Steven Pither established Heat Recovery Systems in the UK in 1981 as a sole enterprise, acting as the UK agent for a Swedish manufacturer. Despite the long hours, single-handedly taking care of imports, sales, quotes and deliveries paid off, as the company made a healthy profit in its first 12 months.
38 years later, the company, now named HRS Heat Exchangers with Pither as its CEO, has been named one of the UK’s 200 fastest-growing firms for international sales in the Sunday Times HSBC International Track 200 league table. Specialising in the design and manufacture of its own, patented heat exchangers for the food, environmental, pharmaceutical and wastewater sectors, the company has changed immeasurably since its early days. It now has over 200 direct employees and a network of offices and agents throughout the world, including Australia.
HRS’s success has been helped in no small part by a highly successful export strategy, underpinned by its dedicated office for Australia and New Zealand, which it opened in Melbourne in 2011. With this region expected to bring in sales of over $1.9m this year, Pither reveals the five principles that have helped him take the company from a domestic start-up to a global corporation.
Invest in people
Look closely at any successful business and you’ll find a team of talented and committed individuals; HRS Heat Exchangers is no exception.
“Our staff turnover rate is less than five per cent,” Pither reveals proudly. “One employee has been with the firm since year three, and there are many more with over 20 years’ service. To build a successful business, you need core competency everywhere – engineering, sales, finance, etc – and not just in one department. Experience, reliability and knowledge are crucial to building a reputation, so we’ve worked hard to develop strong teams across the board that can deliver this.”
Like many engineering firms, HRS is at the sharp end of the skills crisis and Pither understands the importance of investing in people.
“With the industry-wide skills shortage, it can be a challenge to recruit good staff, which is why we strive to hold onto the ones we have,” he explains. “To encourage staff retention, we offer competitive salaries, profit shares and bonuses, provide career development opportunities, and try to be as flexible as possible. We also offer apprenticeships, to keep the next generation of talent coming through.”
The importance of good people extends to HRS’ international operations. Although it relies on agents in some territories, the company has its own offices in Australia, India, Malaysia, Mexico, New Zealand, Spain, Russia and the USA.
“The vision was always to build an international heat exchanger brand,” Pither reveals. “An international presence helps you to be taken seriously by big customers; it builds confidence and trust. However, I decided early on that if HRS was to become globally successful, it was essential to find local talent in each territory who could communicate in the same language, and with the same cultural references, as our customers.”
The international gamble certainly paid off, as a combination of strong local teams and proven products is helping HRS to enjoy an impressive 41 per cent international sales growth (annual average based over two years).
Focus on innovation
Although heat exchangers remained a focus, as the business began to grow, Pither realised that his customers were looking for more than just pieces of kit; they were seeking integrated systems, which could provide entire solutions. To fulfil this growing demand, HRS acquired its own manufacturing site, and soon expanded with a bigger facility in India. These are supported by two workshops in Spain, where the company also houses its R&D and design departments. HRS’s range now includes entire wraparound solutions such as evaporators and concentrators, as well as an ever-expanding portfolio of heat exchangers.
“Thanks to our increased manufacturing capabilities, we now offer a wide range of patented and innovative designs, such as our R Series of scraped surface heat exchangers, specifically designed for viscous and challenging products with extremely high fouling properties,” he explains. “Our product development is customer-led, so our range comprises everything from heat exchangers with gentle handling capabilities for shear-sensitive liquids or soft fruits, to those with hygienic handling capabilities for the most stringent food or pharmaceutical demands.”
Keep the cash flowing
While a focus on people and products is essential to success, according to Pither the biggest restriction to the growth is access to finance. Developing good credit terms with suppliers is therefore crucial.
“Particularly in the early days, late payments and cash flow were a challenge,” he reveals. “We were importing equipment and had short credit terms from our suppliers, yet our customers were requesting long payment terms. This was a problem for us, so we worked hard on building a good relationship with our suppliers, proving ourselves as reliable and trustworthy. Over time, they extended our credit terms from 30 to 60 days, eventually increasing it to 90 days. The importance of this cannot be underestimated; you can have great products and a great team, but if you haven’t got cash, you’re in a dangerous position.”
Plan for the future
Finally, no business ever became successful by standing still. Despite HRS’s significant recent growth, Pither is still driving the company forward with plans for a testing facility in Spain, new process solutions, innovative prototypes and an expanded core range of heat exchanger products.
HRS is also planning to offer a subscription to its software system, which will enable engineers to model different applications. The company hopes it will generate increased sales, as well as allowing them to spot trends by tracking what people are modelling.
And HRS’s international plans aren’t finished yet, either. Pither is focusing on developing business further in Australia and New Zealand, as well as in Russia and Latin America. But as the company has a five-year plan to increase sales to £60m, could he be tempted to branch out even further?
“We’ve got no immediate plans to open any more international offices,” he admits. “However, there are still some territories which appeal to me, such as China, Africa, and the Middle East. So, never say never!”
HRS Heat Exchangers
03 9489 1866