Funding Export Growth

Case Study: Pumped for export

A Cardiff pump maker, owned and managed by a former British policeman and salesman who came to Australia to see the 1987 Rugby World Cup and stayed, is making major inroads on global export markets with its range of Australian-designed pumps.

The Sykes Group, based in the Hunter region in NSW and led by managing director Jon Collins, has become an export success story doubling sales to the United States, Southeast Asia, India and the Middle East in just four years.

When Hurricane Katrina caused New Orleans’ 17th Street Canal levee to wash away last year, the waters of Lake Pontchatrain rushed in to destroy homes, businesses and lives. Once emergency crews realised they would need to drain the city they called the American distributor for the Sykes Group to provide pumps, pipe, filtration and tanks.

The United States is one of many markets where the Sykes Group is expanding distribution for its prime pumping equipment. It has also established offices internationally in Dubai, Hong Kong, Shanghai, Indonesia, and New Zealand, and is using local distributors in other markets.

It currently has more than 140 pumps at work on the massive Doha International Airport project in Qatar, with others on major building projects in the estimated $A16.4 billion construction boom taking place in the United Arab Emirates capital Abu Dhabi.

Export Finance and Insurance Corporation (EFIC), Australia’s export credit agency, and HSBC are assisting the Sykes Group as it seeks further export growth in target markets.

The company has used additional working capital available through EFIC Headway, a financial guarantee from EFIC to a bank, to fast track the export sale of its sturdy Yakka 150i pump.

“We have developed extremely reliable pumps that were designed for tough Australian conditions and are now being exported to countries where the environment is just as harsh,” Collins says.

The Sykes Group started life as the local subsidiary of a British company that made its name with a pump capable of dealing with heavy bomb damage to water supplies and sewers at the height of the London Blitz in World War II.

With 20 years’ industry experience in Britain and the United States, Collins was asked to look at the Australian subsidiary on his 1987 World Cup visit. He stayed on as the local company’s managing director before purchasing it in a friendly management buyout in 1992.

“There were some opportunities for projects offshore back then but we had been somewhat restricted by the British parent company prior to the buyout,” Collins explains.

Fifteen years on, the Sykes Group is now bigger than its original parent and continues to grow in line with its business strategy for the Australian and international markets.

The company is a long-time client of EFIC and is now experiencing the benefits of the innovative EFIC Headway facility, which enables exporters to access extra working capital from their participating bank without the need to provide additional security.

“The Sykes Group is a great example of a profitable, fast-growing SME whose success has outstripped the value of assets that can be used to secure additional working capital,” says Sunil Aranha, EFIC’s head of SME business development.

“Our research shows that SMEs frequently miss out on export opportunities due to working capital constraints, and that 43 percent of SMEs would borrow more if finance was available. EFIC Headway is there to help exporters reach their full growth potential.”

Collins says growing its international business was a key objective for the company and having access to additional funds enabled them to take advantage of immediate export opportunities in the United States.

“The additional funds via EFIC Headway have made a significant difference to the size and effectiveness of our business,” he says. “Our turnover has increased by 12 to 15 percent. It has given us great opportunities to access new markets.”