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Retiring Endress+Hauser MD, John Immelman, looks back at his time in the industry

John Immelman started as sales manager with Endress+Hauser in South Africa in 1993 and eventually became the managing director of the business. By the time he left, the 17 year-old business and had grown significantly to become the major process instrumentation vendor in South Africa. In 2001 he was offered the opportunity to set up the Endress+Hauser Australia business. Their products were then distributed by GE Alstom. EndressHauser Australia started in 2001 with 14 people and a turnover of just over $6 million. Now, 10 years later, the company has 64 staff, seven branch offices and a turnover in excess of $30 million.

What are some highlights of your time with the industry in Australia?
For one, our company was resilient enough to hardly feel the global financial crisis. There was a small little panic-driven dip when the price of resources dropped, but it recovered quickly.

The other highlight is to have seen the first apprentices go through our company over the last two years. We have worked to build a close relationship with training institutions, both at university and at TAFE level and we’ve been successful at both. Up until two years ago we hadn’t seen any fruits of that labour. Recently we have the first of our two apprentices go through, one is now an employee and the other one is still completing the course.

Other highlights are not directly related to Endress+Hauser. Together with a fairly active committee, we’ve been able to turn the IICA New South Wales branch around. When I started with the Institute about eight years ago, it was just about to fold. But we’ve now turned this branch into the strongest one in the country.

The other highlight for me has been the development of the Profibus Association of Australia which I started in 2005. I had also started the one in South Africa. Again with a fairly solid committee, we’ve been able to grow the association, but more importantly, grow the technology.

One of my personal interests is marketing and I have really enjoyed observing how the Endress+Hauser brand continues to grow in Australia. The days of “Endress and who” are over. We now have a brand with a very good reputation at all levels.

And what would you say have been the low points?
In 10 years of being in Australia, the lows have generally not been in Endress+Hauser. We got through the GFC relatively unscathed but it stunted our growth. We were used to growing at 20 to 25 per cent per year but after the GFC our rate of growth slowed down a lot. This meant that many of our expansion plans are on hold until growth returns. I’m inherently an ambitious person, so when the rate of growth starts to slow down I get frustrated. But we are doing better than most so I should be pleased.

Some of my real disappointments have more to do with our industry in Australia. To the best of my knowledge we are the only first-world country that has no vendor association. Canada, America, South Africa, England, the European countries, all have an association where vendors, typically all competitors, get together and discuss issues of common interest.

The consequence is that nobody in the industry here has a handle on the size of the market. I look typically at the market that Endress+Hauser’s involved in and my best guess is that the industry is worth $300 million. But I could be out by 20 per cent and nobody can give me a better figure.

It is really difficult to operate in a market when you don’t know the market size or your market share. So you don’t know if the market’s growing; you don’t know if you’re growing. Market statistics are very common in other markets and we don’t have this data.

Without a vendor association we lose out in other ways too. We miss out on the opportunity to develop our industry from a technical and commercial aspect. I’m talking about influencing TAFEs and universities to offer courses for people required in our industry.

Additionally, we are unable to publicise the positive aspects of our industry – the fact that we work on capital projects, the excitement and the earning potential. Consequently, none of the youngsters want to enter our industry and the TAFEs do not want to run the courses. It is really a chicken and egg situation which can only be solved by an association of vendors who get out there and market the industry and make it a career of choice.

In industry a lot of the lead process engineers are heading towards retirement and there’s no young blood coming through except for overseas hires.

I guess the disappointment for me is that we don’t have a joint marketing strategy as an industry. Of course every vendor does its own marketing and we compete in the market place, so everybody wants more share of the same customers, but on the other hand we should, as a vendor association, be out there promoting the industry, promoting the career opportunities and promoting new technologies that are available in our industry together, at exhibitions, at seminars and at any other venues that we can agree on. In 10 years, I haven’t been able to get that association off the ground despite many attempts.

Why the association hasn’t taken off?
The management of the leading vendors in this country are nervous about the term collusion. That’s the reason the vendor association disbanded 11 years ago – because there was word that one of the vendors was involved in collusion somewhere else in the world. This term spread like a flu epidemic and everybody was out.

