Understanding the nuts and bolts of doing business with the onshore gas industry has been a priority for Roma-based industrial supplies company, Banks Bolts and Fasteners.
For manager, Sally Turnbull that’s meant working out the best fit for their business in the gas supply chain, building relationships and utilising networks like the local chamber of commerce.
Sally and her family came to Roma from Orange in Central Western NSW about 12 years ago and bought the local nut and bolt supply business which was largely servicing the agriculture sector.
“In Orange, we had experience working with the mining industry and saw opportunity here in Roma to expand our range of industrial supplies and our customer base,” she says.
They had an extensive and unique range of fasteners and also became part of a buying group.Gas supply chain
In 2007/08, Banks Bolts and Fasteners became more proactive in finding out about the coal seam gas (CSG) industry that was expanding in the Roma region.
Given the relatively small size of the CSG companies at the time and that most procurement staff were based in the field, they had a lot of direct relationships with the gas companies.
However, as the gas industry grew through the construction boom, Sally discovered the best fit for their industrial supplies business was with the Tier 2 and Tier 3 companies.
“We found we got a better return out of the Tier 2’s and 3’s and we did very well out of that.
However, she says there were challenges as well in regards to payment terms.
“Sometimes the payments are held back a little with the Tier 2’s and 3’s – if you can get through the 90 days, it’s guaranteed money, but delayed money.
“You really need to keep them (Tier 2’s and 3’s) in check as far as their accounts go as it’s really hard to gauge whether the payments are slow because they’re being tactical or some other reason.
“There’s always the risk of a contractor going bankrupt and it would be lovely to encourage local businesses to take the leap with some of these bigger firms if there were some guarantees to recover costs. The bigger companies further east have better buffers than what we do.
Sally says she would also like to see more details of tenders when they are awarded to higher tier companies shared down the supply chain so more local firms can see potential opportunities.
“I appreciate that may not always be possible for commercial reasons, but would be a good way for local firms like us to know who we could potentially approach or pitch for business,” Sally says.
Sally says she would also like to encourage more gas procurement staff – now largely based in Brisbane or Adelaide – taking the opportunity to spend a few days in Roma and other centres to fully appreciate and get to know the many excellent local businesses and their capabilities.
“That’s the problem with procurement offices in the cities. They should get into the field and spend a few days out here and get a feel for it.
“Some of those Tier 2 and Tier 3 companies still have head offices in Brisbane though a lot of the middle ones are Toowoomba based. It’s still very hard to develop those relationships, even in Toowoomba, but we have to make the effort.
Sally says one way to help build and maintain relationships is through business networks like the Roma Chamber of Commerce or Toowoomba Surat Basin Enterprise (TSBE).
“It’s amazing how much I’ve learnt about the gas industry in the last few years that we were stumbling through and thought we knew what was going on,” she says.Keep competitive
During the construction boom Banks Bolts and Fasteners doubled their staff from five to ten employees and oil and gas represented about 80 percent of sales and agriculture about 20 percent.
These days, post boom the turnover is lower and employee numbers are back to seven and the balance of sales are now 60 percent oil and gas and 40 percent agriculture.
Sally says local businesses also have to be more agile and competitive.
“Another thing that’s worked well for us is if we’ve got it; we sell it. If we don’t, they (the customer) start to look at trying to get it out of Brisbane because they can probably get it overnight.
“Some businesses I talk to in town still have this mentality of ‘we’ve got it here…they should be paying for the privilege of us getting it here’ - it’s really not the right attitude to have. Toowoomba is only 3.5 hours away with bigger shops, and the smaller stuff you can buy online.
“To have that attitude and to charge a stocking fee – you can’t operate a business with that sort of attitude – it won’t survive,” she says.Next phase
While the gas construction boom is over, Sally is confident there is ongoing opportunities for their business in the maintenance side of things.
“Our focus is on maintenance – on farms, and oil and gas. Maintenance is not tyre kicking; maintenance is ‘we need this done’ and local firms are well placed to supply.
“Maintenance is better for us profit wise, and we also tend to have better relationships because you’re not having to go back and forth with quotes all the time – it’s steady business.
She says the ideal balance would be 30 percent agriculture and 70 percent gas, because when ag gets lean, you’ll get the big troughs.
“Hopefully, when we get past this dollar and oil price, gas should be more stable. Because we’re dealing in quality product, the gas industry always appreciates quality,” Sally says.