EXPORT CASE STUDY : Growth by design – The Actronic story

Actronic has already made the grade as successful Kiwi exporter. Its hydraulic weighing equipment is market leader in major overseas markets; around 95 percent of its income is derived offshore and in the past four years its annual revenue has doubled to $20 million.
Now in its 30th year, the company is deliberately designing itself for whole new level of expansion. Buying back the rights to distribute one of its major products, Loadrite, three years ago started its shift from primarily manufacturing/engineering design house to company with global reach to end consumers.
“I guess the company had come to crossroads,” says CEO Mark Templeton. “We had new investors on board; there was feeling the company could become truly global and notch up some pretty impressive growth.”
That meant getting better grip on where markets were heading, out-thinking competitive forces, building better sense of connectedness with end customer needs and strengthening distribution channel partnerships.
“To grow we had to be able to expand not only geographically but extend our product range and move into new market segments.”
That presented real challenge to the company’s existing distribution channel which mainly comprised smaller owner-operated companies that were strong on the technical side in terms of installing and supporting product and mainly focused in what has been Actronic’s primary markets – quarrying and mining. Expanding its market network in way that enhanced rather than weakened the company’s connection with its end customers was vital.
One of the tools the company chose to help meet growth challenges was the “Better by Design” programme promoted by NZ Trade & Enterprise. Launched in 2005, it coincided with the company’s need to focus on new growth drivers, says Templeton.
“It was really timely for us. Sometimes these things are bit flavour of the month but in our case it fitted well with the stage of development Actronic was at and the changes it was looking to make in its culture. We put several of our people through the programme and built it into our strategy.”
One of the aspects of the programme that really gelled was its strong focus on designing for end customer needs. It’s why Actronic software engineers can often be found behind the wheels of front-end loaders – exploring how their products are used and how they can be improved.
“Our engineers are put in face-to-face contact with customers – not just those who are doing the buying but those operating the machinery – because that’s really where the design process starts,” says Templeton.
“We spend lot of time looking at how an operator actually drives the machine, ergonomic issues, how our products might make the interface between operator and machine easier – even re-thinking what the product is there for and how its function could be delivered in different ways.”
Or how that function could be extended in way that meets broader customer needs. For instance, with quarry operators being squeezed by rising energy costs and industry consolidation, there’s much stronger emphasis on productivity and that provides an opportunity for Actronic to expand its market space, says Templeton.
“Instead of just supplying customer with weighing scales, we can provide an integrated load-out management system that is pretty much all automated with reporting capability that allows the quarry manager or someone in head office to monitor on-site productivity. What we can offer is not just weighing tool but productivity tool.”
That’s the change in thinking that emerged from looking at its product much more from the customer’s viewpoint and putting effort into understanding trends taking place in the industry, says Templeton.
One of the other aspects of the Better by Design programme, he says, is its cross-disciplinary approach – in other words it encourages different functions within the company to pool their efforts rather than work in silos.
“So we tend to run projects across disciplines and functional bases. Branding, for instance, is not just marketing preserve, it has implications for operations – packaging changes, for instance – and it has implications for engineering in terms of design. Our new product introduction process is very cross functional. Project teams have personnel from all the different areas involved all the way through so at launch time it’s not just case of suddenly handing it over – everyone already understands what that product is meant to do.”
After committing to being ‘design-led’ two years ago, Actronic went through ‘design 360’ assessment or design audit working with selected team of experts (from industrial design to branding) who helped identify existing design capability and opportunities for design to become strategic driver of value. This process, which is 50 percent funded by NZTE, comes up with series of recommendations which Actronic is implementing. The company also opted to fund ongoing mentoring from two of the design advisors.
One of the really positive things about the company, says Templeton, is that it has possibilities for expansion in multiple dimensions – including new products, different industry sectors and different markets. Which means it has to be fairly disciplined about setting business priorities.
“We’ve put lot of effort into our new product development process to get that working more effectively. There’s no shortage of ideas – the problem was too many ideas and not enough focus. Now we have clearer strategy. We know what sectors we’re targeting and through the Better by Design programme have got better sense of what the markets are looking for.
“We’ve been able to completely define and prioritise our product road map and put staged gated process in place that allows us to manage new product introduction more effectively and cross functionally.”
The emphasis has shifted from mainly hardware-based products to networked software solutions and the company is looking beyond its primary markets in the mining/quarrying area to sectors such as forestry and waste management. It’s established what it calls “strategic performance indicators” that extend five years out.
By 2011, Actronic intends to lead the world in assisting the quarrying, mining and waste industries to increase the productivity of their loading operations. It plans to have doubled its revenue to $50 million by then.
“There are also some targets around market share, customer satisfaction measures, staff engagement and turnover and new product revenue. We’ve set milestones for each of the years working back to March 2008 and we’re very much on track,” says Templeton.
The company is already market leader in North America, Australia and Ireland. Emerging markets include South America – Brazil in particular – and China, where it has strong toehold through partnership negotiated last year with established weigh systems giant Mettler Toledo. That alone is expected to generate business worth US$500,000 in 2006 and to double year on year.
New markets it is targeting are India – where Mettler Toledo is again its chosen distribution partner – and selected areas of Russia and Eastern Europe. The company now has regional offices in North America, China and Europe and is anticipating rapid increase in staffing levels.
Expansion means taking on new capability and, with its Penrose headquarters already overflowing, Actronic is planning move to new custom-designed premises in Avondale within couple of months. It’s shift that in many ways reflects the shift in company mindset.
“We set out thinking about how to design new building but quickly realised this was key part of the design process, assisting culture change as well as providing real opportunity to change the way people work. So we put lot of effort into looking at work flows in terms of encouraging informal interactions between people and that cross-functional team approach.”
It’s also about shrinking the barriers between central ‘head

Visited 5 times, 1 visit(s) today
Close Search Window