THE oil industry has long been known as a pretty tough game to be in, but that did not deter Joe Lau from jumping into the deep end eight months ago.
What made his move even more unusual was that his firm JEP Precision Engineering, a subsidiary of AlanTac Technologies, was already thriving - producing aerospace components and parts for the semiconductor sector.
A pressing need to diversify, as well as the lure of skyrocketing oil prices, however, proved a call he could not resist.
'We moved into the offshore oil industry overnight,' said Mr Lau.
Such a transition would cripple most firms, but JEP was well-equipped, as it had the necessary capital, machinery and technical ability.
'In fact,' added Mr Lau, 'the offshore industry is a notch below aerospace manufacturing, requiring less sophistication.'
The firm operates in a select niche - making components that hold together the pipes and drills required to extract undersea oil reserves.
JEP comes into play once the big guns like Shell have surveyed the seas, found a source of oil and set up drilling rigs. Then, first tier companies like Halliburton and Aker Solutions will provide the equipment to 'support' the rig as it extracts oil. They can either operate in above-the-seabed processes of below-the-seabed ones.
Companies like JEP Precision come into the picture at this point by making components the first-tier operators need to drill into the seabed.
Getting a slice of this booming market represents a huge advance for a firm that began as a one-man operation in a four-room HDB flat.
Mr Lau, 53, has taken the firm to the point where it now employs 150 people in his Singapore plant and had a turnover of $23.5 million last year. He sees great prospects in the offshore oil industry. It now comprises about 25 per cent of the firm's revenue, but Mr Lau hopes to increase that to 30 per cent by the end of the year.
A recent business mission to Houston will help in this. Mr Lau is keen on building better relationships and seizing business opportunities with the multinationals he supplies but rarely gets to meet.
The oil industry certainly has its own quirks. While many businesses hope to serve as many customers as possible, Mr Lau believes the opposite strategy suits companies in his sector.
'With fewer clients, we can manufacture more parts for each of them, and without us, they will be very cham,' he said, referring to the dire circumstances their customers might face. 'But if we manufacture few components for many different companies, they can easily find a replacement.'
This article was first published in The Straits Times on Jun 4, 2008
'With fewer clients, we can manufacture more parts for each of them... If we manufacture few components for many different companies, they can easily find a replacement.'
JEP MANAGING DIRECTOR JOE LAU, on the advantage of having fewer customers
