Mining-focused technology company Immersive Technologies has the rare distinction of becoming a global leader while retaining local ownership and control.
When brothers Peter Salfinger and Wayde Salfinger went into business in 1993, they had little idea of the opportunities their efforts would bring.
Aged just 24 and 19 at the time, the initial focus at the company they created, Immersive Technologies, was on e-learning, or computer-based training, for mining companies.
The Salfingers proceeded to pioneer the development of sit-in training simulators for the mining industry; now, 25 years on, Immersive is the global leader.
From their base in Osborne Park, they have signed up more than 300 mining customers across 44 countries, including most of the world’s largest miners.
With a growing product base, plans to move into the construction and defence sectors, and revenue on the uptick, the brothers remain positive about the future.
They also believe their Perth base, once considered a challenge, is now an asset.
The original development of training simulators flowed from some innovative equipment the Salfingers built in the early days, drawing on Peter’s keen interest in electronics and Wayde’s self-taught computing skills.
One example was a robot that drove around at the Kalgoorlie Mining Expo and invited delegates inside the marquee.
“It was quite a device considering the technology that was available,” Peter Salfinger told Business News.
Another example was an eight metre-wide projected screen with touch-screen controls that Peter said was cutting edge at
the time.
On the strength of these innovations, Caterpillar dealer WesTrac asked the brothers if they could develop a sit-in training simulator for one of its customers.
“Our first reaction was, ‘we’ll take on lots of assignments but that might be too challenging’,” Wayde said.
“At that stage, mining equipment simulators as we know them today didn’t exist and multi-media technology was in its infancy.”
Peter said the initial request put them on a development path that had taken them to where they were today.
“What was required was a device for equipment operators that tested split-second responses in different operational scenarios and immersed them in an operating environment,” he said.
“That’s what we had to develop.”
Bringing skills
Peter, Wayde and their father, Colin, built the company’s very early simulators.
Peter developed the electronics, Wayde wrote the original software and designed the mechanical components, and their father welded up the components.
“It was a very good combination of three skill sets,” Peter recalls.
“It was developed with very little funding; we only had $20,000 available cash at that stage, so we had a very cost-effective approach which worked to our advantage.”
They sold their first simulator to Caterpillar in Melbourne and set about the slow task of building a business, without understanding all the challenges they
would face.
“We had quite a few things against us; at that stage Perth was quite remote, it wasn’t the mining centre it has become today,” Peter said.
“We also had to prove the technology, and changing the traditional mindset of mining companies and operators in trucks was difficult.”
Peter said they also needed to develop a range of products to suit different machine types, and get customers and original equipment manufacturers (OEMs) on board.
“When you’re younger you don’t realise how challenging things really are,” he said.
“We just didn’t know how much we would have to do to be successful.”
Or as Wayde put it, “naivety was in our favour”.
Peter said progress was slow, initially.
“In the early years we were selling one or two simulators a year, and that wasn’t a sustainable business,” he said.
“There were many times Wayde and I didn’t take a wage or took a very meagre salary.
“In the early 2000s as the boom started to pick up, we realised there was something real.
“The customers were keen and when they saw value and started to get results, the OEMs quickly followed.
“That’s what led to our exclusive alliances with the OEMs.”
The company has alliances with the likes of Caterpillar, Komatsu, Hitachi Construction Machinery and Liebherr, which work closely with Immersive to support development of simulators for each new product.
Funding
In 2004, the brothers took on Sydney-based private equity group Equity Partners as a co-owner to help fund the rapid growth of the business.
Fortuitously, the agreement allowed them to buy-back full ownership, which they did two years later.
Peter said Equity Partners was a supportive shareholder and they parted ways amicably, but as investors they were not aligned.
“Wayde and I knew it would take a lot longer to build the business; they (Equity Partners) had a different time frame,” he said.
Commonwealth Bank funded the buy-back, which was pivotal to the business.
“They came to the party and helped us significantly,” Peter said.
“The debt was paid back long ago but we’re still with them as our company banker.”
The brothers contemplated an ASX listing in 2006 as an alternative way to fund the business, but realised it was much too small.
