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Flexing their Muscles

It was a quiet drink in an Aberdeen pub three years ago which led to a chance meeting and the formation of one of Scotland’s most successful young companies.

Stuart Mitchell and John Mardsen had been discussing the idea of giving up the security of jobs as well paid engineering consultants when they bumped into former colleague Carl-Petter Halvorsen and over a pint Flexlife was born.

“You might call it arrogance but we thought we could do better in terms of service than many of the consultancies we were dealing with,” said Stuart.

“Carl-Petter wanted to come on board and on April 1, 2007, we started trading.”

It was a big risk for the trio but in a remarkably short space of time it has paid off handsomely. They are now in their third office and not just because they need more space for the host of honours they have won since that April Fool’s day gamble.

The accolades include winning the Research and Development category at the Chamber’s Northern Star Business Awards; Scottish winner of both the Most Promising New Business Award and the Award for Innovation Through Technology in the British Chambers of Commerce National Awards and third in the UK for Innovation in Technology; Wood Group Award for Innovation at the Grampian Awards for Business Enterprise; Most Innovative company in Scotland at the National Business Awards for Scotland; Best Newcomer in the Subsea UK 09 awards; the only Scottish finalist in the HSBC Start-up Stars Awards 2009.

It has been a frenetic two years for Stuart who took possession of the keys of the company’s first office on Aberdeen’s Science and Technology Park on the day his first child, Ryan, was born.

Within two months they had moved to a bigger office and then at the end of the company’s first year, and with half a dozen staff, things were going well enough for them to decide to buy their present offices at Stoneywood.

However, being new players in a very competitive market was challenging.

“Reputation and track record are important so when you have none it is very difficult to land contracts initially,” said Stuart. “You have to build up a track record and start to get people believing in you.

“The ethos we have is to deliver value but that is a statement which is pretty widely used within the industry. To really mean it you have to have a contracting philosophy which is based on risk and reward so if you do a good job for the client then the client wins and you benefit but if you do a poor job then the client shouldn’t be responsible for paying your bills.

“In terms of philosophy you have to back yourself to do a good job and we certainly did that. Even after our first year, from a standing start, we turned over £500,000 and year two was just over £3 million with relatively small staff numbers.

“Is it risky? – yes. If a project goes wrong and takes twice as long to execute it is a double hit. You are paying your staff for double the time you should be and you are also not taking on other work - there is a loss of opportunity as well. You have to be relatively certain in your own abilities and you have to have a good deal of experience in the work you are carrying out to price jobs in that way.

“For our offshore jobs we always have a mechanism to account for things that are outwith our control like weather and client based delays.”

Stuart and John Marsden developed Flexlife’s innovative scanning technology in a workshop at the Mitchell family home near Tarves (which, incidentally, he was refurbishing while coping with being a new father and giving up a secure job to set up a business).

What they didn’t have was any means of deploying it but they knew that their office neighbours, AGR Field Technology, would have. They claim they had to virtually kidnap managing director Matthew Kennedy and hold him hostage until he listened but they were able to convince him and a partnership followed.

The ultrasonic scanning technology, called Neptune, is now in use around the globe.

“When we first launched the Neptune everyone was queuing up to be second to use it,” he said.

“To get our foot on the ladder with a piece of unique technology for the oil and gas industry, which can be pretty conservative, we had to do our first job at virtually cost.

“We really had to ‘buy a job’ in the North Sea.

“As soon as we did that job successfully it opened up the market. Everyone was queuing up to use this piece of new technology which clearly worked and did what we said. The market is so difficult to penetrate even when you have a fantastic idea because with novel technology everyone wants to be second.”

Most of Flexlife’s work at the moment is in the North Sea where they have been protected from the recession to a considerable degree because they operate in both the capex and opex markets.

An increased focus on keeping existing equipment in fields operational has resulting in higher opex and has compensated for the diminishing returns as a result of the postponement or cancellation of new capital expenditure projects.

“It has been good for us that while one arm of the business has dropped off slightly or stayed level in terms of its income the other side has been booming.”

Although they are enjoying success on their own doorstep Flexlife is looking well beyond the horizon of the North Sea for expansion and has just launched an Asian Pacific business and is in the process of setting up another company in Brazil.

They want a greater share of the estimated $1.6 billion spend a year, and growing, on flexible pipe.

The first strand of their business is saving operators and installers money by helping them get it right first time.

The second strand is integrity management in field which is where their unique ROV-deployed scanning technology has made a major breakthrough.

Their latest product is a clamp containing UT scanning technology which can be fitted to a flexible riser to continuously monitor for leaks and they anticipate that will be earning them £14.4 million a year in rental fees by 2014.

If a problem is detected by the permanent monitoring tool their ROV-deployed scanner can then be sent to pinpoint damage and assess the situation. Within three months Flexlife is also expected to launch a permanent repair system.

Unplanned shutdowns of several months are typical if riser problems are not spotted early so the Flexlife technology has the potential to save companies astronomic amounts in deferred production.

As the value of their offering becomes clear life is looking good for Stuart and Flexlife.

When he was being brought up in Norfolk all he knew about Aberdeen, even though it was his father’s home city, was that it was “a place in the North-east of Scotland which was a long way away.”

However he now regards it as home and his first house in Aberdeen was less than two miles from here his father was born.

Just like Flexlife his family is growing and Ryan now has a little brother Ewan. Stuart’s wife Julie helped out in the early days by pushing baby Ryan’s buggy up the steep hill to their first office to work for nothing to do the company’s books and manage their accounts – a journey which the flexlife success has now made unnecessary.