AXYS Technologies: How three PhD graduates built an exporting success

AXYS Technologies: How three PhD graduates built an exporting success

A severe storm that roared east across the Pacific Ocean, gaining steam as it approached Vancouver Island’s west coast caused seven boats to sink and five seamen to drown.

The year was 1984 and the federal government immediately launched an inquiry to investigate the adequacy of Canada’s marine forecasting. It determined Environment Canada’s equipment wasn’t detecting storms early enough. This finding prompted the department to buy more early-warning equipment for weather systems and it ended up on the doorstep of AXYS Technologies Inc.

AXYS was founded in 1974 by three PhD graduates working in marine consulting. In the 1980s, they began designing and manufacturing buoys for Canada’s marine weather network. That 1984 storm led the government to invest even more in AXYS’s buoys, which are placed offshore and have a variety of sensors that give readings for wind, waves, temperature, humidity and pressure.

“From that point on, we’ve always had a very close relationship with Environment Canada in building their buoys and servicing them annually,” said CEO Terry Tarle. “We’re mostly on the west coast, with some on the east coast and throughout the Great Lakes.”

The Environment Canada contracts were a great start, but it soon became clear the company would need more clients to grow. Focussing on what they knew best — government contracts — required them to start exporting. Today, 70 per cent of AXYS’s business comes from exports.

“Some of our first sales were to Korea, Spain and Italy,” Tarle said of the 57-employee company. The latest seven employees came from a Belgian firm AXYS recently acquired.

AXYS has worked with governments globally. In 2015 alone, it had contracts in Denmark, the U.K., France, Germany, Portugal, Spain, the U.S. China, Japan, Australia and New Zealand.

It has also expanded its client base beyond governments. AXYS also sells its buoys to oil and gas companies, and those in renewable energy sector, a large and growing market. AXYS engineers do water-quality testing for companies seeking to understand the impact of climate change and work with prospective wind-farm builders to determine the viability of certain sites by measuring offshore wind.

“Offshore wind is big for us,” Tarle said. “Before a farm is established, built or even fully funded, the company does a one-year campaign to determine if winds are strong enough to warrant one. Our equipment helps them do that a lot cheaper than the traditional approach, which involves building a meteorological tower.”

Offshore wind farms are common in Europe and are starting to dot waters off the U.S.

Exporting has been great for AXYS, but it doesn’t come without risks. To guarantee its account receivables in new markets, it turned to Export Development Canada (EDC) for accounts receivable insurance.

“We feel more secure when we have customers we haven’t had experience with,” Tarle said. “We’ve had defaults so this gives us peace of mind.”

EDC account manager Heather Stokes said AXYS is just the kind of customer she likes.

“Axys has an incredible growth story,” Stokes said. “They take calculated risks to seize opportunities abroad. They mitigate the risk of non-payment with receivables insurance and leverage EDC guarantees to fuel their growth. It is a pleasure working with this dynamic Canadian company.”

FIVE QUESTIONS with AXYS CEO Terry Tarle

1) What was your first export sale?
“It’s been a while so it’s hard to remember for sure, but some of the first ones were with the government of [South] Korea, and the government of Spain.”

 

2) How did that first export opportunity arise?
“It came about after we started looking for contracts outside of Canada.”

 

3) When it comes to exports, what do you know now that you wish you knew then?
“The importance of having local representation on the ground. They help navigate all the difficult things that come up, whether cultural differences, trade agreement restrictions or language barriers. Our team travels a lot and goes to a lot of trade shows where they meet people and try to connect with them. We’ve also used the Canadian Trade Commissioner Service.

 

4) How has the trading world changed since you started in business?
“The internet has really changed things for us. We get a lot of international leads through our website. We’re just this little company on Vancouver Island, but the rest of the world doesn’t know that. We compete quite effectively with much larger organizations.”

 

5) What is the #1 thing new SMEs need to know about export and trade?
“Do your homework on tariffs, duties and import taxes. They’re all different and complicated. If you don’t know them, you won’t get paid as much as you’d like to.”

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