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Creativity and innovation is the key to export prosperity, as these Australian Export Awards finalists and winners demonstrate. Dynamic Export asks about their export experience to date.
Global EARS Limited
Think pneumatic drills and you think pounding noise; Global EARS flagship product, the Exhausted Air Recycling System (where the ‘EARS’ came from), takes the volume down to just 67 decibels, less than an average household vacuum cleaner.
When inventor Chris Bosua tried to make a pneumatic manufacturing machine work with an air compressor too small for the job, he noticed that a lot of energy was going to waste through the pneumatic exhaust. With a background in mechanical engineering, Bosua developed a closed loop system that sent the air back to the compressor, similar to a hydraulic tool. His innovation doubled the capacity of an ordinary compressor and dramatically reduced the noise created during operation.
Size: 5 staff
Turnover: $1.8 million
Years in operation: 3
Main export markets: Europe (Germany, Sweden, UK) and USA
Why do you think your business has been so successful?
Largely because the product EARS is the most substantial advance in the compressed air industry, in terms of efficiency and safety, in the last 30 years. Air compressors have been around for over 100 years, and yet a standard screw compressor is only about 15 percent efficient. In practice, many compressors are running at under 10 percent efficiency due to poor selection and lack of maintenance of the complete air system.
Chris Bosua, our CEO and inventor, has a background as a motor mechanic and running his own business from the age of 19, importing motors and gearboxes and adapting those to Australian conditions. While motor vehicle engines now involve a lot of electronics, air compressors are mostly mechanical and Chris has been able to adapt his knowledge very creatively into this industry.
What was the biggest export risk you took?
We decided to go global from day one and organised meetings and installed EARS into the R&D (research and development) departments of two international companies for testing. However, their decision-making was slow and they were not really interested. We then decided to tackle the retro-fit market by going directly to end users, which involved introducing a new product into new markets. This meant outsourcing manufacturing, marketing and distribution so that we could operate with a small team and grow quickly.
The risk is that when you are small and you start out, you don’t attract the big players, and when you do, they often want to control the process. If you grow quickly with a small company, you can find that they may not be able to fund your growth or they cannot focus sufficiently on your business. However, during 2006 to 2008 we sold the licence for the EARS patent into 12 countries and entered into a joint venture partnership in a further 15 countries.
What was the biggest disaster?
Not a disaster, but the hardest thing to overcome was the resistance to new technology and the difficulty in finding distributors who could both install and sell compressors into the retro-fit market, as the main existing distributors are attached to the five major global manufacturers. Installers tend to be technically strong, but undercapitalised and not marketers, while normal distributors tend to be good marketers, but don’t have the technical knowledge to do installations.
What was the greatest highlight?
The main challenge in 2008 was to tackle the German market by working with the licensee for Germany and committing to help them find and train 30 distributors. Our main market is in screw compressors where the global market is dominated by five manufacturers operating out of Germany, Sweden, USA and UK. However, the R&D on screw compressors is mainly performed in Germany, even by the USA & UK companies.
The challenge was to convince German distributors the benefits of EARS while working through a German translator. At one stage we had to change over our test equipment after one engineer claimed the results could not be that good and that the test equipment must be faulty.
By November 2008, our licensee had appointed 25 distributors and produced a 114-page full colour catalogue in German covering all the EARS products and technical support for distributors. We also attended the Automechanika and Motek trade shows in German and received over 300 enquiries for our distributors.
What do you think can be done to make the export process easier?
The EMDG [Export Market Development Grants scheme] needs to be fully funded. In 2007/08 we spent $315,000 ($150,000 claimable grant) on export expenses but only got $40,000 back in August 2008, and an unknown amount will be paid in June 2009. It is difficult to plan for marketing activities if you are unsure when and how much you will receive.
What was the best money you have ever spent?
Money spent on airfares and accommodation to attend international trade shows was our best investment. We were able to use leverage to get either suppliers or customers (licensees) to pay for the cost of the trade shows. This has enabled us to present EARS at 17 trade shows in the last 18 months. The cost of major trade shows in Germany and the USA are restrictive for many new businesses.
