HCS Control Systems: Strategic Growth and Innovation in Subsea Equipment

Subsea is a shore thing

With its eyes on the ocean but its feet firmly grounded, HCS Control Systems was part of a £9 million equity funding deal in June 2013.

The opportunity to acquire HCS arose with the retirement of one of its founding shareholders.

Managing director Brett Lestrange led the HCS management team to the completion of the deal: “We are going in with new investment, and withan invigorated approach to growing the business.We’ve added a depth of capability with our knowledge, experience and financial backing, so we’re looking at fairly aggressively developing the business and taking HCS to the next level.”

The company has established a loyal client base and has gained a great reputation amongst them. With a clear focus on business development Brett said: “We have been producing very high quality subsea equipment and delivering it on time. This is a big deal in the subsea business and is a key part of our growth plan. Firstly we are looking to expand thenumber of services and products that we offer to our existing clients, providing a whole suite ofequipment that is designed, built and tested as a package, and subsequently ready to go offshore. In doing this we are looking to take a greater role in our clients’ projects.

“Secondly, there are additional customers in the sector that HCS are talking to in order to expand our client base. Thirdly, we are introducing new products and services, expanding on what we offer.” By developing these three areas the company is looking to take advantage of its geographical position within the oil and gas hub of the northeast of Scotland.

The new management team plans to open an Aberdeen base, specialising in sales and servicesupport, whilst retaining its core manufacturing capabilities in Fife. Brett highlighted: “This gives us some distinct advantages over being based solely in Aberdeen. There’s a vast skilled manufacturing pool of labour in Fife and across the central belt of Scotland. I hear daily the challenges of labour supply, but we are easily able to access this band of highly trained and highly skilled technicians that are an ideal fit for our business. Locally we are also supported by a large number of high quality suppliers with whom we have long-term working relationships.

“We are looking at expansion of the testing and assembly facilities in Glenrothes over the next year. In advance of the new business that’s coming in we are hiring additional engineering graduates alongside apprentices. At a time where the consensus in the industry is that there is a lack of resources, skilled personnel and capacity, we are telling our existing and prospective clients that we can handle more. We’re scaling up, we’re very optimistic, and year on year 2013 is already substantially better than 2012.”

Developing innovative solutions to problems faced by the subsea industry and with a patent pending on its design, HCS has developed in-house a new Zone 1 rated high capacity electric umbilical reeler. Client engagement was sought from the early days of its conception. “They really helped to crystallise that development because we knew that there was an end application there,” explained Brett. The zone one electric reeler is primarily for deepwater applications requiring large diameter, long umbilical lengths beyond two or three kilometres, for deployment and retrieval of subsea production trees. “These units can weigh in excess of 50 tonnes,” he continued. “With the electric drive system we are able to accurately and precisely control the deployment and retrieval of the umbilical. Utilising its PLC control allows us in real-time to accurately log any loads and tension seen by the umbilical. With this data we can manage the integrity of that umbilical, so are able to give much greater assurance to the operator that there’s no inherent defects or areas of weakness from prior deployments that could result in operational problems,” he said.

For its clients, the main benefit of the application is its use in deep water, but another advantage of the technology is the suitability in cold, and arctic conditions where pneumatic systems can suffer from freezing and hydraulic systems can be problematic. Brett expanded: “It’s a good example of the innovation drive through HCS and really opens up a dialogue with customers. They are recognising that we are able to take on a greater scope in their project, giving them a fully tested suite of equipment, but also being able to innovate and develop products that are key to their business. It’s a method that is going well in terms of the new business plan and we are pleased with the positive response we’ve received.”

The management team has a background working for and with the international service companies, so has a good understanding of the challenges they face on these big demanding products. It is driven to get beyond the initial transactional level of business and is making time to engage with them and understand their business needs.

Delving into the activity this year Brett acknowledged: “Around 80 per cent of HCS’ production is destined for export. Our clients, based primarily in the UK, Norway and the US are purchasing systems often destined for projects in West Africa, Asia and beyond. They recognise our capabilities and the support we can offer and that, to us, translates into purchase orders of substantial contract values.

“We see great scope to increase our core market share and we’re making some significant roads into developing in new areas. We recognise Brazil is a fantastic market. We have equipment that clients have utilised out there, but the continual question over geographical expansion needs to be considered carefully. It is important not to spread our efforts and focus too thinly, so geographical expansion at the moment is lower down our priority list, behind fully developing our core businesses in the markets we are in.”

Recognised for its commitment to health and safety and dedicated to continuous improvement the company earned, for the second year running, the RoSPA Gold Award. Reflecting, Brett said: “It’s extremely helpful in terms of new clients understanding who we are and what our priorities are. We are extremely proud of it.”

Summarising the strategic view for the next five years Brett reported: “We want to be recognised as one of the leading subsea design, manufacturing and project support companies in the global market. Maintaining our excellent health and safety record, delivering high standards of quality and repeatedly delivering our scope on time is how we see our business growing.”

HCS Control Systems Ltd
Services: Design, manufacture, assembly and test of equipment for the subsea industry