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Wellington Drive on the right track

Wednesday 23rd June 2010

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Wellington Drive Technologies says improving profitability shows the company’s strategic direction of the past five years is beginning to pay off.

Chief executive officer Ross Green said expanding global sales orders and improving product margins means it is on-track to turn a profit soon, but he is reluctant to predict just when that will be.

“All the indicators are going in the right direction, and we’re a heck of a lot better off than when customers were saying they didn’t want our motors,” he said.

Green said Wellington Drive spent a lot of time understanding what it did well, and the exact needs of its customers such as Coca-Cola Co. This resulted in concentration on the commercial refrigeration and ventilation markets “and what you’re seeing now is a slimmer and more focused company with signs that our strategies are paying off,” he said. Last year the North-Shore based company built, sold and delivered over 600,000 motors made in China and Singapore, as sales revenue jumped 54% to $22.4 million.

Setting up dedicated supply chains and a sales infrastructure has been key to Wellington Drive’s increased production, which has seen production increase to 22,000 motors a week from 13,000.

“You don’t get paid for the sale till the motor has been delivered to a customer and it has met their expectations,” Green said. It has taken the Wal Marts and Coca Colas of the world years to be comfortable that a small company on the other side of the world can supply and service motors that are up to three times more efficient that conventional AC motors. Such customers order in the hundreds of thousands, year after year, once they realise the benefits of Wellington Drive’s motors, which are backed by intensive ongoing New Zealand-based research and development.

Green said his company is a good example of how and why New Zealand product manufacturing companies need to go global early in their evolution. Even combining with Australia’s population, 25 million people isn’t enough. “Research shows you need something like 90 to 100 million people as your local market to support high technology manufactured products,” he said. “Customers don’t care whether you’re from New Zealand, to them you have to be local.”

This is the major reason for a concentration on the supply chain and sales infrastructure. Now that Coca Cola has endorsed the motors, it acts as a “beacon customer, and once they use us, others will,” he said.

Another example of the length of time it takes to develop sales relationships is with multi billion dollar American electrical motors’ company A.O.Smith.

“They first approached us eleven years ago,” Green said. “It has been a gradual relationship, a slowly developing one that has waxed and waned. Now it’s waxing again.” Wellington Drive has now proven its motors’ reliability and performance, and is supplying AO Smith branded product in the new category of highly efficient motors.

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