In other industries, companies can work together in a loose association and not be accused of price fixing or bias against certain customers or suppliers. Despite many discussions I haven’t been able to get through that mindset of collusion and promote the serious benefits to be had. I hope that after my time somebody else will be more successful in setting this up.

What are some of the biggest opportunities facing the industry?
The biggest opportunity for our industry in this country is the country itself. We are lucky to be blessed with all the resources that are in high demand in developing markets. We’ve also got reasonable political stability. If you put those two together we become a supplier of choice to the world. All these markets need instrumentation, monitoring, management and the biggest opportunity exists in just exploiting the natural resources this country can offer.

The second opportunity has arisen due to increasing global security concerns and the need to more carefully audit pharmaceuticals and foodstuff production. We need to ensure there’s an audit trail right through the manufacturing process as well as to the raw material suppliers. All this requires measurement and management.

Another opportunity arises with the influx of foreign capital. Some are fearful that a lot of local industries are being acquired by overseas interests. But I see two positives: one is foreign investment and the other is the resulting technology upgrades. It’s good because, in many cases, the local industry has not invested enough, not in technology and not in new markets.

With overseas investment there will be more equipment sold to measure and monitor processes. But more importantly, we will see the spread of global plant asset management (PAM) which will enable holding companies to assess the health, condition and efficiency of their plants worldwide, from anywhere, using new technologies like Ethernet, fieldbuses, gateways and proxy servers.

The final opportunity has to do with OH&S and there’s no doubt that the occupational health and safety of our operators is high priority right now. All instrumentation today is designed with the operator safety as paramount – some of the older plants will need to upgrade to comply with current OH&S regulations, whether they like it or not. You can’t take an old instrument and suddenly make it a safe one.

What are some challenges our industry faces?
There are a few concerns. Some people are fearful of the China bubble bursting. If that should that happen, the world has got a bigger problem than just the supply of instruments. If China were to try to stop their citizens from moving to a higher standard of life, that country would have a major revolt on its hands. I don’t see it as a realistic threat.

I’m a little concerned by the lack of clarity of our political system right now. We are such a fragmented market that it is very difficult for our industry to operate nationally. For example, OH&S regulations, nuclear power and uranium mining policies are different in every state.

All this will really hold back the country and provide opportunities for others to take our markets. When we turn around one day and say, nuclear wasn’t so bad, it’ll be too late and other markets will have got themselves established and they will become the prime suppliers of radioactive material for power stations. Quite frankly I think the only realistic way to supply enough power for Australia is with nuclear power stations.

Another major threat is the ongoing skills shortage. That’s a major issue and it’s been discussed a lot. With the new coal mines and coal seam gas operations being set up, central Queensland alone will need an additional 20,000 technical people – in a country where we already have a shortage. The skills shortage just forces up salaries in two growth areas of the country and feeds inflation.

What words of advice will you give your successor?
I’m fortunate that new MD Chris Gailer is in fact our agent in New Zealand [EMC Industrial Group]. He has worked with Endress+Hauser products and solutions for 20 years.

Endress+Hauser have two areas for improvement. We recently did a nationwide customer retention survey a couple of months ago and it will be useful for Chris to spend some time analysing and acting on the results.

One aspect to emerge from the survey is how we manage customers expectations. We all know that an abusive client at the other end of the line is a customer complaint. But we don’t get to hear 99 per cent of complaints. Customer dissatisfaction could stem from a product that arrived late, or a product that didn’t work in the application, it can be caused by a sales person who is late for a meeting. These are actually customer complaints but we don’t see it like that because it’s not documented.

Chris will need to start an internal program to focus on customer expectation management. Not customer focused, but customer expectation focused. This is different and is really – ‘what would delight the customer’?

Also, we need to improve our logistics chain – reliability of delivery, length of delivery, being informed about late delivery. All these are not handled very well despite the fact that we’ve got SAP, the system and tools to do it.

What are your plans for the future?
My wife and I intend to take an extended break from work, travel locally and abroad. On returning, we will review our options – it could be anything from full retirement to setting up a one-man consultancy specialising in strategic business planning, or marketing communication strategy development. I say Auf Wiedersehen to everyone who has touched my life over the years, and hope our paths will cross again.

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