Anthony Kittel, managing director of REDARC Electronics, spoke to Manufacturers’ Monthly about the importance of research and development investment in the company’s success in the export market.
REDARC Electronics, based in Lonsdale, South Australia, took out the Exporter of the Year award at this year’s Endeavour Awards, which recognises Australian manufacturing excellence. Having won two of these awards in different categories in previous years – including the prestigious Manufacturer of the Year in 2017 – REDARC’s managing director, Anthony Kittel, is proud of the strides the company has been making in the export sphere over recent years.
“For us the award was great recognition, given that export is one of the key pillars of our overall strategy to 2020,” Kittel said. “For the last couple of years we’ve been devoting a lot of resources to growing our export channel and we’ve had some good success, particularly in the last three years, in setting up international distribution.”
The company is aiming for 20 per cent of its revenue to come from exports by 2020, predominately in Europe, North America, New Zealand and South Korea.
In June this year, REDARC appointed its first full-time sales executive in the United States, and has also signed the biggest RV parts wholesaler in the world as its United States distributor. Plans are in place to establish an office there in the next 12 months.
“We’ve also got an excellent e-channel partner, whose core business revolves around the trailer business – one of our key markets in the US,” Kittel said. “It’s nice to see the plan come together and generate sales revenue.”
Kittel said the company’s heavy investment in research and development was central to its success and to its overall growth strategy – which is to invest 15 per cent of its revenue in this area every year.
“And that’s been very successful. The financial year ended in June was our fifteenth year averaging 21 per cent growth,” Kittel said. “Continued investment in R&D is therefore one of our key pillars – to keep coming up with new products, and to generate good growth in that area.”
Another pillar of REDARC’s forward strategy is its diversification into the defence market, which has seen the company become a preferred partner with Rheinmetall on the LAND 400 contract, as well as a preferred partner with BAE Systems on the SEA5000 Future Frigates project. REDARC is now currently bidding on work with Naval Group in the submarine space.
“We’ve been investing heavily over the last 24 to 36 months on a definitive defence strategy targeting land vehicles, frigates, submarines and light commercial vehicle activity in the defence sector,” Kittel said.
Investment in research
The foundation of REDARC’s continued success as an Australian manufacturer, Kittel said, is its continued investment in research and development, investment in the latest electronics manufacturing equipment – including high-end test equipment that it is entering into in the defence and export spheres – and a commitment to adopting Industry 4.0 principles.
“We keep pushing ourselves because we have to be globally competitive. To manufacture products in Australia, we need to be using the latest technology and the latest techniques, otherwise our products will be too expensive,” Kittel explained.
“We know we’re operating in a country with one of the highest labour costs in the world, so we’ve got to do things smarter. We’ve got some really tough targets for ourselves in terms of productivity and we need to use the latest technologies and manufacturing designs to help us achieve those productivity targets.”
REDARC will begin using “cobots” – robots working with humans – in early 2019. Moreover, virtual reality will be used to enable machine operators see how products work together in real-time situations.
“It also helps with traceability: as all our machines are connected, the product can be traced through different machines all the way back to the source.
“If there is any issue, we can determine what parts were affected and how they can be isolated,” Kittel said.
Quality, flexibility and agility
Keeping ahead in an export market, Kittel said, requires quality, flexibility and agility, and an ongoing ability to change production lines quickly from a low-volume to a medium-volume product.
“We pride ourselves on being able to have that advantage over our low-cost competitors. We are highly agile and flexible in terms of product mix. It’s about choosing the right machinery, training our staff, and making sure that changeovers are as short as possible,” Kittel said.
“We are always coming up with new products and innovative features to differentiate our products. Indeed, having this diversification means that we are not dependent on any particular market, and we are able to be more robust and better able to ride the ups and downs of economic cycles.”
Kittel said that, in the end, it was always important to focus on people. “We are really close with our customers, so we are able to take on that customer feedback and then add it back into our engineering system and make changes really flexibly.
“And we fund all of the training of our staff, whether it be apprenticeships, diplomas, degrees, MBA courses or even PhD education. This means we can attract and retain the best calibre people. And that’s a fundamental part of what REDARC is about.”