Scott Technology: Early pickup

Having a variety of markets is vital, says Scott Technology's Chris Hopkins. Photo / Otago Daily Times

Dunedin-based engineering company Scott Technology was among the first Kiwi manufacturers to feel the wrench of recession.

The publicly-held company specialises in designing and making automated production and process machinery, supplying the global appliance and meat processing industries, and mining laboratories.

"Some of our big customers are the major North American appliance manufacturers, and their business is very much driven by the housing market, where the downturn was really kick-started," says Chris Hopkins, Scott Technology's managing director.

Scott felt the effects in late 2007, suffering a $1.2 million loss in 2008. "But as we were first to feel the downturn, we were one of the first to feel the pickup," says Hopkins. Scott recovered with a small profit of $390,000 last year, and revenue continued to grow in the six months to February.

The appliance market in North and South America and China has picked up again, thanks to government incentives and rebates for people buying energy-efficient appliances.

"We've had a bit of a false boost, so it's hard to work out the difference between that and ongoing sustainable business," Hopkins says. "It could all change tomorrow. But the Americas seem to be more sustainable."

The mining and precious metals sector halted projects and capital expenditure, especially in the Americas and Russia, but there's now "pent-up demand" for Scott machinery.

The outlook for meat processing in New Zealand and Australia, Scott's domestic market, is a mixed bag: knocked by declining sheep flocks and droughts. Yet Scott went ahead with a new office in Sydney, realising the importance of being present in the market.

"One of the keys for us is diversification. When one market is up, another market is down. The problem with the crisis was every one was down at the same time; it's rebounded in some areas, but on average it's certainly picking up," Hopkins says.

Scott Technology reduced staff numbers two-and-a-half years ago, but tried to maintain its skills. It is now bringing back more temporary staff, and subcontracting more work out again. Hopkins says it was crucial to continue with its R&D spending: "in some cases, resources increased."

Chris Hopkins
Managing director, Scott Technology

* Your big hope?
I hope New Zealand manufacturers are not overlooked or one of the forgotten few - I think we get lost in activities and policies sometimes.

* Your big worry?
The uncertainty and volatility that Europe brings, and that the uncertainty carries on for an extended period. That creates uncertainty for us as well. Rather than things changing daily or weekly, we need to get back to some stability.

* What would help right now?
A crystal ball? Certainty means getting some good forward orders that could take us through the next five years. But uncertainty and risk is what business is all about - and it's managing that risk.