After being crowned Small Exporter of the Year at the HSBC Scottish Export Awards last month, BQ caught up with engineering company Merlin ERD to see how they conquered overseas markets...
What does the company do?
Merlin ERD Limited are consultant Engineers who design and drill the world’s longest oil and gas wells. Leveraging techniques borrowed from the aerospace sector, these wells reach further, are drilled quicker and with fewer problems than conventional operations.
This has made the Merlin name synonymous with Engineering Success and led to a training offering being added to the established engineering and rig site support services. Merlin designs make marginal fields economic and frequently remove the requirement for costly equipment upgrades.
How long has the company been exporting?
Since 2007, the majority of our clients are global (2015 percentage of export 82%).
What do you currently export, and where to?
Our services, which include our engineering expertise and high quality training. We currently export to USA, Australasia, Asia, The Middle East, Europe and Africa.
What motivated you to start selling overseas, and how long did it take?
The specialist nature of Merlin’s expertise and the global nature of the oil and gas industry drive a trading strategy biased towards international projects. Approximately 98% of world oil is produced overseas, so growth beyond the limit UK market relies upon exporting. Merlin’s aggressive growth targets and desire to bring foreign income to Scotland made exporting a natural progression.
What is the easiest part of exporting?
Combined with the knowledge that we provide a world-class engineering service, many of the company’s personnel, including the founder, have worked overseas and several who support rig operations are foreign nationals, based internationally. This provides foreign language capability, along with cultural awareness which makes global exporting easier.
And the most challenging part?
Reaching difficult or developing new markets. For example Cuba presented as a new market with customers very keen to employ Merlin’s training expertise but contractual and payment difficulties meant we had diverted resources to other projects. Also our services were required in Iran but due to the sanctions it is not possible yet to get banks to accept transactions and we have now joined the UK Trade Mission being planned in May. India is another complexity whereby setting up contracts is complex.
Have language barriers, currency changes, etiquette and culture ever caused you any difficulties? How did you overcome them?
Having a diverse staff has helped immensely, there is always someone to offer assistance, guidance or simply to translate.
Did you get any support when you wanted to trade abroad? Who from, and was it helpful?
Scottish Enterprise and Scottish Development International are both invaluable. We have taken part in the Global Scot trade missions and some of the other events that SE offer. The UKTI workshops have also provided us with insights into the complexities of becoming a vendor in an overseas country.
What advice would you give to someone just starting to explore overseas markets?
Exporting products andor services will cost more than planned and will take longer than expected, but don’t let that put you off. You miss every shot that you don’t take and the rewards are definitely worth the effort. Just get out and do it!
NO! However, naturally there have been spells of disillusionment, self-doubt and frustration, some cash flow concerns but these have been dispelled quickly with the help of the carefully contrived support network and a superb team of professionals.
Where next? What markets are you looking into and where do you see the company in 5 years’ time?
Merlin’s export plan targets expansion in the Middle East - Kuwait, Iraq and Saudi Arabia and very soon Iran provide exceptional opportunities. Thereafter East Africa, the Americas and Russia. We have therefore focussed our efforts on planning the human resource to mobilise our drive.
An office in Houston, USA is a key part of Merlin’s growth strategy, providing access to parts of the industry where we are still unknown.
We are also working on a project which could see our service utilised on every rig worldwide, which at its peak in 2014 was almost 4000 units. That will take true scalable growth.
In 5 years’ time we are planning to have a core staff of 50+ and be turning over in excess of £15m with an office base in Australia, USA and the Middle East.