Yoke Har Lee: Focus on technology proves fruitful

Compac Sorting Equipment has come a long way since 1991, when it sent a machine to its first export market in France.

Compac makes equipment for sorting products as diverse as apples, potatoes and pomegranates. From its beginnings selling to local packhouses, the company has branched out into export markets; more than 70 per cent of its sales are now made overseas.

This year the company won the International Business Wales Exporter title at the annual New Zealand Hi-Tech Awards.

Chief executive Bob Shaw has another reason to sleep well. Despite operating in a recessionary environment, results for the 2009 financial year were 44 per cent higher than in 2008.

"We are very proud of that; 2010 will come off a bit quieter, depending on the confidence level on spending on capital equipment."

What keeps Shaw awake at night is how to continue growing profits and ensuring the company keeps getting its strategic product development right.

Compac has gone through a major metamorphosis since founder Hamish Kennedy, who has a masters degree in electrical engineering, discovered that the sizing machines and packing lines he built for his family's Kerikeri fruit packhouse found willing buyers among neighbouring packers.

A focus on technology has given Compac the competitive edge. Sorting fruit by size, shape, colour and sugar levels are just some of the machines' capabilities.

The jewel in the crown is Compac's InVision 9000 Blemish System, technology that makes sure an ugly fruit does not sneak through a sorting line.

"Hamish is highly focused on innovation and service," says Shaw. "Ten years ago, he built the core offering around what software and electronics can do."

As Compac's equipment began to be shipped further afield, the company had to evolve from being a pure exporter to manufacturing equipment overseas. It now has operations in South Korea, the United States, Europe, South America and China.

The decision to manufacture overseas was driven by the need to be close to customers. "They don't often make decisions till late. If they want a shipment, they want it within the packhouses in two months," says Shaw.

The company found it could boost sales by being flexible, with the ability to assemble the plant in the market at short notice.

Shaw says another strategic shift was expanding the company's capability from being a mere supplier of sorting machines to a turn-key provider of packing solutions.

It has bought a 50 per cent share in Hawkes Bay-based Fruit Handling Systems, a company manufacturing equipment such as produce-infeed systems, automated bin fillers and robotics that operate before and after the main sorting lines. Another acquisition is LENZ, specialists in kiwifruit handling, particularly in the area of bin tipping.

Shaw says the markets are diverse in what they want Compac to be. In South America and China, for instance, the demand is for turn-key providers.

"In New Zealand, Australia and the US, we still tend to be viewed as a sorting company. In the US West Coast, the clients want to choose who should supply what while on the East Coast they want us to be full turn-key suppliers."

Ultimately, Compac wants to deliver with less human intervention and more automation. In one case, says Shaw, an automated carton-handling system for packing kiwifruit into 10kg packs helped halve the cost, providing considerable benefit to the packer.

The company's turnover is now more than $70 million. To grow from here, Compac would require a bigger product portfolio of things the company cannot as yet do, Shaw says. He is also faced with the challenge of ensuring that all Compac entities across the globe have proper governance and measurable performance indicators, yet manage to retain the individual culture unique to the location.

While growing sales is important, Shaw is also mindful of the need to balance that with the company's strict focus on research and development.

"There are many ideas for good things we can do. Filtering and focusing on the right ones, making the right decisions - those are important."

In the area of R&D, the challenge is deciding what gets priority in terms of development. Because of the high level of customisation that is sometimes needed, the company has to make sure engineers do not get diverted from focusing on new product development.

The InVision software, for instance, is a key differentiation for the company against competitors. "It is not something someone can replicate tomorrow - it has taken 10 years of many software development hours," says Shaw.

Not all of Compac's product lines have performd to expectations: "Some products that we have released haven't gone as well."

The next product Compac is likely to launch is a sorter for large fruits, such as melons or large grapefruit. It is also looking at smaller items and vegetable lines.

Compac has some 240 employees worldwide, about 130 of whom are in New Zealand, including 35 mostly R&D staff at its Onehunga base.

Compac

Founded: 1984.
Makes: Automated equipment for sorting and sizing fruit and other produce.
Markets include: NZ, Australia, US, Europe, South America, South Africa, China.
Turnover: $70 million plus
Based: Auckland.