Rockwell hails quality of Rakon work

American communication and aviation electronics company Rockwell Collins is backing local component supplier Rakon after questions were raised about the company's quality record.

Auckland-based Rakon makes crystals and oscillators used in global positioning systems and sells components to Rockwell, which supplies technology to the US military.

An investigation by the Weekend Herald exposed a series of emails which raised questions about whether Rakon was being fully frank with clients about product faults.

Rockwell public relations director Nancy Welsh defended Rakon's record and said the two companies had worked together for more than 10 years.

The Business Herald asked Rockwell several questions, including whether the company was happy with product quality, had been kept sufficiently informed of any issues and was keen to continue trading with Rakon. While not answering these questions specifically, Rockwell defended its association with Rakon.

"During our relationship, Rakon has demonstrated the ability to meet our stringent quality and delivery requirements and performed in accordance with the terms of our agreement," Welsh said in an email.

"In fact, Rakon was initially selected because it was felt they best met our requirements."

As with all Rockwell's preferred suppliers, regular meetings were held to review delivery and quality scorecards, business forecasts and technology road-maps, she said.

"Should issues arise with any supplier, procedures are in place to address the necessary improvements to mitigate those issues."

Investors in Rakon have also shown no sign of being fazed by the weekend revelations, with the share price gaining 28c since Monday to close yesterday at $2.75 a share.

The company was founded in 1967 by Warren Robinson in his basement where he made quartz crystals by hand for the VHF and marine industries.

Rakon listed on the NZX last month at an issue price of $1.60 and raised $66 million, making yesterday's closing price a rise of more than 70 per cent.

The company's prospectus said 11 per cent of sales last year were related to military use, equal to about $7.8 million from a total revenue of $71.4 million for the year to March 31, 2005.

Mobile phone, personal digital assistant, telecom and recreational use dominated revenue accounting for 57 per cent of sales - about $40.7 million.

Neither mobile phone company Motorola nor global positioning system specialist Garmin had responded to the Business Herald's questions by the time of going to print.

Last week, Rakon posted a profit of $4.8 million for the year to this March 31 - 9 per cent ahead of forecast and well ahead of the previous year's $2.9 million - on the back of $74.4 million in revenue.