VIKING Airtech is moving to open new markets as its usual customers in the marine and offshore sectors are buffeted by economic uncertainty.
The company - which provides heating, ventilation, air-conditioning (HVAC) and refrigeration solutions - has seen business hit, with several China projects cancelled.
There has been no order from China since the start of this year, says Viking's executive director Ong Choo Guan.
'The conventional kind of order intake - quick and plentiful - is no longer there,' he says. 'There are still lots of enquiries and quotations, but the orders are not really coming in.'
The slowdown has put pressure on Viking, as China was accounting for almost 40 per cent of its annual turnover.
Fortunately, demand from Singapore and Batam, which contributes almost 60 per cent of turnover, has provided a buffer, along with smaller projects from Indonesia and Malaysia and spare parts deals with European shipowners.
But although the heat is on, Viking is keeping its cool. Management is not sitting on its hands waiting for the storm to pass. Instead, it is busily scouting for new business in India and Vietnam.
'In the past, when we were busy with plenty of orders, these markets were not an immediate need,' says Mr Ong. 'Now we find they are very much needed. We are in the market for upgrading, troubleshooting and repairs, for ships or rigs.'
Part of Viking's plan is to raise its profile by taking part in exhibitions in new markets. In September, it will showcase itself for the first time at a marine exhibition in Bombay.
Until the marketing moves start to pay off, the company is banking on its existing strong order book, which runs to 2011 and totals almost $90 million.
Viking boasts an established management team that has doubled pre-tax profit every year and grown annual revenue 30-40 per cent since 2005. Last year, pre-tax profit was $10 million on turnover of $43 million.
Viking also has a very experienced engineering and design team. It can design systems that use minimum components without compromising on functionality, says Mr Ong. 'Our highly qualified team designs reliable and innovative systems, which is always a plus.'
The team members have years of experience in designing and installing HVAC systems. In fact, Viking makes sure they understand exactly what customers need. It requires all fresh graduates to go on board ships at sea to get fully acquainted with the shop 'floor' - to merge theory with practice.
'Our graduates must also be willing to accept advice from practical engineers,' says Mr Ong. 'Together they form a great team.'
As the sole authorised Singapore dealer and service agent for Carrier Marine Equipment - Carrier is the world's largest maker and distributor of HVAC systems - Viking also benefits from Carrier's worldwide network of service stations, which Viking clients can turn to for support services.
To ensure cost-competitiveness, Viking set up an engineering parts factory two years ago in China - where factory space, equipment and skilled labour is not only plentiful but cheaper to come by.
This has stood the company in good stead in today's tough times. 'The chances of securing projects are slimmer now because more people are eyeing them,' says Mr Ong. 'Everyone is worried about losing projects, so they are cutting prices.'
Besides controlling costs, Viking is trimming its profit margins. 'If we make 10 per cent and cover our overheads, why not?' says Mr Ong.
He concedes this has meant a mentality switch that has been difficult, as the company commanded solid margins during the good years. But the switch is necessary. 'It is better to make a small amount of money than nothing at all - or even lose money,' says Mr Ong.
Viking is hopeful is strategies will compensate for cancellations in China and allow it to maintain turnover at last year's level.
'The volume of projects is important because of our fixed cost,' Mr Ong says. 'We cannot be too far away from our turnover last year.'
Viking, a subsidiary of Viking Engineering Group, was set up in 1994 to tap the HVAC and refrigeration market in the marine and offshore sector, which is markedly different from Viking Engineering's core business of ship repair.
Viking Airtech was ranked 32nd in the Enterprise 50 - a mark of recognition for the cream of Singapore's business crop.
