Twice bitten, never shy

Twice bitten, never shy

Howard Gould returned to take over ISIS-Ex, a company he had been involved in setting up, some years after he moved onto other things. Here he explains why it was worth it

The Deepwater Horizon oil rig disaster in the Gulf of Mexico in 2010 was seen by many at the time as a disaster for British business’s reputation in the area. A large British multinational, BP, had entered the region to compete against other US-owned companies.

And its safety standards had been found wanting, resulting not just in the deaths of 11 employees on the oil rig itself, but also in the damage to the economy and environment of vast swathes of the Gulf of Mexico coast.

It may have been a disaster for BP, particularly after its then chief executive, Tony Hayward, ill advisedly told a reporter coming to view the damage that all he wanted was “my life back”.

In an initial settlement in November 2012 BP agreed to pay US$4.5bn in fines, but it still has to agree payments to thousands of people affected by the spill. But there is one company from the Yorkshire region at least that is still doing very well with the oil barons in Houston, thank you very much.

ISIS-Ex makes computers that are certified safe to use in a possibly explosive atmosphere, a sub-category of hardware known in the trade as ‘Ex’. The oil business is the company’s most obvious client – although it initially started out selling many to the pharmaceutical sector.

"These are sophisticated products. A fully loaded ISIS-Ex computer costs about the same as a small car. People think we just get Dells in here and modify them,” says managing director Howard Gould.

They certainly don’t do that. The product itself is cased in solid aluminium, which the company machines out to make space for the technology. There are many technological challenges that have to be met as well. Given the varied parts of the world oil platforms are located in, for example, ISIS-Ex computers have to be able to function in anything from -60°C to +40°C.

“We have to put heaters in them,” says Gould. “There we are, putting together something that won’t cause an explosion, and we do that by essentially making sure its surface temperature doesn’t rise above a certain level, and yet we put heaters in them. It’s very exciting.”

There is also the question of how to respond to the current demand from customers – forged, says Gould, by the popularity of the iPhone – for all computers to be touchscreen. Not easy when they are stationed outdoors. “How do you differentiate between a raindrop and finger press?” says Gould.

He and ISIS-Ex must know the answer, however, because in the three years since Gould took over, the company’s growth has been exemplary. Since 2009, headcount at the company has gone up from 15 to 35, turnover is now at £4.2m when it was below the million mark, the company has taken on an office in Houston, and it has also just employed another business development manager for the Europe and Middle East region. Not bad for an operation that is headquartered in sleepy Malton.

Gould says the focus on Texas is not surprising. Even today, he says, there are more oil platforms located within the mainland USA than there are in the rest of the world put together – and every one of them is a potential customer.

“There are between 2,500 to 3,000 active platforms in America,” he says, “and they all need products. Flying across West Texas, all you can see are nodding donkeys.” And despite the Deepwater Horizon affair, there is still a marketing advantage in being British.

“There is absolutely no fallout from being British,” he says. “We trade very hard on that. We are the only British manufacturer of this type of product, and our customers like that.”

Yet what is remarkable about the company and Gould’s achievement with it, is the long history it has had. Gould was in fact, involved in managing the company in its very early days, but that was two decades ago. Since then the company has been through several owners, two different locations, and even came very close to being closed down. It is, if anything, a real survivor.

The company started out in the early 1990s as a subsidiary of Bradford-based Beacon Controls, itself set up by an ex-Courtaulds employee to make time temperature devices for the textiles industry.

Courtaulds had approached Beacon Controls to see if it could design a product that would be safe to use in an explosive atmosphere, and ISIS Products as it was then called was born. (The word ISIS includes the ‘IS’ acronym widely understood within the sector to mean “intrinsic safety”.)

Gould, who had over 20 years in IT and telecommunications behind him including a stint working for BT, was taken on to run the subsidiary, although he also soon had a seat on the main board. By the end of the 1990s, however, Beacon’s original owner had sold up, and the new Swiss owners, realising that textiles were, in Gould’s words, “moving east”, decided to sell a business they no longer viewed as core.

As part of the sale, ISIS-Ex went to Technor, based in Stavanger, Norway. That was where Gould and the company initially parted company. He opted to stay with Beacon Controls under its new Belgian owners, who had not been interested in the computer business, even if it was in the same building as Beacon.

Gould claims that it was under the Norwegian owners that ISIS first began to market to oil and gas companies. Even still, they managed the company very much at arm’s length, and effectively allowed it to drift. Eventually, Technor put together a plan to close it down.

“The only problem was that some of the customers the main business had were big names to whom they had sold from other parts of the group, including ISIS,” he says. “So, realising that it would have been very embarrassing if they couldn’t honour their obligations, they asked the guy who was running ISIS if he would look after warranties for them.”

That, it turns out, was how the business ended up in Malton. “He said he would,” Gould continues, “but only from his home. He had a farm near here, and he converted a barn to carry out the warranty business.”

Then the story gets even more bizarre. “The guys in Norway more or less forgot that they had decided to shut the main business down,” says Gould, “and they carried on selling ISIS products in America.”

One company liked the product so much they ordered 50 at once, and suddenly the business was reborn. “There it was, taking its last gasps of breath, and all of a sudden it was resuscitated as a result of this one order,” says Gould.

