wayne admits the company is in a rather enviable position of having its core expertise – its critical plant asset refurbishment capability – being “very well regarded by the customers that we deal with today. But there is an enormous opportunity for us to expand geographically into these other areas.” The biggest problem, he says, is not trying to run too fast, “not to do too much at any one point in time and trip over ourselves. We are very focused in our sales and marketing activity, so we identify targets that have similar plant and equipment to what we have expertise in doing now.” Berg then builds relationships, demonstrating and presenting its capabilities and benefits.

Not that the company has ever lacked ambition. Roger Berg, the founder of the business, is retired now but he and his wife Pam grew the business from almost nothing – he started in his garage, having bought his first lathe, and started producing componentry – to a 30 million dollar business with two locations and a total of 160 employees. Now son Derek wants to take what his father has built and grow it to the next level. “Derek is very focused on taking the 30 million dollar business that we have today and growing it to 200 million dollars, so he has brought new capability into the business, which we are reformatting from a small, geographically focused business to a larger, more nationally focused enterprise.”

In fact, the company’s footprint is now international because Berg Indonesia has just been established, taking account of the award of some “rather major contracts” for refurbishing large pumping assets for a couple of very large gold mines in Indonesia. “We are really moving through a transition from one generation to the next generation and it is a very exciting process to be part of,” says Wayne, who joined Berg two and a half years ago.

Berg has made something of a speciality of servicing blue chip clients, which include the likes of BP, Caltex, CS Energy, NRG United Group and Xstrata to name just a few, with maintenance and refurbishment of critical assets like pumps, valves and gear boxes. “One definition is ‘roto-mechanical assets’ – anything that has a shaft and bearings or impellers that rotate. We have the equipment and processes to be able to refurbish or enhance the life of such components.” A lot of Berg’s work is not just rebuilding broken gearboxes, pumps and valves, but also “applying the engineering technologies that we have to make them last longer than the original OEM items. That is why we are able to hold such good relationships with these big blue chip clients, because we actually deliver serious value in terms of reducing their maintenance and operational costs as a result of the engineering work that we do.”

In many cases this is about remanufacturing a component or assembly to perform better than the OEM product – which hardly endears Berg to the major original equipment suppliers. Has Berg ever thought of entering the production fray itself? “In fact we are moving down that track with valves,” says Wayne. “We have been maintaining and refurbishing alumina slurry valves now for 12 years and our clients have asked us to look at developing a range of Berg products that they can buy from new, because they see and understand the improved life that they get from our product.” Some of the client’s engineers are working with the company, giving their input into the product so the final design can be more applicable to their specific requirements. “We believe that we will be able to release these products within the next six months.”

There is, of course, an intellectual property dimension in this sector. Berg can refurbish, replace or remanufacture any part on behalf of a customer that owns the asset under the repair-or-replace provisions of IP law. But the company does face competition from outside Australia, “particularly with our Indonesian customers. We are faced with some fierce price competition from Asian companies that try to do the same sort of thing. Unfortunately they don’t have as good a level of control over the raw materials that they purchase and also the engineering technology that they utilise to make the parts is not quite as refined as what we have here.” So the competition is generally unable to match the performance of Berg’s products, but in some cases they will come in at half the price and “that pushes us into a position where we have to re-justify to our client why they are paying the money.”

When it comes to direct performance comparisons, there is rarely a problem, “because we have lots of experience and history and we have been able to outshine the performance of the Asian manufactured products quite significantly. But if we were moving into that market today, without that experience, it would be very difficult to compete in those markets.”

Berg remains largely focused on mining and minerals as well as power generation, especially for coal fired power plants with pulverising equipment for coal. “We do a lot of refurbishment work with pulverising gear, and of course turbines, which are precision rotating elements either for compressors or gas turbines for power industries.” The company is seeing an increasing amount of work in this sector although at present, coal represents around five per cent of the company’s business. “The feedback we have from existing clients in that space is there is a big opportunity for us to move in there,” says Wayne.

Berg stands by its commitment to lean manufacturing. “Operational efficiency is one of the things that is really going to differentiate businesses like ours,” explains Wayne, “so we have invested a lot of money, time and energy into training our people in all aspects of lean.” It’s a manufacturing philosophy that really must be inbuilt into the daily operation of a business to see a long term benefit. The company has seen a “significant” reduction in rework. “We are now maintaining on-time delivery at better than 95 per cent in both of our facilities, which is better than it has ever been. Our labour and cost control efficiency is better than we have ever seen and that all of course translates into a better service for our customers.”

At the heart of the company – and what will enable it to take its ambitious steps forward – are its people. Wayne says there is a total willingness of staff to pitch in on jobs, which are frequently urgent as clients worry about downtime. “We have a really good culture of people. If it means we have to work the next three nights round the clock to get something done, then we just do it. We are very fortunate to have a group of employees that are so dedicated to our customers in that way.”

Making Sense of Management

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?

December 19, 2018, 9:24 AM AEDT