Leo D'Angelo Fisher Columnist

Leo covers management and leadership issues, business trends and corporate strategy. He is a former senior business writer at The Bulletin and a former host of The Business Hour on 3AW.

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Pipeline to growth

Published 04 October 2012 04:15, Updated 04 October 2012 04:16

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Growth has never been a problem for Brisbane-based engineering company OSD Pipelines but it has never been an end in itself for company founder and managing director Brian O’Sullivan . Since starting the business in 1998, the former engineer, as befits his profession, has taken a methodical and calculated approach to growth.

That is not to say there hasn’t been flexibility, even the occasional rethink, along the way but O’Sullivan has always been guided by a vision and a plan to create a global company specialising in the design, development and operation of pipelines and pipeline facilities.

OSD’s pipelines carry oil and gas, water, slurry and coal seam gas in Australia, Asia, Africa and the Americas. Twenty per cent of its business comes from overseas projects.

OSD – which is the abbreviation of the original business name, O’Sullivan Developments – also provides engineering, pressure equipment and plant design and project management services for the oil refining, petrochemical and gas industries.

With 220 employees and annual revenue of $50 million and overseas offices in Chile and New Zealand, there is one word that underpins growth at OSD: sustainability.

“There are loads of companies that grow to 200 people and either implode or are taken over. Our aim has always been to grow sustainably,” O’Sullivan says.

This means not taking on more work than the company can handle and favouring projects that involve partners and clients that OSD has worked with before. At OSD, steady clients are the best clients.

“We take pride in the working relationships we have with our clients. “We keep getting repeat work,” O’Sullivan says.

OSD opened its first overseas office – in Calgary, Canada – in 2007. It closed the office three years later but O’Sullivan says North America remains a key market and OSD intends to re-establish a presence there.

“Canada was tough but we learnt some very important lessons about moving into a new country: know your market, don’t rely on other companies’ strategies, have a well thought out strategy and engage local people,” O’Sullivan says.

OSD opened an office in Santiago, Chile, in 2009, and New Plymouth, New Zealand, in 2010. Domestically, OSD has offices in Brisbane, Melbourne and Perth. O’Sullivan says the global spread is consistent with OSD’s sustainability strategy.

“Markets go up and down, so if we’re going to develop a business that’s sustainable we need to diversify [geographically] and grow our business in other jurisdictions,” he says. “Having an overseas strategy has been an important part of creating a sustainable business.”

As well as ameliorating the effects of local economic and market cycles, being internationally active ensures OSD is able to make the most of client relationships.

“If you have strong relationships in one part of the world those relationships often extend to other jurisdictions.”

Listing OSD is a possibility but O’Sullivan insists it is something “we’re not rushing to do and may never”, although the company considered doing so “long and hard” until the global financial crisis of 2008.

OSD has had a board of directors for five years – respected company director Rod Keller is non-executive chairman – and O’Sullivan says the business is “run like a public company”. Given the company’s international activities, he says, the governance and reporting systems in place ensure that the company does not expose itself to unnecessary risk.

The board is another plank in OSD’s sustainability model, as is O’Sullivan’s decision to reduce his shareholding in the company to 66 per cent from 80 per cent in 2009.

A management and employee equity program – which is open by invitation only – is a way of building “quality, commitment and ability to add value” into the company. The selldown is part of OSD’s succession strategy, designed to bring emerging management talent into the leadership team.

Such a successful, orderly and well run company might be expected to attract its share of suitors – and it does.

“Our answer to those approaches is this: we don’t wish to be acquired at this point; we have a solid group of people, we have a plan and we have something to execute here.”

OSD, however, is interested in making acquisitions of its own. It acquired Brisbane firm GWB Engineering last year and is in discussions with other potential targets.

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