Ep 17 Beaver Group’s Jason Varone talks about Working at Heights innovation and growing a $300m company

Brendan: Welcome to Episode 17 of the Australian Health and Safety business podcast. I’m Brendan Torazzi, the host of the show. Today, I’m joined with Jason Varone from the Beaver Group. Good morning Jason.

Jason: Good morning, how are you?

Brendan: I’m very well. Thanks very much for coming on the show. Rewind and tell me how Beaver Group got started because you’ve got quite an interesting journey that you’ve had since the late 1970s.

Jason: We certainly have. Our business was established all the way back in 1978 by my father in law Chris Di Losa and his wife Maria. The business evolved from providing spare parts for dredges. The dredge in particular his name was a beaver dredge hence the name The Beaver Group. From 1978 all the way through to probably the late nineties the business evolved into a couple of different streams. We had a business called Beaver which specialized in lifting, rigging and then ultimately working at heights. We had a business called Beaver Engineering that still exists today specializing in offshore mooring. Anything to do with a buoy all the way down to the anchor at the bottom we specialize in not only new systems but obviously refurbishing currently ones as well.

The business has had quite a few different stages in its life. The most interesting one was back in about 2005 we had a business called Beaver which was our lifting, rigging height safety as I mentioned. This business was about a $13 million a year business. We got involved with a couple of other different businesses. We thought about how to grow our business. We ended up doing a deal with private equity which was very interesting. If you think back to 2005 it was a whole different financial landscape. There was quite a bit of capital around for business to evolve. We went out and actually bought 18 businesses within 18 months.

Brendan: Those 18 businesses were they scattered around Australia?

Jason: Totally Australia. The idea was we wanted a business to control the supply chain. We had control of the manufacturing all the way through to the end user.

Brendan: What sort of market share do you think you would have had?

Jason: The business was at $350 million. I would have said that back then it would have been just under 7% or 8% of the market share. It’s quite a big market when you roll in industrial and safety and all the different product groups that sit under there. I think it was a different landscape back then as well. Times were different. People looked at the values of businesses differently but it was interesting. It was quite an invigorating time. We went through obviously the wonderful GSC with more debt than anyone could imagine.

Brendan: You started the roll up in 2005. GSC hit and then you came through and sold in was it 2012?

Jason: 2012 we ended up selling the majority of the business to Bunzl from the UK. They saw an opportunity to get into this market stronger in that safety space. They bought the entire group in 2012. In that period my father in law reinvigorated himself and started a technical Beaver Technology Services which is effectively BTS. Our engineer cloud safety specialist business.

Brendan: After you sold in 2012 I would imagine there would have been some kind of non-compete for X amount of years.

Jason: The good thing was our sale was considered all the way back in 2015. Our non-compete should run out by 2010.

Brendan: You sold your original business into the greater collective I’d say.

Jason: Correct. We were quite free to go out and reinvigorate and reinvent. This time we sort of looked at the market and understood what we thought was missing. That was this whole theory of what do I connect to when I’m working at home. In our previous life it was all about harnesses. I think in our peak we were probably about 20,000 harnesses a year we were manufacturing here in Sydney which was phenomenal. That was when height safety was in its infancy. To give you an idea about the value of goods. We were selling a harness entry level at about $160 to $170 back then whereas today you’ll probably buy that same harness for $40 to $45.

Brendan: The story that I’m hearing here is a story of innovation. How has innovation played into what you guys do today?

Jason: Key part to continue on doing what we do. To try and be, what I supposed what we call cutting edge market leaders you need to be able to innovate and produce products. Anyone today can make a harness effectively. You need to probably look beyond that and see what are the other opportunities that exist in this space. We understand the space. We lived and breathed it for 20 years. When you’ve got that understanding of a market it’s quite easy to be innovators in areas that you see opportunity.

Brendan: Are you still manufacturing in Australia or you had to go offshore in order to compete with I guess the market is a little bit more crowded now.

Jason: There’s not that many players left today manufacturing harnesses in Australia. A lot of them have moved offshore. There’s still a few players left but the products that we manufacture today we assemble here in Girraween. We manufacture components all over the world, bring them all in here and assemble them.

Brendan: It’s kind of designed in Australia. Made parts and components overseas and assembled back in Australia. I guess you could probably say it’s Australian made.

Jason: With the amount of entire labour is the key ingredient. The amount of labour that we invest, you’ll find the actual cost outweighs the cost of the raw materials. It becomes an Australian manufactured product.

Brendan: With your height safety equipment now, do you focus on certain industries? Is there certain sectors that you’ve got a foothold in?

