Opportunities in a restricted market
Few professional firms can claim to be as pioneering as the Energy Contract Company which invented its own profession in the UK back in the 1980s and then took it worldwide. Chief executive Niall Trimble talks to Neasa MacErlean.
If ever there was a professional firm which could claim to be bigger than the sum of its parts then that is the Energy Contract Company (ECC). It is frequently quoted in the FT; it organises numerous well-attended courses in the Middle East, Far East and Africa each year; having begun in the UK 22 years ago, almost 70 per cent of its work is now international; and its 400 clients range from giants such as Sonatrach, Hess and RWE down to smaller UK gas producers such as Moorland Energy. But it does all this from a team of four directors, eight associates and a support staff of four from offices in Twickenham, on the outskirts of London. And it does not even have a marketing specialist on board, nor an official marketing budget.
The company's main role in life is to support clients in the negotiation of complex commercial transactions covering the sale of gas or Liquified Natural Gas (LNG), oil and gas transportation and processing and other upstream agreements such as Production Sharing Contracts (PSCs). Its experts include people with backgrounds in geology, engineering and economics. Niall Trimble, formerly a British Gas purchase contract specialist, started the company in 1988, just as Margaret Thatcher's energy market liberalisations were coming into force. British Gas had been privatised just before, setting off a move to the private sector which then spread around the world. Trimble kicked off the new business in spending three years negotiating the gas sales and transportation contracts for the Strathspey gas field in the North Sea, on behalf of Texaco.
Talking about contract negotiation within the energy sector, Trimble says: "It's a very restricted field. There isn't an awful lot of local expertise." So, even though the ECC works on four continents around the world, the sector has the feel of a small market. "It's not a big field," he says. "We will never be a PricewaterhouseCooper. I don't think there is enough business for us to get to a £20million turnover."
Unlike law and accountancy firms, the ECC is never up against a host of other firms when it bids for business. And, for the same reason, it does not have trouble differentiating itself. It can survive without a specialist marketer because the marketing it does undertake lasts a long time. "You go to see someone and they give you a call three years later," says Trimble, describing how some of their marketing visits unfold. The record (so far) is for a 17-year time lag in between Trimble talking to someone at a course he ran for the College of Petroleum Studies and getting a telephone call from the same man, asking if the ECC could do some work for them in Greece.
Even though the ECC specialises in drawing up ten and twenty year contracts, it is hard to take such a long-term view in marketing. It has experimented with organising trips abroad purely of a marketing nature - but the slowness of the payback period is offputting. Trimble recalls just such a trip to Australia where "we were very well received" but which, to date, has not translated into work. For a company whose annual turnover is about the £2million level, it is difficult to justify spending thousands of pounds on such trips if they do not produce measurable results in the medium-term.
Trimble, enjoys marketing even though he finds his professional role more absorbing, does a significant part of this work. In recent years, he and his other three directors have upped the emphasis here. They have developed a marketing strategy which highlights their activity in producing publications, running courses, speaking at conferences, developing the website and visiting clients and prospective clients. Trimble is realistic about their achievements."We have paid more attention to the website, though we still haven't paid enough," he says. The directors are also good at fitting in visits to potential clients on their journeys around the world. (This interview was conducted with Trimble, as he waited to board a plane at Aberdeen airport, having seen a client and a potential client there.)
Ironically, however, it may be the fact that the firm has no marketing budget which has helped prevent the marketing spend being cut during the downturn. Many law firms, for instance, have frozen their marketing budgets and told the marketing team that departing staff will not be replaced. At ECC these steps could not be taken and, if anything, they have spent more time on marketing in the last year. And, now that a new government has been elected in the UK, there could be a change in the UK market which could lead to more business opportunities on its doorstep for ECC."There is an increasing emphasis on long-term markets and security," says Trimble of the new Conservative/LibDem administration.
Certainly, the ECC is now set to grow in terms of manpower. For instance, it is hoping to recruit a specialist in electricity. "That is an area of priority for us in the future," says Trimble. The firm has grown by spreading into various different parts of the energy market since its foundation in 1988. "We have added things that are adjacent to our areas," he says. So, for example, it has developed an energy finance specialism in recent years, which has worked well."But there is a limit. We won't go into sheep-farming."
The firm is fortunate that some areas of work that it has added on over the years have also had the side-effect of being powerful marketing tools. For instance, about 25 per cent of the ECC's revenue comes from expert witness work. Nothing could really underline the notion better that someone is an expert (an obvious prerequisite for getting this kind of work) than becoming known as an expert witness.
Training courses have also proved to be first-rate marketing opportunities. Trimble did his first one a few months before the ECC was launched. This developed into a major line of work in the UK in the mid-1990s. It gradually dried up there (as the UK moved from long- to short-term energy contracts) and moved over to the Middle East and Far East. Now the ECC holds eight or so a year, in locations as diverse as South Africa, Dubai, Singapore and Australia. These courses keep the ECC flag flying, keep it in touch with companies around the world, produce income and often result in work. Just as some contacts have a long lead time, some contacts produce instant results. Transaction-related work is nothing if not volatile - so having clients all round the world (except for the rather separate, well-served American market) is a way of protecting against that volatility.
Another initiative which has become a tradition is ECC's annual 120-page The UK Gas Market Review report which has featured in the FT, The Times ,The Observer and other publications. Cultivating the media is an activity which the firm sees as very worthwhile. "If the FT quotes you, it's a real endorsement," says Trimble. Going forward,Trimble and his fellow directors would like to do more on business development. "We are trying to beef up our marketing effort," he says. "There's no doubt that we can handle the business that comes in." As well as using its existing staff and associates, the firm works with various others who could be called upon if there were more demand. It is important that ECC continues to grow - not just for growth's sake but to prevent it from falling into a situation where, in the worst case scenario, it could shrink. "It's a restricted market," says Trimble."There aren't that many marketing opportunities."
Although he might feel more at home negotiating the intricacies of a new Liquefied Natural Gas contract,Trimble still finds many challenges in his marketing role. He says: "I agree with what Henry Ford said: I know half of my marketing budget is successful. I just don't know which half."
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