Redarc realises the power of investing

By / 28th of March, 2014
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LONSDALE’s Redarc Electronics, a maker of power solutions for vehicles, has found success through ambitious goals and a constant re-investment of revenues in its people and facilities. Owner and CEO Anthony Kittel told Brent Balinski from Manufacturing Monthly about what it takes to be a successful Australian electronics company.

In 1997 Redarc was, as they say, on the bones of its bum. In 1995 its founder had died and, by its current owner’s admission, it had lost its way.

It then employed eight people and had revenues of about $800,000, selling a family of basic voltage converters for trucks.

Today, operating out of a new, sophisticated, completely integrated manufacturing facility – with sales and marketing, innovation centre, assembly and logistics centre all under one roof – its turnover is about $25 million a year, and its rapid growth over the years has been recognised with a swag of awards. These have included repeated placings in the Deloitte Technology Fast 50 Australia and the BRW Fast 100.

According to an article published last year, the company’s revenue is currently growing at 25 per cent, year-on-year, and employs over 100 staff.

Owner and CEO Anthony Kittel, who purchased Redarc in 1997 with his wife, has ambitions to grow revenues to $50 million in 2017.

A big part of the company’s success in its market, providing power solutions widely used by groups – including miners, grey nomads, recreational four-wheel-drivers – is a willingness to invest in R&D, a figure the company puts at about 15 per cent of revenues.

“We punch above our weight in terms of R&D capacity,” said Kittel, who said with some pride that the company didn’t even cut down on this during the GFC.

“It’s a pipeline, and like anything you need something to put into that pipe,” explained Kittel.

“Customers are willing to pay for that innovation, features and reliability: a product that’s engineered to survive the Simpson Desert, Canning Stock Route - these sorts of environments - will survive Russia, will survive Africa and so forth.”

Redarc has grown from selling a low-technology product to a solutions provider.

“We have 20 people in R&D fulltime; that’s pretty unusual. And that innovation contribution we can measure each and every year to our business.”

In terms of being a solutions provider, the puts the breakdown of what it calls “Redarc push and customer pull” at about 60/40. This means that about 40 per cent of what is made is driven by the needs of a client.

“And I guess you want to balance the risk, because if you’re pushing products onto the market, that’s where the high risk is, and so, by spreading the risk between us pushing and customer pulling, we’re able to balance and know that our R&D investment is sustainable,” Kittel told Manufacturers’ Monthly.

R&D is also carried out in collaboration with educational institutions, for example through the Auto CRC’s Vehicle Electrification Program.

Developing skilled workers in-house – and keeping them there – is also important. Kittel mentioned partnership with South Australian universities who gain project work at Redarc in their third year. Many key members of the company’s staff began as undergraduates and stayed.

img - industries_manufacturing_140227_Redarc_banner-4Redarc provides an in-depth range of training pathways for its workers.

Kittel was made to see the value of staff development early on in his own career.

“I was lucky enough a long time ago, back in the 80s, when BHP gave me a cadetship, paid for my studies, and I stayed on as an engineer for quite a number of years,” he explained.

“We follow those same sorts of values here and we have young people who come into the business, whether they’re unskilled, semi-skilled, or undergraduate professional people, and we provide that career path for them.”

The company has elsewhere named participation in the Workplace English Language and Literacy Program as part of Redarc’s expansion since 1997.

Production workers, many of whom have not finished school and/or are from non-English speaking backgrounds, have been put through the WELL program.

When asked what an electronics company needs to do to survive in Australia, Kittel didn’t hesitate to go back to re-investing in people and their skills. To this, he added marketing – often considered as something Australian manufacturers tend to neglect.

img - industries_manufacturing_140227_Redarc_banner-3Owner and CEO Anthony Kittel believes that reinvesting in people is key to success - a view grounded in his own experiences starting out in the industry.

Redarc’s brand is something the company is proud of, and it refuses to perform any requests to do private label manufacturing. The Redarc brand is clearly visible on everything that comes out of the Lonsdale factory. If you break down, call Club Assist, and look at the device they use to get your vehicle running again, and take note of the name on the lemon yellow-coloured charger used to get your car running again.

“And so you can’t just be an engineering business, you need to be a market-driven company,” explained Kittel.

“If you have the front end of your business looking good, then backed up by great products, built and designed by great people, you’re going to have a good business.”

This article originally appeared at Manufacturing Monthly, by Brent Balinski.