Fyfe boss Mark Dayman reveals how a commodity price plunge pushed his company to the brink, and how they fought to save it
Fyfe’s Mark Dayman was a picture of success in mid-2014, but the storm was just about to hit.
IN late July 2014, from an outsider’s perspective, Mark Dayman looked the picture of success.
He had just been named as a category winner in EY’s Entrepreneur of the Year awards and Fyfe, which he’d headed up since late 2005, had a stellar reputation and a great track record of growth.
The reality was far more complex. Four years later, with a bit of distance to reflect on what was probably the most challenging period in his life from both a business and personal perspective, Mr Dayman is keen to share his story.
This is because while it’s great to share stories of business success, every business owner knows that the reality of what it takes to build a business in times of rapid growth, and then survive when that growth disappears almost in an instant, is a story which is more difficult to tell, but which contains lessons for everyone who stakes their personal wealth and reputation on taking the risk to employ others.
In early to mid-2014 Fyfe was rocketing along, buoyed by an oil and gas sector which couldn’t move fast enough to get gas to markets both here and overseas.
As a consulting engineering company, Fyfe was at the pointy end of the boom, and with a national footprint was well-placed to ride the wave of success.
“There were quite a few dynamics at play at that time. Because the industries were growing so rapidly, and there were big players doing big projects, a lot of the support functions and the people grew rapidly.
“Those things got out hand a little bit as far as the metrics of running a good business and that probably applied across the sectors where we were spending too much. Salaries were high, we were fighting for people.
“The fundamentals probably needed a little bit more attention.’’
Mr Dayman said the company had growing revenue, but “ever so slightly, the profits were not being maintained’’.
“That was a bit of a warning sign for us and we were going through and making adjustments to our business in the second half of 2014 to get our costs back under control.’’
Mr Dayman said the predictions in mid-2014 were still that the price of oil would sit well above $100 per barrel however.
“And right from that time the price of oil started to fall and it was about that time in late October 2014 that we all realised that this wasn’t a dip in oil prices, it was a major change in the industry.’’
As late as November 2014 Fyfe was still looking to make profit by the end of the financial year, but by the end of June 2015 it posted a loss of $8 million.
For Fyfe and its employees, the world had changed.
Four years later and Fyfe has just posted a profit the employee-owned company is proud of, and it is much more diversified than in 2014. But Mr Dayman said hard decisions had to be made.
“We had quite a good month in November 2014 but we knew we had serious issues with regard to the work outlook.’’
December and January are never good months in the consultancy game, and as the New year dawned, it became apparent that a “rapid and consuming’’ downturn was hitting.
“We were heading towards a profit for the financial year of 2015 (in November), making some changes, tweaking the business, then pretty rapidly we just lost a lot of money with the dramatic slowdown.’’
Mr Dayman credits a combination of things: his relatively young executive team; the willingness of staff to adapt and be flexible; and good advice from people such as his late mentor Bob Kennedy, with Fyfe’s survival.
“We lost pretty close to $1 million in December and $1.7m in January.’’
“The hardest part is understanding where the bottom of the market is and trying to predict that.
“Our clients often swing between cost and schedule.’’
Clients will reel costs back in, then should the dynamic change, the pace of being able to respond becomes more important.
“We didn’t want to be caught out in that situation,’’ Mr Dayman says.
While there was a need for redundancies - with some of those staff now having come back - Fyfe staff adapted to working fewer hours in some cases and took significant pay cuts.
The idea was to retain good staff and be able to respond should demand pick up, while being able to trim costs at the same time.
“We didn’t actually find the bottom of the market until about February 2016, so it kept on falling.’’
“The first thing we did is really consider the structure of the company.
“We’ve got a responsibility to make the right decisions for the company, otherwise the outcomes will be far worse. If you don’t keep the company solvent everyone loses their jobs, people lose money and projects get disturbed, so that was our primary focus.
“We were very upfront with staff, and we did it quite quickly. We’d make an announcement, it would happen that day and we’d be back to work.
“And probably the key thing we did, was we reconfigured our executive and developed a strategy which was really about sustainability (for 2015 and 2016).’’
“It was about the financial sustainability of the business and delivering good work to clients.’’
Those things were separated into different teams so there was no distraction for project-oriented staff.
Mr Dayman said other chief executives, advisers, key staff within the business, and chairman Stuart Glenn were key sounding boards during this time.
“We’ve got a relatively young executive team. I’m 62 and I’ve been through a lot of downturns but I’ve never seen anything as rapid and consuming as that, so our young group of execs - that’s a pretty valuable process that we went through.’’
It was a turbulent enough time for Mr Dayman, but he was also struggling, silently, with personal tragedy on a number of fronts.
In July 2014, just before the EY awards, his wife Denise died, leaving Mr Dayman and his three boys facing major changes to their lives.
His mother died in December that year, and by March 2015 he himself had been diagnosed with prostate cancer.
“It was really an unusual time. Denise died in July ... and we had her funeral and I had some friends over. It was the next night that it was the entrepreneur of the year awards and I nearly didn’t go to those and I was successful in one of those awards.
“And going through this period of adjustment, and I had three boys at home, going through that period of adjusting household was really quite difficult, because we were all suffering.
“I had to keep a household together.’’
Mr Dayman had to undergo brachytherapy in late which involved placing radioactive pellets directly into the cancer. He was back at work a few days later.
Mr Dayman kept his cancer diagnosis under wraps at the office and outside of the family, finding that bringing it up just led to more stress, often for those he told.
With all of these business and personal issues to manage, Mr Dayman said he kept health issue private, while dealing with business and personal matters.
Having passed through the fire, Mr Dayman says perhaps unsurprisingly, the business is much more resilient.
“We gradually got to the point where we were eking out small profits.
“February 2016 was the bottom of the market and about May of that year we started to make small profits.’’
The statewide blackout in September of that year didn’t help.
“Then I think from the latter part of 2016 where we felt the market turning.’’
“We set a fairly conservative budget for the financial year that’s just finished and we exceeded that by over 30 per cent.’’
“It has been very true (that) it’s the tightest the business has ever operated.
“It’s really got the business in tune.’’
Mr Dayman is optimistic about the future, and thankful that his core executive team survived the process with him.
“It’s really been a testament to people’s commitment and determination,’’ he says.
cameron.england@news.com.au