Jason: Our systems start at $20,000 all the way up to a $100,000 for a system. The mining resource sector has adapted to it very strongly and very quickly over the years. They have allowed us to get our products out there. The mining resource has been a big player in this space. Over time what we have been able to do is develop products that become what I would call price sensitive. We have even launched about six months ago a nationwide rental program to try and open up the market. For example take a builder who is doing sky light work on a house. He’s not going to spend $40,000 or $50,000 on a trailer to do a job that is really is going to take him a couple of days in the way he does. What we’ve done is we’re able to give those products to that market by renting them. For as little as $150 a day you can effectively have a system seven meters high in the air that allows two people to connect to and work.

Brendan: How much do you think health and safety legislation has driven your market or is it are there other drivers as well?

Jason: It’s huge. The reality is everyone talks about their concern with I supposed safety in the workplace but when we start looking at the dollars it’s amazing how people change their way of thinking. What enforces that is the legislation because I think if we allowed it to be open to the market I think you would find that there would be a huge gap that would start to be in terms of the quality of products, in terms of different people using products. Then we’ll start to see this workplace again. Kind of the way our country runs and obviously we export as well so we get quite a bit around the world as to how everyone works with safety but I think Australia is right up there at the moment. We take it to probably the highest levels in the world. That also reflects in the terms of the amount of people that actually die at work.

Brendan: Bringing it back to some of the building projects that I’ve done myself. I’ve never ever seen resi builders being up on the roof connected to a harness but it’s vastly different when you’ve got a corporation, mining company. There is reputational damage. There is cultural damage. I guess they have the regulators breathing down their neck as well as they’re not doing the right thing.

Jason: Mining industries in a way could be over regulated the way it goes about it but it’s reflected in their high safety results that they get at the end of every year which they sit down and at the end of the day we want everyone to go to work and come home. That is what we set to be the goal that anyone works with. Having people or having systems where you say we’re only allowed X amount incidents a year. Guess what guys? We shouldn’t be having any incidents. It should be zero incidents. It should be everyone goes to work and comes home safely every day.

Brendan: How has it felt sort of reinventing? You have the big roll ups. Were you involved with that integration of all those different businesses?

Jason: I was there from the beginning until the end literally. I ended up as the CEO of the group. In the end it was seeing it all sort of come to fruition. The reinventing it’s probably tougher than what we would ever imagined. We’ve invested millions to get to where we’ve gotten. It has taken us probably five or six years just to get to this stage where you have a range that you know it’s going to do what it’s going to do. Then we say it’s going to save someone’s life it better do the job otherwise in terms of reputation and future for the business. We only need one accident and that will destroy our business.

Brendan: How many staff have you got there now?

Jason: We’ve got 30 in the group in total in different arrays. We’ve got manufacturing. We’ve got obviously warehousing. We’ve got two design engineers that are pretty good at making sure what the products that we’re actually making do what they’re going to do. We’re NATA accredited test house so we do all of our own internal testing. Nothing goes out without some form of testing. We’ve probably invested in over a million dollars in testing facility to insure that everything does what it’s supposed to do.

Brendan: Do you do anything around like stakeholder engagement, getting the regulators out to just have a look at what you’re doing or getting the government involved in some way?

Jason: We work with lots of different industry groups, bodies, unions. Ours is about educating. We keep saying to people we need to educate people. People say what is the legal height that you can work at without any form of safety gear that I need? Up until I think about year and a half ago, a couple of years ago they used to actually put in the standard, I think it was a couple of meters, 1.3 or 1.8. Don’t hold me to it. Today, it’s falling from one level to another. If you think about it it makes sense. It doesn’t matter what a level could be. You could be 300 to 400 up and fall and hurt yourself.

Brendan: You’re based in New South Wales. Do you have any other offices or sales reps, sales people in regions?

Jason: We try to keep in terms of the majority of our products here. If we are delivering a trailer at the site we would like to further have it all done and tested here, ready, packaged and delivered ready to go. There’s really no head for warehousing or manufacturing around the country. We centralize that. That also keeps your costs down but definitely you need a sales network. We have what we call strategic partners in certain areas that we might not be able to serve.

Brendan: I imagine with your gear it would be a lot of word of mouth as well. They see your product in situ and they go where did you get that? That looks awesome.

Jason: That mining resource is obviously a clear example of that where people tend to move around quite a bit. We’re at that stage where someone says I bought one of those. I used those on the Rio site. Now I’m FMG site and away we go. In terms of media, when we talk about social media we talk about things like LinkedIn where we try to get as much information out there for people to make them aware that these products exist. We work on the same principle. No one is going to do a Google for a height safety trailer because they probably don’t know it exists. We’ve got to capture their attention to show them that we have these solutions.

