Serving an international market means thinking globally in terms of your manufacturing. Rinstrum’s Darren Pearson tells Brent Balinski about seizing opportunities and why they looked to Sri Lanka for a component manufacturing base.
Electronics company Rinstrum has grown handsomely over the last two decades through intelligent products and globalisation.
Managing director Darren Pearson has been at the 22-year-old, Brisbane-headquartered company since 1995, a time at which it employed about 10 and sold purely within Australia.
Rinstrum designs, makes and markets weight measurement solutions including scales, indicators, batchers, displays and transmitters, and is able to weigh “anything from beans to trucks”.
Nowadays it has distribution hubs in Australia, the USA and Germany, and two years ago began manufacturing in Sri Lanka.
In its early days, the company manufactured entirely within Australia, at its plant and using local subcontractors, and made about 10 instruments a week.
An opportunity arose soon after Pearson joined through HBM, who supplied sensors to Ranger Instruments, as the Brisbane company was then known.
“They requested that we design them a product that they market in Europe and they put in some development money and we went all the way and developed that product,” Pearson told Manufacturers’ Monthly.
“We used that technology to prepare something similar in Australia. And so very quickly we went from that point to having a substantial export component to our world: On the back of a technology change.”
The product in question is still made, though it represents only about 5 per cent of sales. What it did lead to, however, was the chance to expand into Europe.
Name clashes forced Ranger to rename as Rinstrum and it opened a German subsidiary in 2003.
According to a case study of the company, Rinstrum tripled the volume of its output in the decade following.
Part of its story includes opening up a wholly-owned subsidiary in Sri Lanka in 2012, and it currently makes components at a 23,000 square feet facility near the coastal city of Negombo.
“So at some point about three years ago we did an analysis and realised that bringing all of the parts across the equator twice was just not going to be sustainable,” explained Pearson of the hunt to find a South Asian base.
“And I went over there and got introduced to the place and having some people on the ground that we knew and trusted was ultimately the tipping point.”
The company had had experience with subcontractors in China, Vietnam, Malaysia and other countries, but considered the differences in culture between those to Australia’s too pronounced.
A similar common law history, free education to year 12 and high levels of home ownership help explain the similarities between an Australian’s and a Sri Lankan’s worldview.
“They tend to commute to their places of work and they go fishing with their family on weekends and that stuff,” explained Pearson.
Also importantly, the local workforce also had the required skills in areas such as micro-electronics and science.
Parts from the Sri Lankan factory undergo the first level of testing and assembly, before being sent to one of the company’s three main hubs for final stage customisation.
“The final product we sell in Germany is a fair bit different to the one we sell in Australia and the one we do in the US,” said Pearson.
“And whilst we haven’t changed very much our staffing levels and direct production spend, the net spend mix is quite different overall.
“And that’s seen us grow quite strongly this year, we’ve grown about 15 per cent this year in terms of our top line.”
The cost of labour also means, “We can have reserve capacity, and it means opportunities come along and you can grab them with both hands and that’s ultimately quite critical to the bottom line.”
The make-up of revenues from around the world is put at about 25 – 30 per cent from the US, 30 – 40 per cent Europe and the rest domestic.
As with many globalised Australian companies, the product innovation takes place locally, with the central R&D team in Brisbane.
There are six full-time designers at headquarters.
“Electronics and software through to industrial design,” Pearson noted.
The global spread of the business, and the local operation being a link in a sprawling, cross-continental enterprise, is simply “a reflection of global nature of manufacturing,” said Pearson. It’s nothing unique to Australia.
“But in our world, everything in our business has a global footprint,” added Pearson.
“And manufacturing needs to be the same.”
For an introduction to Manufacturers' Monthly's Australian Hidden Champions series, click here. Part one, featuring PWR Performance Products, can be seen at this link, part two, featuring Anatomics, here, and part three, Nobody Denim, here.
Image: http://www.rinstrum.com/