Water solution ready for export

Rubicon Systems is building an innovative global business through trying to solve the world’s water problems. He gives his export tips. By AMITA TANDUKAR.

By Amita Tandukar

One solution to the world’s water shortage problems is to refine the technology we already have. Rubicon is doing just that.

David Aughton, the founder and CEO of Rubicon Systems Australia, is building a global technology business by promising the world he can solve its water shortages with his technology for more efficient irrigation.

Today one in three people around the world are affected by water shortages, and global warming will only make fresh water harder to find.

Over 12 years Rubicon has developed patented technology and now employs 60 staff. The company plans to increase revenue by 23% to more than $50 million in 2007-08. It will install 15,000 kilometres of channel network and 4000 gates in the next three years.

Exports to the United States, New Zealand, Canada and India account for 15-20% of total sales. The company’s biggest export customer is in the US and Aughton has high expectations for future sales in China and further sales in India. In each of these countries there are 60 mega-hectares (millions of hectares) of irrigated land (compared with 2.5 mega-hectares in Australia) and irrigation efficiency is only 50%, meaning half the water is wasted.

Identifying the market

Aughton understood the water problem long before the current drought from his position working in the Victorian Government.

Seventy per cent of Australia’s fresh water is used for irrigation but the management of that water is antiquated. Farmers must wait two to three days for a worker to drive down to the irrigation channels to release water. Then almost a third of that water is lost due to inaccurate measurements, excess water running into drains and leaks from ageing channels.

Water infrastructure in other countries is in even worse shape. One in three people around the world are affected by water shortages, according to the International Water Management Institute. In India, 17% of the world’s population live off 4% of the world’s water – yet half of India’s irrigation water is wasted due to poor technology.

Aughton convinced four colleagues – Gino Ciavarella, Bruce Rodgerson, Tony Oakes and a fourth director who has since left the company – to join him and invest their life savings to establish Rubicon as an irrigation consultancy based in Melbourne.

The aim from the beginning was to reinvest the profits of the business and devote 30% of the annual operating budget to research and development.

Developing the technology

Aughton knew he needed a scientific breakthrough to achieve a fully automated system and create a product that could compete in export markets. He recruited Belgian engineer Professor Iven Mareels, who had just arrived at Melbourne University. Aughton says: “It was fortunate that there was an international expert on our doorstep.”

The global potential of the technology helped them win Federal Government grants to fund a university research program and more recently a $1 million Commercial Ready grant. Aughton’s advice on winning grants is to be clear about the criteria of each grant and demonstrate an understanding of export markets and risks.

The university team under Mareels made the company’s first scientific breakthrough, creating a unique model for how water behaves in channels and river systems.

Rubicon’s own development team backed up the scientific model with an innovative gate design to improve measurement and automate water release.

The company now holds international patents for the resulting “Total Channel Control” (TCC) system, a radio-controlled, solar-powered channel network fitted with sensors to measure water flow and water levels.

The TCC system is being installed in four large channel networks in Australia. Aughton claims the system has boosted efficiency up to 90%.

Export strategy

Aughton and his directors chose to attract expertise to the board with small parcels of equity instead of pursuing large investors in their quest to export. They recruited the former chairman of Amcor, AMP and Coles Myer, Stan Wallis, former UBS Warburg Australia chief executive and chairman Gordon Dickinson, and AT Kearney director Phil Harkness.

Aughton has won customer overseas by making direct sales pitches to global water infrastructure customers. The small nature of the industry has made it possible, and Aughton has explained Rubicon’s technical breakthroughs at international conferences and trade fairs.

The company established its first overseas office two years ago in Loveland, Colorado, close to the centre of the United States. Colorado, an inland state that mixes cattle ranches with wine producers, was chosen because of its existing Rubicon customers and the Denver Airport was a good transport hub for the rest of the country.

Rubicon expects the US market to grow as political awareness increases. “We think we will see a fairly fast spike [in sales] because they are suffering the same issues as Australia and there is large use of irrigation – 10 times the size of the Australian market,” he says.

Rubicon has found a single entry point to a massive opportunity in the world’s emerging markets through the World Bank.

The bank’s experts have visited Australian pilot TCC sites and purchased Rubicon’s component products for the past five years. Aughton expects the company to be competitive for some of the bank’s large projects over time – development timelines are long due to the enormous size of each project.

In China, Rubicon is holding discussions with the Chinese Ministry of Water and hosted officials at its Australian sites.

Struggling to meet demand is a problem that Aughton is looking forward to. “Where we sit at the moment, but because of the scarcity of water around the globe, we don’t have a big say in the uptake,” he says. “We have to be prepared for movement from all quarters of the globe.”

Aughton’s tips for making the export story work for your company:

• Seek government assistance to develop a product that is unique in export markets.
• Attract expert staff and board members with equity.
• Seek a specialist audience in export markets for your sales pitch.