WHILE most businesses start off in their local market and aspire to break into the export field, Perth-based Inflatable Packers International has taken the opposite path.Ten years after breaking away from its parent company, Age Developments in order to service the international market, IPI recently signed its first Australian customer, Queensland mining company Pro-test, after it narrowed its market focus to the coal bed methane industry.The partnership has been successful for both IPI and Pro-test, with Pro-test reporting a more efficient running time and lower costs as a result of utilising IPI's product.In the past, IPI's inflatable packer and down hole tools have been applied to the geotechnical and oil and gas industries, primarily for well-testing.IPI's commercial director, Howard Kenworthy said the internet had made it easier for businesses to focus on its product application in terms of industry rather than geography, reflecting the company's move into the CBM sector.IPI was established as a stand-alone company after its founder and managing director, Clem Rowe, saw the potential for Age's product - the inflatable packer.He formed an agreement with the company to spin off under the IPI name to focus on servicing international markets.IPI is now owned by Mr Rowe and business partners Dave Knell, who serves as the production manager, and commercial director Mr Kenworthy.Reflecting on IPI's original capital raising strategy with Belgian business partner Geotech, and the funding of research and development through sales, Mr Kenworthy said the biggest lesson for IPI had been the importance of cash flow.He lamented his experiences with British financial institutions and their use of factoring, but also believes the Australian banks' risk aversion is a road block for small businesses in Australia.Mr Kenworthy acknowledged the difficulties that lie in raising capital for R&D, and highlighted the added financial burden of manufacturing costs; both catalysts for IPI's search for alternative forms of finance.IPI utilised foreign exchange brokers rather than banks for its foreign currency transactions, resulting in faster processing and healthier cash flow.The company also sought government grants to supplement its income, but this has delivered mixed results. Mr Kenworthy is critical of the bureaucracy involved in seeking R&D grants but has had success with Austrade's export market development grants, which have become integral to the company's business development.IPI's marketing strategy primarily lies in having a strong presence at industry trade shows.It has attended 14 international trade shows to date this year - marketing efforts that have been matched dollar-for-dollar by the Austrade grants.IPI has established two branches in Chile and Montana and has eight international distributing agents.Mr Kenworthy said that establishing branches had been important for the development of the export business, since company staff tended to have a stronger focus on a niche product than agents."Having the gold name plate on the door frame is the most important thing to some agents" he told WA Business News. The state's apprentice employment scheme has helped IPI to overcome the skills shortage of the last boom; IPI's team has grown 150 per cent since 2007 to 25 people.Since its inception IPI has developed its workshop site in Osborne Park - where 98 per cent of its product is manufactured.The directors built the IPI team with the goal of having a range of skills and experiences while also having the capacity to meet the demands of its clients.
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