“If it wasn’t for the Commonwealth Bank, things might be very different; we might be a listed micro-cap in a whole world of hurt,” Peter said.
“We’ve always taken a longer-term view,” Wayde added.
“The best place we can invest is in the business.”
That is reflected in their spending on research and development.
“We have a big focus on reinvesting into engineering, it’s our lifeblood,” Wayde said.
“It varies from 12 to 15 per cent of revenue, sometimes as high as 20 per cent depending on the needs of the business, and that’s all in Perth.”
As the biggest player globally in their industry, Immersive has needed to fend off multiple competitors, including Canadian company CAE, which is a world leader in training simulators for aircraft.
CAE made a big push into mining in 2011 after buying software companies Datamine and Century Systems Technologies and started developing its own simulators.
“They came into mining very well funded by the Canadian government attempting to take out our market but they were unsuccessful and have since divested,” Peter said.
Sale options
Immersive often receives approaches from other companies wanting to buy the business.
Peter recalls the first time was in 2005, and it has been a regular occurrence since.
“It can be as regular as once a week, on average it’s once every month,” he said.
Wayde said he and Peter would consider a sale in the right circumstances.
“Our heart is in the business immensely but we want to see it grow and take on new markets, and one day that might require a new partner,” he said.
“If the other party is a good strategic fit and the valuation is right, we would consider that, but at the moment there is no need.”
By remaining independent, Immersive contrasts with many other Perth-born mining technology companies, such as Surpac, Minex, Fractal Technologies, Minetec and MiPlan, which have been bought by larger interstate or international players.
Tight team
The Salfingers’ approach is reflected in how they run the business.
“At the end of the day, we want to be a well-run corporate,” Peter said.
“We have a board delivering corporate governance, but at the same time we aim to treat our staff like family.”
Immersive has a small board, with Peter and Wayde as directors and Roderick Brown as chair since 2004.
“It’s a small board but been very effective,” Peter said.
“Rod has also acted as a mentor.”
They had considered a larger board but struggled to see how it would add value.
With 220 staff spread globally across 14 offices and a manufacturing plant at Malaga, the business has a big focus on having a strong management team.
“We have many exceptionally good people who could fill our roles if needed,” Peter said.
Recovery
Immersive suffered a decline in sales in recent years as mining companies cut back on equipment purchases.
That led to a drop in annual revenue from a peak of $77 million in the boom to a low of $40 million.
Revenue this year is expected to be about $50 million and set to grow further.
“Revenue is coming back up again at quite a rate of knots,” Peter said
“We’re a completely different business to what we were at the end of the boom.
“We had a large focus just on training simulators, so during the downturn we invested heavily in new products and services.
“Heading into this new period, we think we’re exceptionally well placed to continue growth but with quite a diversified
portfolio.”
The diversification includes a wider product range for mining sector; the business currently has 420 large equipment simulators in use and more than 1,000 machine modules deployed.
Wayde said training services had been a big growth area.
“We have a lot of simulators operated by our own training staff who are embedded with mining customers around the world,” he said.
“We also have a team of training advisers who help customers implement specific training programs, typically to improve safety and productivity and cut unscheduled maintenance.”
Autonomous needs
Wayde said Immersive had also developed new training modules to suit the growing trend towards driverless trucks.
“It was a potential threat but now we have an offering that has been very well received.”
He said the trend towards autonomous mining created different training needs.
“The people operating the shovels, the loaders, and other equipment in the mining pit need to be trained to a higher standard compared to traditional operators,” Wayde said.
The company already has autonomous training solutions deployed with Rio Tinto in Western Australia, Codelco in Chile, Suncorp in Canada, and will shortly have a deployment with BHP Billiton locally.
“There’s actually not a lot of autonomous mining around the world just yet,” Wayde said.
“But we can see that changing and that’s why we want to be at the forefront in this area.”
He said WA was at the centre of the autonomous mining trend and that was another advantage of being in Perth.
“Perth has become a centre for mining globally; look at Rio, BHP, many of the major players are here,” Wayde said.
“Why would we want to move?
“Perth’s a great spot, we see it as a positive.”
