Industrial fan maker Fantech has saved money - and won awards and new customers - by making components it used to import.
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Entrepreneur: Jack Pirie, Managing Director (retired) & John Bent, Northern Regional Manager
Company: Fantech Pty Ltd
Business type: Design and supply of industrial fans and associated noise control products
Turnover: $10M - $50M
Head office: Mulgrave, Victoria; Branches - Kings Park, New South Wales, Somerton Park, South Australia, Wellington and Christchurch, New Zealand
Contact details: +61 3 9560 2599
The Fantech Story
For Fantech’s Managing Director, Jack Pirie, intense competition has produced a constant search for ways to make better products at less cost. Import replacement - substituting expensive imported components with locally made ones - has produced some surprising cost savings.
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Key learning points:
- Import replacement benefits - Replacing imports with local components can save a lot of money.
- Awards benefits - Recognition of company successes by independent awards can raise a company’s profile, which helps to draw new customers.
- New product ideas - The need for new products can be easily identified as a result of close relationships with customers.
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Pirie says: “I think we’ve stopped being surprised; we’ve been embarrassed. You go out there and see something that you have been importing for yonks [and] then all of a sudden you think ‘I should have been making this myself’.”
Pirie gives the example of a steel component that cost $600,000 a year to import. Tooling up and producing the component in Australia saved $300,000 in the first year. The initial tooling estimate of $700,000 was reduced to an actual cost of $140,000.
Fantech’s success at replacing imports with locally manufactured ones has won the company numerous awards, including the Import Replacement Award at the Western Sydney Industry Awards 2000 for Excellence and Innovation.
Pirie says: “The savings from import replacement arise [when] you’ve got volume and you can manufacture in hundreds if not thousands of units. In our case, producing thousands of units is saving us hundreds of thousands of dollars each year. You also need an inherent understanding of what things cost and highly skilled people who know what they’re doing in manufacturing”.
Fantech’s Sydney-based northern regional manager, John Bent, says he would never have dreamed of entering the company in such an award until a staffer from the NSW Department of State & Regional Development, the Award sponsor, encouraged him to seek recognition. Bent says he did not find preparing the award submission particularly onerous or time-consuming.
The win took Bent by surprise. The ongoing benefits flowing from it have convinced him of its importance. Bent says: “At no cost to the company, it’s lifted our profile, making people aware of us in areas we would never go to, people I have never heard of sending us letters of congratulations and offering us their services. People like to stick with people who are going well.”
“We’ve had publicity out of it”, says Pirie, “but apart from that we’ve had customers and that’s what we’re in business for. Any company that comes across opportunities like this should sit down and realise it’s not that hard to enter.”
By working with customers, Fantech builds relationships. Staff think laterally as they solve client’s problems - sometimes with unconventional solutions. Pirie says: “This is a different engineering level altogether [in which] you are talking much bigger dollars eventually. It’s like generating a whole new area of operation that you might have otherwise never considered.”