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Caledus enjoys growth

Caledus, a well construction technology company, is proving to be a great example of an Aberdeen headquartered business using expertise and technology developed in the North Sea to conquer new international markets.

It was established in early 2004 with just four staff and now employs more than 50 globally, 40 of them in Aberdeen, and by the end of this year that should have risen even further.

Turnover last year was $16 million, is on schedule for $25 million this year, and under its three year strategic vision will have trebled to $75 million by 2012 with the pay roll rising to 200.

Paul Howlett, the co-founder and chief executive, said that internationalisation was a key part of their expansion plans from the outset but market conditions forced them to accelerate the process.

In the first couple of years the plan was to expand in the UK, Europe, the North Sea and eventually move further afield. However they found the market was shrinking and a reluctance by operating companies to use small, innovative new companies meant they couldn’t grow as fast they hoped in the domestic markets and they were forced to go international.

It has proved a highly successful path, with the occasional steep learning curve en route, and he said it was vital for companies to be aware of the investment in time and money it was likely to cost to ensure success.

However he said the relative speed of the decision making process by overseas companies and the willingness to engage with new ventures more than compensated for any exportation red tape which might be encountered.

“There are so many countries and regions around the world now where you have to have an agent and if you have an agent in Malaysia, for example, most of the red tape is taken away.

“It is only in those areas where you have the ability to operate as your own entity and you choose to set up your own entity there is going to be a lot of bureaucracy and red tape.

“The vast majority of the ‘low hanging fruit’ internationally is in places where you are compelled legally or by tradition to have an agent. A percentage of your revenue inevitably goes to that agent but more often than not he is taking care of all the normal everyday things which all companies have to do when they are operating in those parts of the world.”

The Asia Pacific region was the first target for Caledus.

“We focussed pretty heavily on that region in 2006 and 2007 and it is a two to three year process for a small company to go from doing nothing to doing something reasonably substantial.

“People who go in and think it is all going to happen in weeks or months are fooling themselves and are naive. If you aren’t prepared to budget for a year of investment in business development you shouldn’t move into the area.”

He said that although there was considerable help available for the process it simply made it less painful, not painless, and everything took longer than expected.

“We have an 18 month rolling plan so at the end of 2008 we embarked on exactly the same process in the Middle East and are just beginning to see some fruitful revenue coming from there but it has taken 12 months or so of seeding the business and attending the trade shows.

“Some people underestimate the amount of time it can even take just to get an legal agent in place.

“In addition to the legal issues there are also cultural issues. You don’t turn up as a stranger from the North-east of Scotland and expect to build a relationship of trust with people as a result of exchanging documentation.

“That takes time and I think while the legal side of it is something you can get very good advice on - there are the black and white aspects of all of that - I think the cultural issues and the relationship issues depend on who you are and who you are talking to as to how well that goes.”