The diversified iPi Group has grown up from its origins as a provider of services to the Porgera gold mine in Papua New Guinea. Chief Executive Officer Scott O’Reilly outlines his strategy to overcome tighter trading conditions to Business Advantage PNG.

Business Advantage PNG: What are the pros and cons of offering so many services?

iPi Group’s Scott O’Reilly

Scott O’Reilly (SOR): The iPi Group commenced operations in the early 1980s with a single string to its bow, and, while having an association with the Porgera gold mine was a pretty decent string, it was never going to sustain a growing group that had aspirations on a country-wide scale—and beyond.

Diversification using a couple of methods was my answer: first, synergistic diversification, providing more services to an existing client, and second, geographic diversification.

Over the years, we have managed to prove our worth around the country and beyond. Now the positives of diversification need to be balanced with the potential for negatives as project specific issues arise.

BAPNG: How do trading conditions compare now with 12 months ago?

SOR: I think it is fair to say—and this is no great surprise—that we have come off the back of a buoyant LNG period and currently face significantly tighter trading conditions.

The ongoing tightness with foreign exchange causes daily issues and this flows through to client businesses as well. The net effect is a market driven strongly on price sensitivity.

This is not always the ideal condition when innovation, efficiency, pro-activity and extreme attention to quality are a focus for us. It is obvious that to invest back into business requires the finance to do so, and in a very price-sensitive market that can be a challenge.

‘Debtor delinquency is an economy-wide phenomenon at present’

BAPNG: What is the biggest challenge with daily operations?

iPi Transport. Credit: iPi Group

SOR: The reply is different depending upon whether it relates to trucking, warehousing, catering, property management or hotel operation.

On a broader economic base, the difficulties with foreign exchange present a challenge that is not necessarily factored into cost models but is increasingly becoming a real cost to doing business. Having reasonable capital stores, we see this as a competitive barrier to entry for those who might challenge, and we embrace the process.

Nonetheless, it is not without its issues.

Debtor delinquency is an economy-wide phenomenon at present; we are stretched with governmental and commercial agencies alike and are, in turn, reluctantly doing the same in some supply relationships. It is not ideal, but it does speak to the tightness of the overall economy at present.

BAPNG: What is iPi’s growth strategy? Will you seek to expand existing operations, diversify further or acquire other businesses?

iPi Catering is one of the largest industrial catering and camp service providers in Papua New Guinea  Credit: iPi Group

SOR: I have had an eye on growth through improvement of internal efficiency, synergistic growth and diversification for some years. I continue to hold the viewpoint that this strategy is best for us.

So, we will look to do what we presently do but better; we will look to offer more services to existing clientele, and to diversify, either through tender or purchases of businesses.

I am a believer in growing from a core rather than opportunistic growth and any moves will fit within a model of building from a stable, well-resourced core rather than pursuing an operational direction that is unknown to us.

‘We’ve given back through supporting rugby, church groups, schools and medical needs. We’ve created bursaries that provide ongoing educational support.’

BAPNG: Is there one project or case study that sums up what makes iPi truly innovative?

SOR: Our involvement at Porgera commenced with geologists. Mick Searson, who first discovered gold in the valley, he sat on my board until his passing.

Since those early days we have provided transport and catering but, over the years, we have also partnered with Porgera through building the airstrip, building the fly-in-fly-out accommodation village, providing the static guards at the mine, supplying all the bricks for the underground tunnelling—and in other ways.

We’ve given back through supporting rugby, church groups, schools and medical needs. We’ve created bursaries that provide ongoing educational support. We’ve overcome gender barriers and placed females into once male-dominated areas. We’ve supported women in business.

Importantly, we’ve provided dividends year in and out to give a future for thousands of our people.

We have been able to do this through trading periods that were buoyant and through trading periods that were extremely difficult; this symbolises who we are and what we stand for—and will continue to stand for.