Getting your business financing right is the key to a solid foundation. With Bellingham Wallace on board, Modtec Industries has fuelled growth through innovation and reinvention.
Change can be frightening, but in business embracing it is often essential, not only for survival, but also for growth.
Evolving with the changing market has been vital for Silverdale engineering and manufacturing company Modtec Industries.
Modtec designs and makes zinc die-cast components and steel tube and powder-coating products such as monitor arms and mounting systems, freight containers, modular office desk systems and medical beds.
However, when it was founded in 1969, the New Zealand company was in the very different business of manufacturing fence stains.
Six years later, the current chief executive Bruce Davies bought Modtec, sold the fence-stain business and reinvented the company as an engineering firm focused on leading-edge design. The company has never looked back, going on to win several top design, recycling and exporting awards.
“Our first products to market were a range of cap guns and toy sewing machines,” says Davies. “We had an ambitious timeline of six months to set up a tool room and a zinc die-casting business, as well as design and produce the tooling and finally deliver the finished products.”
They met that deadline and over the next few years Modtec became a supplier of zinc die-castings to several New Zealand exporters and a number of Australasian firms in the office furniture business.
By 2002, increasing offshore competition, particularly from Asia, had placed Modtec and other New Zealand engineering firms under a huge amount of pressure.
Modtec was becoming less profitable and Davies knew another big change was necessary. As luck would have it, a discussion with a customer led to a new opportunity designing, producing and distributing computer monitor arms to Europe.
Davies admits that establishing a start-up business again was tough, but well worth the effort. Integ International Ltd has carved out a profitable international niche providing modular monitor arms and mounting systems for the commercial furniture and medical markets in Australia, Singapore, the US and the UK. Its products are all designed and manufactured by Modtec.
For the past five years, Modtec has been working with Matthew Bellingham and Brendon Cutler from accounting firm Bellingham Wallace, which has provided significant input into the company’s strategic direction, export strategy, succession planning, and board structure.
“From our first meeting, Bellingham Wallace clearly had a vision and shared fantastic new concepts relating to growth and the value of business beyond the numbers,” says Davies.
Bellingham Wallace has set new standards for Modtec as the company’s accounting and governance partner, he says, and added substantial value in several areas. Among these is the development of financial processes to ensure more certainty and accountability to deliver results to the company’s stakeholders.
“By accepting change as the norm, Modtec has seen consistent annual growth of more than 25 percent,” says Davies. “With help from Bellingham Wallace, we’ve introduced lean thinking into all our processes.
“Matt has helped us improve the structure of the business to enable growth, to simplify our governance and reporting activities, and has worked with me on an exit strategy. Bellingham Wallace has also done a great job of building better partnerships with the banks and providing leading-edge financial and environmental-responsibility reporting.”
Exporting is now the spearhead of Modtec’s success, with the company winning several export awards, most recently the Excellence in Exporting award at the 2011 Westpac Auckland North Business Awards.
Australia, Modtec’s largest export market, is still growing, and India, China and the surrounding APEC countries are delivering profitable opportunities, says Davies. Modtec has representation across the US and is achieving good results.
“We had a plan to grow Modtec into a global business delivering sustainable productivity tools to the work space – whether the workspace was an office, bank, airport control room, hospital or prison,” says Davies.
Bellingham Wallace has added value in the areas of export planning and strategy, helping Davies revamp the organisational structure and recruit a global sales and marketing manager.
Earlier this year, Bellingham Wallace introduced Modtec to contacts in India as the company set up a manufacturing and distribution facility in Bangalore.
Further recent expansion includes the establishment of sales offices in Sydney, Melbourne, Perth and Shanghai, as well as a new Integ development and training centre in Albany.
Like all SMEs, Modtec has had to overcome its fair share of cash flow and growth challenges, says Bellingham.
“While developing its export markets, Modtec also recently faced issues with the high exchange rate so we’ve put some foreign exchange management strategies in place to assist with that.”
Modtec is poised for significant growth over the next 12 months, so Bellingham recommended implementing a board to attend to strategic and risk matters.
“We worked with Bruce to put in place the appropriate governance framework, provided some recommendation regarding the initial appointments and chair the company’s board,” he says.
“Bruce is very open to advice, hugely enthusiastic and a real pleasure to work with. His is a great example of someone buying a small business, trading it in a market that used to exist and having the vision to keep the business viable and suit the changing market.
“Bruce established a solid business early on but he didn’t sit back and rest on his laurels. He was always looking ahead at where the market was going, innovating, pushing development, investing in R&D and in people – and the results speak for themselves.”