Brendan: You’ve actually got a trailer that would go out to site. Is that how it works?

Jason: We’ve got three trailers. One trailer goes up to 12 meters in height and can have two men connected. Think about those big diggers that you see out in the middle of a mine. They’re digging away and if they’re going to do some service work it’s quite costly to bring that unit all the way back into the shed.

Brendan: I get it now. You’re completely mobile.

Jason: You might need to get two guys to fix some hydraulic cables up the top. They connect themselves from the bottom. First step that they take up on a ladder or however they’re going to access to the unit all the way up until the top they’re connected.

Then we’ve got fixed units. We’ve got units that sit on 3.6 ton bases and we’ve got one that sits on 2.5 ton that you can move around a workshop or a warehouse or an open air facility outside. We’ve got a couple of those units for example doing some work in the dry docks. They’re setting up the wooden wedges for the boats to sit on. We’ve got a couple of units sitting there as the guys are installing and climbing all over them and hammering them into place. They’re connected.

Brendan: Is that a bit of an innovation being able to do this sort of thing?

Jason: Absolutely. There is no one else to go to. It’s not like someone can say I’ve got six choices. We’re the only people doing it in Australia.

Brendan: You were saying this is the thing that you’re now looking to open up to being to rent by the day.

Jason: A couple of the units are weekly hires. It just depends on what they are. Monthly, if they’re bigger type units. That has opened up a whole new world for us. It probably works in our advantage because it gets people to see the units in action.

Brendan: Yes or they could do the try before you buy or any of those things.

Jason: Correct. What we try to do is take away all the reasons why we and the number reason that we get from customers at all levels is I don’t have the capital to buy that piece of equipment. We can’t afford it. There are all the negatives. They all need it but the cost becomes inhibitive. The rental program cuts that out. You can rent it for as little as $150 a day.

Brendan: I take it that you can do confined space work with them as well.

Jason: Absolutely. One of the units that we’ve got now, I don’t know if you’ve heard. There have been a couple of deaths in the last 12 months in Melbourne with shoring. While they’re digging the holes and setting up the shoring people are falling in. Two gentlemen in particular are falling in and lost their lives. Again, it shouldn’t happen. We’ve got a product that is effectively an anchor base. We’ve got a 1.6 ton anchor base that sits 5 to 10 meters off the hole and you can connect two men to it. They can walk up to the hole do what they need to do because they’ve still got to physically access and do work around the hole as they’re digging and putting in this shoring props. The system effectively restrains them from falling in.

Brendan: This has been really interesting to hear what you’ve been doing. It sounds very innovative and exciting. What are the plans for the future? Are you going to do another roll up?

Jason: We’re always looking for opportunities. That is a definite. I basically look for companies that we can see the synergies. It’s always on the table. We’re looking at a couple of those as we speak. International is a big opportunity. There is a huge market. We take that very cautiously. We pick the markets that we want to play in. You’ve got to find the right partners in those markets. We have some advantage in the fact that we have a manufacturing base. We’ve seen as a high quality manufacturer which is important in this type of environment when you’re working in safety. I think the international side over time will develop. We still have a lot of work here in what we call Australasia. There’s quite a few mines we service today in Papua, West Papua. We’re just basically scratching the surface of where we’re trying to get to. There’s plenty of opportunities and for us to put our head down and keeping the focus on what we do.

Brendan: We’re going to wrap up the interview now. I’ve just got a few short questions to ask you. Can I ask how old you are?

Jason: I am 51 this year.

Brendan: What do you like to do to keep active?

Jason: I go for a walk every morning with the dog.

Brendan: How many hours sleep do you get each night?

Jason: Not much.

Brendan: It sounds like you’re too busy with the business.

Jason: It’s just the nature of the beast I supposed. I probably get six hours.

Brendan: Do you have any personal goals you’re looking to achieve in the next 12 months?

Jason: I’m probably not the sort of person that sits down and sets goals in terms of what do I want to be or what I achieved. I just put our focus on the end goal is I supposed which is to grow a business successfully and create an environment for employees to flourish because you can’t do it without the people in the business. That is probably going to be the driving force for us.

Brendan: If people want to find out more about what the Beaver Group does, could you give us your website?

Jason: Probably the best website to go is btstech.com.au.

Brendan: Jason, thanks very much for coming on the show today.

Jason: Pleasure.