Twelve months ago precision engineering firm Pressure Dynamics was proudly showcasing its new premises and looking forward to growth. It’s now in receivership.
Twelve months ago precision engineering firm Pressure Dynamics was proudly showcasing its new premises and looking forward to growth. It's now in receivership.
IN May last year, Pressure Dynamics hosted then-commerce minister Simon O’Brien, suppliers and customers at its impressive, purpose-built premises at the Perth airport industrial estate.
The 30-year old company was in a good space, having invested in specialist skills and equipment to meet growing demand from the resources sector.
Its specialist niche was hydraulic systems engineering, a field in which only five or six companies globally could supply the same equipment.
It had secured contracts on three of Western Australia’s big liquefied natural gas projects.
The business was supplying a 12-tonne subsea controls production unit for Chevron’s Wheatstone project, and also working on Shell’s Prelude and Woodside’s Greater Western Flank projects.
International sub-sea engineering company FMC Technologies had awarded the contracts, pleased to have a world-class supplier such as Pressure Dynamics in Perth.
It was the kind of relationship that government ministers and project developers love to sing about; a high-tech local business able to bolster local content on major projects in the face of competition from big international suppliers.
Speaking last year, chief executive Roy Park was confident more contracts wins were on the way.
“Looking at the opportunities coming up, especially in WA and Queensland, we could double our turnover and staff,” Mr Park told Business News.
The three LNG contracts were collectively worth $7 million and helped the business to achieve annual turnover of about $30 million.
Pressure Dynamics had also made some big investments to support its growth.
At its peak, it had about 90 staff, including a team of apprentices, and had a big focus on safety and quality.
Another big investment was in its facilities; it had dedicated clean rooms with custom equipment that could provide test pressures of 1379 bar, equal to water at a depth of 14 kilometres.
Mr Park said the facilities at Pressure Dynamics were normally only seen in the defence and aeronautical industries, where he previously worked.
“Australian suppliers need to find a niche where they can be competitive, that is the future of manufacturing in this country,” he said.
Despite ticking so many boxes, the company ran into trouble this year.
The directors called in administrators from Grant Thornton earlier this month and its secured lender followed up by appointing PPB Advisory as receivers and managers.
A detailed review of the business and its problems has not been completed, but it appears from the outside to be a fairly simple story.
The company had high cost commitments, primarily wages for its staff and leases for its premises.
While the oil and gas sector held the potential for big growth, the company was also exposed to the mining sector.
With big mining projects being cancelled and mining companies looking to tighten spending on existing operations, all suppliers to the sector are being squeezed.
Pressure Dynamics was not carrying a large debt, and it was very conscious of managing its cash carefully.
Mr Park told Business News last year that one of the frustrations facing the business was the onerous terms and conditions imposed by some big contractors, which demanded performance bonds without appreciating the cash-flow pressures facing smaller firms.
The company had actually knocked back some contracts because of what it considered draconian terms and conditions.
Despite its best efforts, it appears the old management team was unable to move fast enough when changed market conditions called for cost cutting.
The business is still trading, with staff numbers down to about 50 positions. Some staff were cut by the old management, and the administrators have made further cuts.
PPB Advisory has started a sales process and has reported a very encouraging level of enquiry from local and international firms lodging expressions of interest.
That suggests, hopefully, that a new owner will recognise the value in the company’s skilled staff and specialist assets, and will be able to inject new life into what had been a WA success story.
