Family ethics boost TCC’s performance

SECOND-GENERATION winner – TCC GROUP

If the test of a company is how well it copes during times of adversity, then Total Corrosion Control is a very strong company.

During the past four to five years, Kwinana-based TCC has faced challenges that would have brought many other companies to their knees.

A major industry downturn, serious illness among key staff, a rift with investors and a hostile takeover bid are some of the challenges that faced TCC during this period.

The company’s ability to withstand these challenges and then benefit from the current boom conditions is due in no small part to its family-based values.

Total Corrosion Control has been judged to be Western Australia’s top second-generation family company in the 2004 Family Business Awards.

It has seven members from the Iannello and Cinalli families, including the three equal shareholders – managing director Terry Iannello, general manager Tony Iannello and projects manager Sam Cinalli.

The business was established in 1982 and has grown to the point it has about 500 employees.

It is believed to have the largest industrial painting facility in the Southern Hemisphere and has worked on some of WA’s biggest resource projects, with clients including Alcoa, BHP Billiton and Woodside.

However, TCC’s reliance on the mining and oil and gas industries means it is exposed to cyclical fluctuations in activity.

From 1999 to 2002 there was a major downturn and a dearth of new projects, which had an adverse impact on TCC.

A number of competitors closed their business or went bankrupt, and TCC was under pressure from business advisers to reduce costs by cutting staff levels and selling assets.

The management resisted this pressure and staff assisted by not taking pay rises.

TCC also maintained its training program and community sponsorships.

It is now reaping the benefits of these decisions.

By retaining staff with key skills and extensive industry experience, TCC was well placed to benefit from the upturn of the past two years.

Its turnover has rocketed from $35 million in 1999-00 to $59 million in 2002-03 and it is now the largest player in the industry.

During the trading downturn, the company had an additional unexpected difficulty.

Managing director Terry Iannello had an 18-month battle with cancer and family members and staff pulled together during this period to ensure the business kept functioning.

The loyalty of long-serving staff came to the fore once again this year, when listed technology company mBox.com tried to engineer a takeover of TCC.

TCC’s staff took the extraordinary step of staging a sit-in at the offices of mBox.com and released an open letter pledging their support for the family ownership.

“Our company has been trading for over 21 years and we take pride that it is a WA-owned and operated family company,” the letter says.

“We do not believe the merger is a positive step.

“As individuals with families, mortgages and dependents we feel safe and secure within the TCC Group environment as it currently operates, as a family focused organisation.”

A few weeks after this protest, mBox.com announced the merger would not proceed.

One of the key issues during the takeover battle was a split between the family shareholders and a second group of external shareholders, who had been in favour of the proposed deal.

The successful blocking of the merger has led to a review of TCC’s ownership, to reassert family control.

Despite the strong family focus, the company has appointed an independent chairman to its board of directors.

That role is filled by John Hyslop, who is best known as chair of the State Government’s electricity reform task force.

Family members planning to join the management team are encouraged to broaden their perspective by gaining experience in another business.

For most positions the company looks to promote from within.

It actively assesses the workforce to identify skills and potential for promotion, and provides its own training so that employees can take on expanded duties.

The company recruits externally only when the relevant skills are not available internally.

The main performance indicators used by TCC are profitability and turnover.

The company also places a high priority on safety, in terms of lost-time injuries, and its ability to secure and renew long-term contracts.

This goal reflects the management team’s desire to reduce cyclical swings in activity.

It is moving into asset management and maintenance contracts, which provide a more stable income stream.

It achieved a big win recently when it was appointed to provide maintenance services at all of Alcoa’s refineries and mine sites.