21 March 2019
Lamor Value Drivers and Establishment of a New Business Unit
by Mika Pirneskoski, CEO Lamor Services
Lamor has always understood that globalization is a source of growth opportunities, but the explotation of those opportunities presents certain challenges and threats to the company. The traditional view is that the global market is only exploitable for large organization, but in Lamor we have always challenged that view. Our solution has traditionally been to find an organizational structure, which allows for a strong market presence with fixed expenses that can be sustained. However, for us to grow we need to be able to utilize the global market opportunities in an efficient manner. This case study highlights how we managed to do that in Chile with utilizing our established sales and partner network.
Our regional VP of sales received an invitation to “Challenge Presentation Workshop – Integral Suppliers Model (GIP)” from ENAP in 2015. The purpose was to collaborate towards an innovative, attractive solution that would replace the old procedures ENAP was applying at that time. Our sales VP reviewed the invitation and passed it on to our then Soil & Water Treatment team. After having analyzed the two challenges posed; one related to the treatment of tank-bottom sludge and the other one for treatment of drill cuttings, we decided to take part in both. The best technical capabilities and experience for the scope of work was in our Ecuadorian business unit, Corena. Therefore, we decided to engage their technical team in the preparation of the proposal from the beginning. The team put up two innovative and attractive solutions to ENAP utilizing technology from potential partners in the US and in Brazil. The solution proposed for the treatment of tank bottom sludge also included some civil construction work and unfortunately, we were not able to agree terms with a local Chilean partner and decided to concentrate our efforts in developing the drill cuttings treatment project.
After having presented several different commercial proposals for different scenarios we managed to get an approval for a pilot project in 2017 divided in two steps, one for treat drill cuttings in a pit and after the good results of these activities, the second step was the treatment of drill cuttings in the rig. The pilot project was commissioned in 2017 and it was a success. After the pilot project we started negotiations on the award of a long-term contract and finally in 2018 we were awarded a contract for one year. This was a bit of a disappointment for us as we were expecting a contract of three to five years. However, as our operative performance was excellent, and client was really happy with the results, we finally were awarded a 3+2 contract in March 2019. This long-term contract will allow us to use the recurring revenue as a platform for future expansion.
This project development is a good example of how long it takes to develop a long-term service contract in a greenfield market. It took us almost four years to be awarded a long-term service contract that guarantees the profitability of the country unit for the next five years. However, it is an excellent example how we can utilize our value drivers in establishing ourselves in a new market. We used our distribution network to identify the need, in the second phase we used our regional resources to source and present an innovative and attractive solution for the end client. Finally, our proposal was supported by our global references and credibility of a Finnish company. Currently we run the operations using well-defined and managed processes and the result is in line with the corporate environmental responsibility of the end client.
-Mika Pirneskoski, CEO Lamor Services