I thought that some insight into the different business models for American NDT service providers would be of interest to BINDT members. I sought out Brian Shannon, President and CEO of HSI Group and a long-time BINDT member, who has extensive experience in creating, developing and marketing NDT service-provider companies in the USA.
Brian, how did you become involved in NDT?
NDT was an integral component of my entire career, from the heavy pressure vessel fabrication shop in Belfast where I started. In those days, radiography, primarily X-ray, was used to evaluate weld quality with the additional use of surface methods (magnetic testing (MT) and penetrant testing (PT), where applicable).
Prior to moving to the USA in 1979, I spent most of the 1970s working on the construction/engineering side of things, building offshore platforms for the North Sea, pipelines and power plants in North Africa and refineries and petrochemical facilities throughout Europe and the Middle East.
After moving to the USA, I was involved in the nuclear power industry for the first half of the eighties but, as you know, nuclear power was going through a significant downturn due to the Three Mile Island accident, which, with a negative portrayal by the media, resulted in the cancellation of all new plants.
My first exposure (no pun intended) to ultrasonics as a weld examination tool was in the nuclear field. This was with the fledging P-scan system being utilised for the critical welds on the nuclear piping systems for which I was responsible.
At what stage did you become an entrepreneur?
Starting my own company was the result of seeing an opportunity in the oil & gas sector, which lacked awareness of all of the capabilities of ultrasonics and professional NDE services. Historically, oil companies had employed radiographic testing (RT) as a construction tool, but were not using any real tools for the measurement of corrosion or degradation of the pressure systems they were operating. It was only after several deadly accidents that the industry awoke to the hazardous conditions that exist in these facilities.
Today, inspection and NDE technologies and services are applied to aid in the safe operation of industrial plants, in varying degrees depending on the owner’s/user’s appetite for and understanding of risk. The company that I started, IESCO, was the result of seeing the opportunity and realising that there was room in the market for a professional, service-oriented provider of advanced and conventional NDE services.
Growing the business was a daily challenge; building the administrative, operational and technical staff all had to be accomplished simultaneously. Based in California, the target industries were the oil & gas sectors, fossil and nuclear power plants and the ammonia industry.
As to size, I remember achieving an annual turnover of $21k working alone in 1986, which increased to having 280 employees with an annual turnover of over $40 million by 2009. During that term, we conducted work both nationally and in over 45 different countries around the world.
What were the business basics you applied that permitted the company growth?
It is important to have a vision and a cogent plan to get there when considering a business. While the USA provides a host of new business opportunities, the one thing that does not get talked about enough is the need to dedicate seventy to eighty hours of work per week, every week, to ensure success. While some might say that working smarter not harder (ie not working as long) is the preferred method, I would disagree; working smarter is a finite attribute and should be incorporated into working continuously harder, which has infinite opportunities.
A clear vision and well laid-out plan are great, but will come to nothing without sufficient capital to ensure success. This is probably the single biggest challenge in starting and continuing to grow a business. Sales, marketing, company promotion and exposure are all important ingredients, but without sufficient capital success can be elusive.
Once you decide to grow the business beyond the ‘personal service’ (ie yourself and a handful of operatives), you need to build a team of professionals: administrative, financial, operations, HSE and technical support. Assessing potential team members for alignment with the company vision and operating philosophy is of the utmost importance, as is doing your homework on the hiring process. Remember, people will tell you what they think you want to hear and a CV tells very little about the real person, so sooner or later the real person will show up. Being aware and thorough in hiring practices is critical! Remember, there should always be time to do it right.
Increasing the size of the business demands an expansion, not only of turnover but also in the adoption of internal systems and controls, which will allow for greater sales volumes without sacrificing the execution and quality of service delivery.
Can you speak on the subject of the acquiring and integration of NDT companies?
On this topic, it is imperative that the platform company has a clear vision and ultimate goals as part of the stated plan when acquiring add-on businesses and/or key personnel. Failure to do so will result in a mixed message being sent to company management, personnel and clients. The result will be internal misalignment of business goals, the ultimate failure of the combined company performance and the loss of personnel.
On the topic of company ownership by financial entities, having a financial owner will certainly allow faster growth in sales, the purchase of technology and equipment and the ability to solicit a higher level of management. Remember, however, that the financial purchaser (usually publicly traded) is being judged on quarterly financial performance and not necessarily on the long-term sustainability and vision of the business.
In summary, bigger is not necessarily better. A smaller, more nimble, company will be able to attract, retain and develop assets, personnel and technology, while responding to the ever changing needs of clients.
How would you compare operating a business in the USA versus the UK?
Broadly speaking, the USA has a more informal approach with technician certification. The SNT-TC-1A is an employer-based programme where the employer has the final responsibility for technician certification. The UK operates under a central certification scheme related to ISO and/or the UKAS system. Since we operate under both programmes, I can say that the costs are comparable. However, the formality in conducting business in the UK is much greater. This is in keeping with the variance in culture between the two countries.
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