What do you wish you had known when you started?
That a share market downturn and world recession would commence in October 2008, just when we were about to issue a share offer to raise money to grow the business.
What are your intentions for the future?
In November 2008 we changed our strategy due to the global uncertainty and decided to increase our export expenditure and concentrate on the highest potential overseas markets, but also to substantially increase our R&D on three new products. We currently have government funding to produce a new compressor, which we expect to improve the efficiency over a standard compressor by 130 percent.
We have also designed another new compressor using different technology, which will be available on the market in 2011, achieving even higher efficiency gains, with the prototype results being available by mid 2009. We are offering 20,000,000 preference shares at six cents per share to fund this growth, which we expect to be taken up as we release the R&D results on the three products during 2009.
Our goal is to be the global leader in carbon reduction technology in the compressed air industry by 2011 by achieving electricity savings of over 60 percent compared to the current performance of a standard screw compressor. Compressed air systems use up to 10 percent of total industrial electricity use in Australia; with 73 percent of the cost of a compressor due to energy use, significant cost savings will be made by improving efficiency.
—Robert McInnes, finance and commercial director for Global EARS
* Global EARS won the Small Business Award category at the 2008 Australian Export Awards
Haltech Engine Management Systems
What started as a quest to develop diagnostic equipment for electronic fuel injection ended up as a different commission altogether when Modern Motor magazine asked Haltech founder Steve Mitchell to find a way to fuel a supercharged Ford project car. The result was a supplementary fuel injection computer, which was then followed by a turbo timer. It was only a step to the development of the world’s first real time, PC programmable engine management system, which could be used while the engine ran.
Today, the company provides engine management solutions for use in cars, motorcycles, off-road vehicles, boats, jet skis, outboards, snowmobiles, karts, motor homes and aircraft, controlling throttle body, multi-point or staged injection, distributor or direct ignition, naturally aspirated or turbo or supercharged engines.
Size: 22 staff
Turnover: $4 million
Years in operation: 22
Main export markets: Europe, Iran, Thailand, USA
Why do you think your business has been so successful overseas?
Australian products are widely recognised as good quality products at a reasonable price. Haltech’s products are well engineered and easy to use; this is essential for export growth.
What was the biggest export risk you took?
Setting up a satellite office in the USA was a big, expensive step for us, finding locals who you can trust, and who can also fulfil the many and varied roles in running a small technical business, is a challenge.
What was the biggest disaster?
Trusting the workmanship of other cultures. One example was a trade show we were attending in Iran. Our display stand needed some basic construction to be erected correctly. Finding a drill and drill bits took the most part of a day, but once the parts were found there was a random power outage so we had to wait another three hours before we could drill three holes in a backing board. Now we take all our own cordless tools for construction.
What was the greatest highlight?
Winning at the NSW Export Awards [in the Small Business Award category] was a real buzz this year. To be recognised and rewarded for our export achievements, and to have the additional exposure that comes with that, has been a great highlight for Haltech.
What do you think can be done to make the export process easier?
A significant area of opportunity is in low volume shipping; although we export a lot of products, what we do export is small in size and delivered by couriers such as FedEx and DHL. The documentation and information process for duties inbound and outbound can be very frustrating and time consuming, having products caught in customs for weeks on end waiting on HS clarification can be a real problem.
What was the best money you have spent?
The best investment we have made for our export sales, and domestic sales for that matter, has been to invest in our own production machines. Not having to rely on someone else for any area of production allows for much faster turnaround times and reduced development costs.
What do you wish you had known when you started?
How much government help was available. It took us a lot of years to start to utilise government help such as Austrade and EFIC, and now we don’t know where we would be without them.
What are your intentions for the future?
Continue to expand our product range by diversifying our market share from just aftermarket products into an OEM supplier to some of the world’s smaller automobile manufacturers. From there, who knows? Continue to open the door when opportunity knocks, which it always does.
—Matt Wright, international project manager at Haltech
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