Oxford Flow – the flow control equipment specialist for oil, gas, water and industrial process industries – recently announced an initial investment into its water and industrials business by GF Piping Systems, a division of Georg Fischer.
The company plans to leverage the Georg Fischer investment to accelerate its transition to a fully self-sustained business and act as a catalyst for a further capital raise from existing investors. The funding will see the company scale up its R&D, business development and operational activities as it extends its global reach – a move that has been realised thus far with a new US subsidiary.
To find out more about the investment and Oxford Flow’s recent expansion into the Americas, Energy Norther Perspective spoke with CEO Neil Poxon.
Utility and industrial
“Obviously, we are very excited about the Georg Fischer investments,” says Poxon. And while the investment does not include Oxford Flow oil and gas industry activities, “It’s a licence for an exclusive field, which is utility and wastewater, and a non-exclusive field, covering areas such as gas distribution, industrial processes and marine.”
“We created this subsidiary called OFUI – Oxford Flow Utility and Industrial – to handle the non-oil and gas activity,” he adds.
Among the company’s key innovations, the Oxford Flow pressure regulating valve will be the focus of the agreement to help further Georg Fischer’s innovation strategy.
“The nature of the partnership is that they will sell and market our polymer valve,” Poxon explains. “Georg Fischer has more than 100 years of experience manufacturing polymer products. So, for us, this was a massive and important part of the relationship – they would take care of the manufacturing of our polymer valve for their needs and for our needs as well.”
“One of the main synergies here is the fact that Georg Fischer was looking for an innovative technology that would provide value enhancement to their business,” says Poxon.
The Oxford Flow valve’s intelligence dovetails with Georg Fischer’s needs, explains Poxon. “They do not have a control valve that has any of the capabilities of ours. Although that was their initial focus, when they came to realise that we have also made advancements on the digitalisation side of things – and all the smart valve aspects of our products – they became even more excited, because their mission has been to focus on smart networks and digitalisation. They see this as we do, as the way of the future, particularly in utility networks.”
Georg Fischer’s initial investment covers milestones for transforming the manufacturing process for the polymer valves. “We currently manufacture our polymer valves from bar stock, using a machining process,” says Poxon. “Georg Fischer will transition to an injection moulding process. The milestones are centred around achieving a certain cost base for that injection moulded product – and that’s the de-risking.”
“We’ve agreed on the cost base using two of our valve sizes as an example. If either party can achieve that cost base within the 18-month period – the manufacturing and the commercialisation rollout globally for all our polymer products – then the second part of the investment is automatic. And we are very much on track to do so,” he continues.
When asked if the coronavirus pandemic has been an issue, Poxon replies, “we haven’t had any major disruptions, but it’s been challenging. Fortunately, we went through our MRP system and ordered additional stocks of critical items before the lockdown set in. To say that there hasn’t been any impact would not be correct, but what I would say is that we’re managing the impact very well.”
He continues, “We are still producing goods and shipping, although the shipping is quite difficult, because goods are being held up in various steps of the shipping process. We are faring relatively well in terms of producing goods and being able to ship to our customers.”
He emphasises that the utility sector is considered essential infrastructure. “Different projects are slow but they still need to maintain those crucial infrastructure networks and so we are quite fortunate in that regard.”
The Georg Fischer agreement also includes a co-development framework agreement, says Poxon. “We have several very high-level steering groups, covering various aspects of this deal. One of them is focused on innovation and an innovation roadmap, where both companies will work together to codevelop improvements to the technology and new ideas. And those improvements are then available to the company across all markets, including oil and gas.”
“For example,” he continues, “the intelligence that was originally developed for the polymer valve for water has been cross fertilised to our oil and gas products and our latest multiphase oil and gas flow, which is the stainless steel valve. We will be sitting together as an innovation group and agreeing the projects within our innovation roadmap that we want to work on together where there’s synergy particularly around the intelligence, we will work together with Georg Fischer and both companies and all markets will benefit.”
“We’re going to have a quite big impact of the ability to collaborate with Georg Fischer on innovation projects, and the framework agreement is already settled as part of the deal,” adds Poxon.
To expand its reach in North and South America, and to offer on-the-ground commercial and technical support, Oxford Flow has also formed a subsidiary, Oxford Flow Americas, Inc., in Houston, Texas. “Recognising that most of our activities for the oil and gas side of our business were being stimulated out of Houston with the major oil companies who are keeping very much a watching brief on our products, so having the operation in Houston is key to that,” says Poxon.
“It has been very positive – some of the key accounts I was managing with the major operators and service companies have been handed off to Andy Ghiz, our VP in the Americas, because there’s a fantastic advantage to be able to continue the momentum and develop the relationship locally with those types of discussions and opportunities,” he continues. “And now we’re looking at investments into that side of our business going forward. We have gained momentum and begun discussions about potential future investment opportunities as a result.”
Poxon stresses that the ultimate goal is to create value within the oil and gas industry via a partnership similar to the Georg Fischer agreement. He says, “A partner in oil and gas would manufacture our metal products, just as Georg Fischer will manufacture our polymer products, and then the polymer and steel products would be available across all markets.”
“So that’s our master plan.”