Embrace change and stay ahead

When EziKey, an Australian smart key management system company, was looking to unlock some serious quality and warranty problems, it contacted Successful Endeavours, a small, privately held, Australian electronics company. The key manufacturer was facing difficulties with one of its products that contained circuit boards that were designed and manufactured in China. Successful Endeavours examined the product and discovered that it had several design issues. After thorough examination and testing, Successful Endeavours successfully redesigned the product, and EziKey is glad that the quality and complaint issues are resolved.

Successful Endeavours, an Australian electronics design and embedded software development company, focuses on small to medium-sized Australian manufacturers looking to develop next-gen offerings. Ray Keefe, an embedded designer and embedded software developer, founded the company in 1997. We recently spoke to Keefe about the changing face of the Australian electronics industry. Below are some insights.

How has the electronics industry changed over the past few years?

Over the last 10 years, the belief has risen that the hardware is made in China and the software is designed in India, and that it costs ‘almost nothing’. Potential buyers start off with that picture in their head when they evaluate the amount of funds required to have a saleable product. This is why it’s more important than ever for businesses to offer value - you can’t become complacent about your market.

The other popular belief is that the Australian manufacturing industry is dead. The fact is that manufacturing is still the third-largest sector of the Australian economy, and the largest sector of the economy in Victoria. There is also a belief that everything has to be cheap. Not everything can be made cheaply. Sophisticated products need to be designed properly, particularly if they have to pass the safety standards.

A number of imported electronic products don’t comply with the Australian EMC and safety standards but they are sold regardless of the consequences. That said, not everything that’s imported is of bad quality. Around 14% of all manufacturers in China are high quality and the remaining 86% consists of companies that offer low-cost, low-quality products, good-quality low-cost products and those that ‘do absolute rubbish’. The real problem for Australian entrepreneurs sourcing products from China is to find a spot on the curve where price is low and quality is high. I don’t want manufacturers to stop buying products from these markets as we are lifting these markets out of poverty, but I just want to make sure we don’t risk our own future in the process. Some buyers prefer to have a presence in Asia as well as Australia - they manufacture small volumes in Australia and do large orders in Asia. From cash flow perspective, Asia still remains an attractive proposition for a number of reasons, ie, government support, tax benefits and other financial incentives.

Your words of wisdom for business owners?

It’s important for business owners to keep up with the market trends and technological advancements. There are new technologies regularly coming onto the market that can be game changers. If business owners don’t keep up, they will not be able to take advantage of new opportunities - this exposes them to competition from people who are keeping up.

But it’s not all about the product. Other areas businesses need to focus on are: culture of the business, supply chain, marketing and business promotion, production costs, processing costs, energy costs, calibration costs, service/warranty and reputation costs. If you focus on just one or two of these eight areas, you may end up having a distorted view on how much the product will be costing you.

It’s also important for business owners to attend industry events, network with clients and competitors, and establish a strong online presence (website, blog and social media). It’s a long-term strategy and may not yield noticeable results straight away.

Where do you see growth opportunities?

Continued urbanisation creates opportunities for electronics designers and manufacturers. Cities require sustainable infrastructure and support services, including water supplies, electrical distribution, smart grids, mobility solutions, building management and communication systems.

A number of local desginers and manufacturers wait till they receive an order, instead they should position themselves where the market is heading so by the time the market gets there they are ready with a new product, technology or solution.

So is there a strong future for manufacturing?

There is no doubt we have some world-leading industries in Australia and there is also no doubt that rising unemployment is a problem we can’t afford. The government needs to determine which areas it wants to stimulate investment activity in, which sectors it wants to support. Tax holidays and financial incentives could help attract investment. The other key issue is Australia has the lowest levels of business-to-business collaboration. Government incentives may not bear fruit if businesses don’t work in partnership. You can’t have open innovation, industry cooperation and sustainable policies without collaboration. The Japanese showed us how you could build an economy by collaborating after World War II. The USA economy looks at leverage and has much better models for inter-business collaboration. Europe is inherently more collaborative