Chris Brugeaud is the CEO of SSS Manufacturing, a Queensland-based company that specialises in producing fabricated structural steel. It is a company that is doing well, and one that Brugeaud and his partners have worked had to make a success.
However, it is lessons learned from being involved in failures that have had the biggest impact on Brugeaud’s attitude to what makes a successful business.
One of his biggest learning curves was being involved in the Israeli-based start up Better Place – a company that began with all the best intentions and $850 million worth of funding, but was reduced to $500,000 worth of capital in just five years.
Better Place was an electric vehicle infrastructure company, whose founder, Shai Agassi, had the goal of trying to reduce consumers’ reliance of oil.
Brugeaud started out as the Australian engineering director of the company and has an insight into what went wrong, and how it went wrong.
“Better Place’s approach was to make the utilisation of electric vehicles more common,” said Brugeaud. “The market drivers that were inhibiting the take up of electric vehicles was range anxiety and the cost associated with these vehicles. In order to address the market drivers, Better Place settled on robotic battery switch technology as a key part of the solution. The vehicle owners would lease the batteries and purchase a subscription to the charging network. The solution required Better Place hardware to be seamlessly integrated into OEM vehicle manufacturers. And that was the first problem. I don’t know if anyone has had anything to do with trying to have equipment fitted to OEM vehicles – it’s complicated in its own right.”
One of the key failures was the company have too narrow of a focus on what to spend the capital money on. Almost a third of the budget went on battery switching technology and the charging stations where the batteries would be stored and capable of being exchanged. A car would drive up to the switch station, pivot over a pit-like set up where the car’s battery would be taken out and a newly recharged one installed. It was an automated process. Brugeaud not only suggests that the charging stations were expensive and unnecessary, but their existence did not justify the $300 million initial outlay. There was also one other elephant in the room.
“And how many models of vehicle could use the battery switch station?” he said. “It was one. The Renault Fluence. Better Place spent $300 million on establishing a capability that serviced one vehicle. To make matters worse, the use of the battery switch stations was typically more of a novelty rather than a necessity. The charging infrastructure – particularly in Denmark and Israel – was extensive. The typical day of utilising an electric vehicle in those markets would constitute driving it to work, plugging it in, driving it home and plugging it in again. So you would never use more than a quarter of the battery’s charge and any particular point in time unless you were going on an extended trip.”
While not scathing of Better Place – after all the company’s intentions were good, even admirable – Brugeaud believes that there are a couple of fundamental lessons that fledging technology companies need to take into effect.
“Better Place had effectively invested one third of its capital raised into a technology that actually constrained its overall offer to market to one vehicle,” said Brugeaud. “Although it wasn’t the only contributing factor to failure, it was certainly a significant one.
“The other take away from this case study is that the integration of Industry 4.0 methodology and automation in general, should be done in a way that seeks to capitalise on market opportunities, not constrain it. The solution can be a technically elegant, but can fail to deliver commercial outcomes. My brother had a saying in our house, ‘rub something with enough money and the problem will go away’. Unfortunately for Better Place, $850 million wasn’t enough money.”
While Brugeaud took a lot away from the experience, he cites his previous role to that as general manager – rail, automation and automotive at Marand Precision Engineering, as an example of a case study where everything went right. It involved finding a solution to service BHP’s all-car fleet at its Port Headland facility in Western Australia.
“The specification called for a tack time of one all-car in, and serviced, every 15 minutes,” said Brugeaud. “It needed to significantly reduce the demand on labour, both in physical and costings and all elements of the all-car were to be serviced in that time. Service data and initial operator inspection were to drive the production sequencing. Operator stations were then fully integrated to prompt service requirements. The only way this was ever going to be achieved was with significant amounts of automation.”
Marand provided automation solution options to achieve BHP’s requirements. However, during the process Marand stated that it intended to move BHP’s all-cars around on AGVs in pedestrian access areas. It was at this point that BHP looked at Brugeaud like he was crazy. BHP continuously recited the mantra that it was first to be second. It took Marand about four months to convince BHP that in fact BHP would be second in the application of the technology, and it was extensively utilised in the automotive industry and had been for years.
“If you consider what the facility would have looked like without AGVs, the movement would have likely have been completed using overhead cranes. So, the benefits associated with the AGVs were immediately obvious,” said Brugeaud. “Once [management at BHP got] on board they used to joke about the fact they would conduct their site tours on a dedicated AGV. The end result was one of the most advanced facilities of its kind globally.
“The take away from that case study was that more often than not, you can leverage existing technologies in the race to be first to be second. What I will say, is that with BHP’s mantra, they’re right in that if you are at the bleeding edge of technology, it can get very expensive and be very complicated.”
Brugeaud’s company also developed artificially intelligent automation technology, which was six years in the making and constituted somewhere in the order of five million lines of code. The company initially started by building its own robots, but as Brugeaud points out, this was a classic case of just because you can do it, doesn’t mean you should.
“It wasn’t a great commercial decision, but we like to reflect on the fact we learned more technically than we ever did in the following years,” he said. “We’ve since focussed on our core capability, which is automation and software and integration, and we now leverage our collaborative partners for support on the hardware side.”
It is this focus that has really shown Brugeaud and his fellow directors just how much the investment in the technology has paid them back – in many different ways.
“What has the technology enabled us to do? In terms of our steel fabrication business, its enabled to realise a 75 per cent saving in labour content for each tonne of fabricated steel produced,” he said. “The solution uses the single input of structural steel through 3D drawing data to automatically programme the full production environment. Within 15 minutes we can download a 3000 square metre structural-steel project and it generates all of the production code required to operate our facility with no human intervention.”
While it obvious when listening to Brugeaud that SSS Engineering has taken the proverbial bull by the horns to get itself ahead of the game, he is not suggesting that everybody has to develop their own robots or code. He believes that there is now enough support out in the wilder world, that any company considering making these steps doesn’t have to do it alone.
“There is an ever-increasing number of industry bodies, cooperative research centres, innovative hubs, as well as integration organisations, which can provide support in developing solutions around Industry 4.0,” he said. “If you plan to go that way, I highly recommend engaging them and learning from their experiences.”