This man makes money from old rope

Peter Montgomery's vacuum system can secure a ship in seconds. Picture / Simon Baker

In 1985 while an officer cadet in the merchant navy, a 19-year-old Peter Montgomery witnesses the aftermath of a tragic mooring accident. A taut rope has snapped, fatally striking a crewman across the chest.

This accident had a lasting effect on Montgomery, who decided there must be a safer way to moor a ship.

Twenty years later, there is: Montgomery's idea for a vacuum mooring system that doesn't use ropes has become a listed company that has attracted the attention of some major institutional investors.

Shareholders in Mooring Systems this month voted overwhelmingly to merge with the much larger European firm Cavotec, which is in a similar field.

However, unlike some innovative start-ups which have headed overseas in search of cash or have been swallowed up - and in the case of Navman spat out - by larger overseas companies, this deal will see the firm remain listed on the NZX and based in Christchurch.

It's a merger Montgomery says will secure the future of the company, ensuring that a piece of home-grown ingenuity has the chance to change the face of the shipping industry and build a multimillion-dollar business.

For vessels that travel across vast stretches of ocean, mooring in port can be among the most dangerous aspects of life at sea.

"It involves most of the personnel on the ship and it's very hazardous," Montgomery says. "You've got to have your wits about you."

Mooring with ropes can take from five minutes to more than an hour, depending on the vessel, but Mooring Systems' technology can secure a ship in about 10 seconds with the simple push of a button and no personnel.

However, using vacuum technology to moor ships requires a paradigm shift in thinking in a conservative industry in which ropes have been the standard for centuries.

People were dumbfounded when Montgomery first touted his idea for safer and faster mooring.

"It's a wonder I haven't got a broken nose I've had a door slammed in my face so many times. But every door that slams, I'll find one that'll open, that's just the sheer tenacious side of my personality."

The door Montgomery has opened with Cavotec will see the firm's highly skilled workforce increase from about 10 to 15 people, enabling the start of research into new products that had been put off.

"We don't need a big workforce. We're an intellectual property design and sales company so we can achieve a lot with a small workforce."

After the 1985 accident Montgomery began work on conceptual designs for mechanical mooring systems, but it wasn't until he completed an executive master of business administration at Massey University in 1995 after 12 years at sea that he hit on the idea of using a vacuum.

A vacuum may be a quantum leap in thinking, but in reality the technological choices were limited by the flat steel sides of ships.

"You can go to magnetics or vacuum, but there's very few things that can [attach to flat steel] without actually altering that surface or creating a physical attachment point."

In 1996 Montgomery set up Mooring International, with the first breakthrough coming a year later when TranzRail ordered the first vacuum system for the 150m ferry Aratere.

It was two more years before the system was installed and running, so the early life of the company was very much make-or-break.

"It was done with no money, so it was really using the good will provided from suppliers over many months. I'm really happy that it worked because I would have probably gone into liquidation if it didn't."

To keep the business funded, Montgomery held other jobs including as a ship manager running Russian fishing boats. Working 100 hours a week was nothing and he lived on "baked beans and red wine".

Making sure the company got the finance it needed to turn the idea into reality has been a big challenge, says Montgomery.

"No one will give you money until you get results, and you can't get the results without the money."

Fortunately, some Norwegian friends from his merchant navy days backed him with several hundred thousand dollars on the back of a potential listing.

Mooring Systems was listed in November 2000 and the following year bought the assets and business of Mooring International.

With $900,000 raised through an initial public offering, the company had funds of more than $1 million.

"So you can look forward with the amount of cash you've got ... and the amount of time that equates to in terms of your cash burn-rate and you've got a drop-dead date."

A dock-based prototype was built in late 2002 with the help of a $250,000 Government grant, and in 2003 Patrick Shipping of Melbourne bought eight units for nearly $3 million.

"We didn't make a lot of money on the contract but what it gave us is a splendid reference site. It's wonderful to see the ships coming alongside and not using ropes any more."

In April 2003 the company got another boost when ACC invested more than $1 million for a 9 per cent stake in the company, which now has about 20 operational units worldwide.

Despite growing success, Mooring Systems lost $674,588 in the year to March 31, although this was an improvement on the $1.2 million loss the year before.

The loss, though disappointing, was representative of investment to pursue new initiatives, establish credentials and support the efforts of Cavotec, which became Mooring Systems' European licence-holder in March 2004. Both firms had a similar view of the world in terms of ethics and their approach to doing business, and Montgomery was soon thinking merger.

A deal proposed last month and overwhelmingly approved by shareholders will see the merged entity stay in Christchurch, listed on the NZX as Cavotec MSL Holdings.

Mooring Systems had revenue of $1.8 million in the last financial year compared with annual sales of about $200 million for Cavotec, whose 65 shareholders will own 80 per cent of the merged company.

It's a merger Montgomery says will boost Mooring Systems' product development, profile, credibility and access to markets, ultimately securing the future of the business.

"It's extremely challenging, extremely costly, time consuming and if you get it wrong on minimal cash flows you'll loose your company."

He likens the challenge of developing an idea, getting it accepted and raising enough cash to see it through to walking blindfold down a road laid with landmines - "but luckily I had a mentor with a metal detector".

That mentor was chairman Michael Cashin.

"I've learned so much through the great advice there from an experienced business person that steered me around a lot of the landmines, but if you're naive enough you'll stand on them and you'll go boom."

Montgomery himself has been a business mentor in Christchurch since 1995.

"I think unfortunately in New Zealand sometimes our culture is more around the All Blacks and sports teams ... and sometimes doesn't do justice to the many successful people that are out there who are creating the wealth in the community."

Montgomery feels like a battle-hardened entrepreneur with optimism, enthusiasm and the ability to stay focused on the goal.

"All the troubles and difficulties you go through are just part of the hurdles and barriers that you have to overcome, and if you're not the sort of person that can overcome those, you won't make it."

And if he could do it all again, he would.

"It's a challenge and a dream and I think that's a really important thing in life to have those - it's a driving force."

Peter Montgomery
Managing director, Mooring Systems

Born: Port Chalmers, Dunedin
Age: 41
Married with one child
Home: Christchurch
Education: Shirley Boys' High School, Christchurch, MBA, Massey University, Palmerston North

Career:

1983-1995: Merchant navy
1996: Founded Mooring International
1999: First operational vacuum mooring system
2000: Sets up and floats Mooring Systems on the NZX
2001: Mooring Systems buys business and assets of Mooring International
2006: Merges company with Dutch firm Cavotec