Building on solid ground


  • SMEBiz
  • Saturday, 18 Jan 2020

New horizon: Yeoh saw the opportunity to turn around an ailing business.

BACK in the early 2000s, the thought of running his family’s prefabricated container business did not really cross James Yeoh Chor Guan’s mind. The UK-educated mechanical engineer was, after all, working with one of the world’s largest consultancy firms in Singapore. The perks were good and so was the prestige.

Yeoh was eventually posted back to Malaysia, but with all the benefits of an expatriate. This ensured him a cushy position and a good career path to continue on.

But like many of his second-generation peers, Yeoh eventually ended up back at the family business. This was, in no small part, thanks to the persuasion by his older brother.

More so, Yeoh, now the managing director of Solid Horizon Sdn Bhd, saw the opportunity to make something of the declining prefab container business. In 2010, it seemed like a challenge worth making the leap for Yeoh.

Solid Horizon specialises in fabricating shipping containers and converting them into permanent or temporary structures such as living spaces, showrooms and cabins. The company, founded more than 30 years ago by Yeoh’s father Yeoh Eng Lee, was one of the pioneers in the industry, supplying containers to construction sites and other businesses that require temporary structures.

The company grew over the years, riding on demand from the booming construction sector. But Eng Lee, like most of his contemporaries in the industry then, was not well equipped to deal with matters such as finances or how to organise an efficient corporate structure.

When the market started to change by the late 2000s, Solid Horizon found itself mired in financial stress mainly due to price war and depreciating margins. Solid Horizon also suffered from the lack of new projects and bad debts.

Temporary structures: A significant part of Solid Horizon’s business comes from supplying construction sites with temporary facilities using its containers.Temporary structures: A significant part of Solid Horizon’s business comes from supplying construction sites with temporary facilities using its containers.

“My elder brother, who had joined the family business earlier and is now in charge of another unit, Falcon Safe, was the one who convinced me that returning to help turn around the family’s business was the right thing to do. He told me that while we can earn a lucrative income and perks working as a professional, in business, there is no limit as to what we can achieve.

“The main draw for me was to be able to take on a new challenge and to see if I can succeed in business. Besides, the challenges faced by the company at that time required someone who could offer a fresh perspective on the business model and on how to respond to the changing market demand, ” says Yeoh.

He was also keen to apply the knowledge he had gained through various stints overseas and from his consultancy works for other businesses to help restructure the company and bring in the necessary tools and skills for it to succeed.

While he was ready to take on the change, Yeoh soon found that one of the hardest things he had to do was to motivate himself as a business owner. He was no longer an employee and his job scope and routine weren’t as clear cut as before. Simple things like waking up and coming to work on time or having a clear plan on what to do for the day were suddenly no longer required of him.

The ability to discipline and motivate yourself has now become an important part of the process to ensure the business can be run successfully, he notes.

Thankfully, Yeoh wasn’t completely new to the business since he grew up watching his family bustled about the company. His early exposure to the fundamentals of the business came in handy and helped ease his transition from a working professional into a business executive.

Prefab homes

One of the first things Yeoh did when he joined the firm was to carve a niche for Solid Horizon. He saw an opportunity in the oil and gas sector, where demand for prefab structures was growing and margins were higher.

“However, the safety and standard requirements in the sector were also much higher, and not many of our competitors have the knowledge or ability to meet those standards then, ” he says.

This was an opportunity for Solid Horizon to prove its mettle before the other players can catch up.

“Once we successfully completed the first projects for the likes of Petronas, we were able to establish ourselves as one of the contractors for the industry, ” he shares.

Potential growth segment: The company is looking at building prefab homes for a more sustainable source of income.Potential growth segment: The company is looking at building prefab homes for a more sustainable source of income.

But as with most companies in such an industry, its revenue tends to fluctuate according to the availability of projects and contacts secured each year.

This has led Yeoh to look at more stable construction-related industries such as building permanent homes and structures to secure longer-term projects and a more sustainable source of income.

Solid Horizon is now targeting the affordable housing market. Yeoh says the company is waiting for approval from the relevant authorities for its prefab structures to be allowed for use in permanent residential structures.

He hopes to start the commercial roll out of its prefab building structure, which uses similar technical specialisation as shipping containers, this year.

Yeoh says Solid Horizon has the capacity to assist the federal and state governments with affordable housing projects by using a standard template that can be applied across up to 30,000 units. However, a single agency needs to coordinate the affordable housing development, he opines, because in the industrial building system (IBS) segment, the modular construction relies on standardised designs.

“The advanced technology helps shorten construction cycle time by at least 30%. But prefab structures such as IBS are currently 15%-20% more expensive to build than traditional steel and concrete methods mainly due to the huge capital outlay and lack of scale.

“We need the economy of scale to make IBS feasible. Once these key metrics are in place, we are optimistic the competitive edge in this innovation can support local demands at a lower cost in the long term, ” he says.

Going forward, Yeoh also plans to steer Solid Horizon towards producing higher value products by leveraging on its established base in the containers and prefab structure engineering segment.Yeoh says the company is also looking at plans to acquire or form joint ventures with other prefab building companies or production facilities to further expand into the housing and permanent structures construction space.

Among the options up for consideration include acquiring stakes in an associate company that would be able to provide it with additional production capacity, or in one which has specialised skills to help Solid Horizon with its diversification goals.

For now, any potential expansion will be financed internally, says Yeoh, though it has not set aside any specific amount for acquisition activities.

Solid Horizon currently generates annual sales of between RM50mil and RM60mil, and employs more than 400 workers including technicians and engineers at its plant located near Klang, Malaysia’s main shipping hub.

Improving living conditions

Although Yeoh has managed to diversify into more lucrative and complicated sectors such as the oil and gas industry, he notes that there is still potential to be tapped in the construction site space, which is still the mainstay for the company. A significant part of Solid Horizon’s business comes from supplying construction sites with temporary facilities, like housing, using its containers.

There needs to be better facilities for the construction sector, he emphasises.

Most of these facilities are used to house migrant workers at the construction sites. More often than not, these lodging spaces are unsanitary and not conducive.

Notably, construction companies will need to watch their costs to ensure comfortable margins for the projects. But Yeoh says they only need to fork out a little more to make these ordinary containers into a more comfortable temporary home for migrant workers to improve their well-being.

If the construction industry can take a longer-term view and invest in better facilities, it will help to create a better working condition and draw in talents for the industry.

One such way, he says, is to use prefab structures to build better homes for them. Prefab structures, he adds, have many advantages including in the area of sustainability.

In some ways, Yeoh hopes to bear the standard for such improvements in the industry. Treating your workers well will eventually benefit the company itself, he believes. Not only will you get happier and productive workers, it would also add to the company’s branding and credibility.

Recalling the company’s journey in the past 30 years, Yeoh says Solid Horizon has never defaulted on paying its workers and creditors even during the difficult times. It strives to continue upholding a standard to not shortchange any of its stakeholders.

In the longer run, Yeoh hopes that the wider construction industry will come to embrace its values of holding long term views and having a constant hunger for innovation.


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