DEVELOPING a business from a backyard operation into a multi-million dollar international success is about good financial, resource, and people management, according to Austal founding executive chairman John Rothwell.
Speaking at WA Business News’ Success and Leadership breakfast last week, Mr Roth-well outlined key management-based reasons for his company’s success, as well as some interesting contract negotiating anecdotes.
In 1988 Austal had an employee base of 40, a projected turnover of $3 million and one WA-based location.
It now has 1800 WA-based employees, a turnover of $350 million, one US manufacturing location and offices in the UK, Japan and Miami.
Managing the company through significant growth and acquisitions required a good sense of business acumen and people management, Mr Rothwell said.
“My partners were very young and experienced on the floor but it felt lonely out there,” he said. “But if we were going to take on a partner I needed to trust them.”
Mr Rothwell told the breakfast gathering the decision to accept a business partner and significant investment was made because he liked the incoming partner, whom he felt shared his vision.
“In 1994 we accepted investment of $15 million, which was 30 per cent of the company. We had gone from $200,000 to $50 million in value in six years,” he said.
“I can’t warn on the dangers of leaving investment too late. We were operating on the seats of our pants and we wanted to take boats worth $30 million to market.
“Because I liked my partner I accepted the investment.”
Mr Rothwell said a big question that looms, and continues to loom over his business is one that most businesses are faced with.
“How do you manage the people factor?” he said. “The family atmosphere disappears when you go from 40 to 500 people. We had layers of managers.
“Austal is fairly successful but nowhere near what we should have been. How do you make the guy down on the floor feel part of the team?
“It was a situation where it was thought ‘we are a big company and no-one gives a damn’. But we needed people to work with us to make the company greater.
“I don’t have to pander to senior people and tell them how important they are, they know what a good job they are doing.
“But we haven’t grown that band wide enough and that should have been more people with that attitude.
“The people factor was the single most important factor we could have done better and we are still working on that.”
Mr Rothwell said that, in the early days, the company should have worked more diligently to set up loyal and dedicated management layers to better communicate with the employee base.
And there was no shortage of advice offered by the man who continues to play an integral part in Austal’s growth. A major lesson, Mr Rothwell said, came from the company’s first acquisition, the purchase of Oceanfast.
“It was an opportune acquisition but it was one we were not ready for and that is where the problem lies,” he said.
“We should have had a team that could go in and say: “This is how we need to do it, this is how Austal does it’. We pussy footed around and it was at a time when Austal was booming, so we had no-one that we could put into Oceanfast.
“The lesson from that is that we will never make another acquisition unless we have a team of people that we can dump in there that say: “This is Austal’s culture this is how we do it and it starts today’.
“Don’t make an acquisition unless you trust and have confidence with the people that you will send in.
“We have business development people that work through the company, so that when it is time to make an acquisition we have someone there that we know we can trust and send in to manage it.”
Clinical Cell Culture co-founder and chief medical officer Dr Fiona Wood will speak at WA Business News’ next Success and Leadership breakfast on May 15 2003 at 7am. Tickets can be purchased from WA Business News.
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