Even still the new start wasn’t exactly promising, and in 2007 Technor approached Gould again to see if he might be interested in coming in to turn it around. It wasn’t just because of his past history with the business that they chose him.

In the intervening period Gould, having left Beacon in 2001 when the Bradford operation was merged with one in Blackburn, had set up his own interim management consultancy, called Tandim (or Turnaround ad Investment Management). Managing turnarounds, he says, is something he particularly enjoys.

“I realised not long after I left Beacon that I enjoy sorting problems out, and that when things are working well I tend to get a bit bored and get itchy feet,” he says. “In any case, problems are not always bad. Sometimes they are good – people are growing very quickly. You get the best of both worlds.”

But this was not your typical interim consultancy – he had seen enough of those, and wasn’t impressed. “A lot of those companies are no more than glorified employment agencies,” he says.

“They put you up for work, then take a huge percentage of fee, and you get the rest and actually have to do the work. Most are also based in London. I went to see a few, and what I saw was awful. So I thought: ‘Let’s have a different model.’

“The people I was using were all in as nonequity partners. We effectively traded among ourselves, they had their own businesses as well. I had people with expertise in IT, in sales and marketing, accountancy, bookkeeping, and a Chinese national based out of Harrogate – we did quite a lot of work with her.

"We had all sorts of opportunities and interesting ventures. We were even involved in setting up football sponsorship in China. They wanted to set up the equivalent of the Champions’ League in the UK, and unfortunately it wasn’t until I was well into it that I realised that it was all corrupt and wasn’t to be.

“But simply because we were there there were all sorts of opportunities.” He had been aware of his old company’s move to Malton in his absence, but little else, and was initially reluctant to get involved when Technor approached “out of the blue”.

But he had just come to an end of one particular project, so he thought he would just go for three months and produce a report at the end. But Technor only agreed to implement his recommendations if he became managing director – albeit still an interim one. He agreed.

“For me it was important because people relied on this business for their living”, he says. He continued to work for Tandim, and had a number of conditions about his new role.

“One of the main things I required was that we became a profit centre rather than a cost centre,” he says.

“We had to become accountable, and when we did, things started to improve. We also needed direct contact with customers – we weren’t even allowed to talk to them before.

"And we needed more control over product design. The Norwegians interfered too much. Then I installed better control systems and better reporting. For a year things rallied along, and the company moved into bigger premises. But then at the end of 2008 Gould was summoned to Stavanger – an event so unusual he knew something must be up.

“They told me they didn’t think our business was core to their interests, and they wanted me to sell it. I had a strange sense of déjà vu.”

Even though he managed to find them a buyer, Technor didn’t want to sell to them. It became clear who they wanted the buyer to be.

“They finally said: ‘Will you buy it? We will make you a very good offer,’” he says. To get some final reassurance on this question, Gould contacted a trusted business associate, John Holliss, from FDYL, an agency supplying interim finance directors to Yorkshire businesses based out of Cleckheaton.

“John is the most commercial accountant I have ever met,” says Gould. “He is not just a bean counter. He had already been working for Technor, and they had retained his services. I rang him and explained the situation. I asked him: ‘Will you take a share if I buy the business?’, and without hesitation he said yes. It was like when you ask someone if they love you, and if they don’t hesitate to say yes you know they mean it. John didn’t find it daunting, so I knew I wouldn’t.”

But what persuaded Gould, in his early 60s by now, to park Tandim into a position where he now only has a chairman’s role, and raid his pension to raise money, all for the sake of buying such a business? He admits the banks he approached initially thought he was crazy. “It was the company’s prospects,” he says.

“We are operating in a very niche market. We are one of four big players in the world, and we only have a tiny fraction of market share, so we only have one way to go.”

There are challenges ahead. One concerns certification. Each new product design has to be certified by governing bodies, and there are different bodies for different parts of the world, including a new AEX American standard that was introduced as a direct result of Deepwater Horizon.

Similar bodies also have to visit the factory to audit the production process. Naturally enough, none of these certification systems synchronise perfectly, and they all have different methods of auditing.

The new territories ISIS-Ex wants to start exporting to – Russia, for example, and Kazakhstan – are each busy developing standards of their own.

“So all our products need recertifying,” says Gould, “and that costs between £30,000 and £40,000.”

In America as well, there are political factors to consider. The Texan oil barons, it seems, had been assuming that Mitt Romney would just cruise into the White House. President Obama cut back on issuing licences to the industry following Deepwater Horizon, and during his campaign Romney had been making noises about giving the industry a boost again.

However, because the barons all assumed that this would be in the form of a tax cut, they held back on any additional investing. Now, says Gould, they are in “mourning”.

“But Obama is going to have to do something,” says Gould. “The oil lobby is so powerful in the US, after all. We haven’t yet got a car that runs on water, and right now interest in the electric car has waned. Obama will be under pressure.”

And that, he thinks, will play into his company’s hands, even if businesses supplying computers to the oil industry are “at the bottom end of the food chain”. “If I woke up one morning and said: ‘I want to open a business’, it would not be this one,” he says.

“But you can see the cost of entry to this sector is high. When I came back into this business I saw we had a presence here, we had the technology, the licences, and people who know what they are doing. I like to say we are a 20-year-old business with the energy of a start up. We punch well above our weight.

"To my mind we just needed to get the ducks in a row, and now we have done that we are flying.”