Good vibrations

By Rebecca Macfie

Thursday 1st July 2004

Some products, no matter how clever or cutting edge, just don't win a lot of attention. They're under-the-bonnet gizmos that do a pretty thankless job of keeping things functioning smoothly and efficiently; the unsung heroes of industry.

The modestly-named VB is a bit like that. Its purpose is as prosaic as its two-letter trademark - to analyse the vibration in industrial machinery to detect looming faults.

Christchurch company Commtest is turning this industrial maintenance tool into a fast-growing business that turns over $3-5 million a year, has trebled its exports in the last two years, sells 98% of its product offshore, and is geared for annual growth of 100% for the next few years. Its VB vibration analyser - which looks a bit like a transistor radio - is helping big name industrial giants such as General Electric, Hyundai, Pratt and Whitney, Kraft and Michelin sniff out mechanical problems before they occur.

"All machinery in factories vibrates and rattles, causing it to wear out," says company founder and majority owner Jack Henderson. "We're in the business of monitoring the state of the machinery and analysing where it needs to be sorted before it breaks down."

The operative word here is "before". The whole point about Commtest's product - and those of its competitors in this fast-growing market - is that it offers a major advance on traditional forms of industrial maintenance. In an old-fashioned predictive maintenance regime, certain parts will be replaced regardless of whether they've reached the end of their useful lives. With preventative maintenance, whole factories or divisions are shut down at scheduled intervals, resulting in loss of production. Commtest's VB unit is about proactive maintenance, where looming problems caused by things like bearing defects, imbalance, and misaligned parts can be diagnosed and resolved before there's a breakdown.

The proactive maintenance market is growing at 11% a year as industrial companies look for ways to extract maximum productivity out of fixed assets. "The Americans think this way, and the Chinese are increasingly, too, as they open new factories," says Henderson.

Commtest is a relative newcomer to this market. The company has its origins in Christchurch high-tech wheelchair controls manufacturer Dynamic Controls, of which Henderson was the founder and major shareholder. Dynamic was sold to US healthcare company Invercare in 1992, but Henderson and minority shareholder, Timaru accountant and financier Alan Hubbard, retained a division producing industrial monitoring devices.

But by Henderson's own admission, the company was just "plugging along", and so in 1998 the decision was made to launch into the proactive monitoring market. The first versions of the VB were on the market a year later - and they weren't very good.

"In fact the first ones were bloody hopeless," says Henderson. "The idea was to overwhelm the market with a $4000 instrument because everything else in the market was selling for $30,000-$50,000." It didn't work and the company spent the next six months re-engineering the product.

Ever since, it's been a process of continuous improvement, with over 35% of turnover ploughed back into R&D. Thus far, Commtest has focussed on the market for portable vibration measurement tools, where a staffer or contractor walks around the plant with the VB taking measurements. From September this year the company will have an online product on the market, with the monitoring equipment installed at critical points around a factory and data monitored via the internet.

Competition is heavy, including Swedish giant SKF and US-based Rockwell Automation. So how does a 25-person company in Christchurch, New Zealand compete? With the online product, the strategy is to offer customers slightly fewer features than the competitors' products offer, at a lower price. Henderson reasons that most customers only use 90% of the features of other products on the market, so why sell them a Rolls Royce when all they need is a Toyota?

But competing in a tough global market is about more than just the product. Henderson and marketing manager Mark Ryburnd are convinced distribution arrangements are critical to long-term success. To that end, Commtest has spent the last 18 months setting up 32 distributorship relationships around the world, with the help of New Zealand Trade and Enterprise and US-based channel builders 3dB Global.

Previously the company worked with a single worldwide distributor, but Henderson says it wasn't a great match. "They were significantly larger than us and we were just pipsqueaks by comparison." He decided the company was better with smaller owner operator distributors "who have to sell our stuff to make a living". And, as they've discovered, being small doesn't bar a distributor from selling in to big companies: for instance, their Korean distributor supplies Hyundai.

"The number one mistake we make in New Zealand is to put all the emphasis on R&D and new products. You have to first of all know how you are going to deliver it into the hands of the people who are going to use it - and that's the hard part. And it's also where we don't have a lot of expertise in this country."

Kiwis are inventive, adaptable and enthusiastic he says, but we're not so good at channel building. "The world's full of inventors. You pick up any magazine or newspaper and there's a guy holding something and saying 'I've got to take this offshore'. It's easy to find new products and ideas; the hard part is how to deliver them to the market."

Comments from our readers

No comments yet