Best Use of Research and Development in International Business

The Pacific nation of Kiribati desperately needed its Kiritimati Island airport to reopen but it couldn’t afford a $5 million asphalt plant, or the large supplies of bitumen and energy required to patch the runway with traditional hot mix asphalt.

Cassidy International Airport closed in 2008 amid safety concerns about its crumbling 50-year-old runway.

To overcome the need for a hot mix asphalt batching plant, Downer NZ researched and developed a cold mix asphalt solution.

It could be stored in shipping containers, was stable for three months in tropical heat, and had sufficient strength to withstand heavy traffic loadings within 10 days.

The closure of the airport on Kiritimati Island had imposed social and economic restrictions on critical island activities, such as food supply from Fiji and Hawaii, travel to the capital Tarawa, and tourism and sport fishing activity (which provides more than 20 per cent of Kiribati’s GDP).

Downer NZ Chief Executive Cos Bruyn says: “The development of the cold mix technology was the only affordable remedy to get Kiritimati Island reconnected with the world.”

Downer NZ provides design, build and operate services across five sectors – transportation, water, telecommunications, facility management and energy.

The company anticipates signifcant demand from Pacific countries for cold mix technology as a cost effective and appropriate engineering solution for maintaining aged asphalt paving.

Mr Bruyn says: “The temporary repairs at Cassidy International Airport were very successful, providing a value-for-money solution and allowing this critical infrastructure to reopen to jets.”

After patching the runway with cold mix asphalt to get the airport reopened, Downer NZ was awarded the contract to permanently fix the runway.

In the last year, Downer NZ reported revenue of $1.2 billion, of which almost $53 million was from offshore earnings. The company’s international earnings were just over $10 million in 2008.

Energy Mad is a New Zealand company that designs, manufactures and sells energy efficient lighting.

Its vision is to ‘make lives better by saving enough electricity to power Europe’. Each Energy Mad Ecobulb saves consumers up to $240 over its life and boasts a lifespan 15 times that of a traditional incandescent bulb.

The company’s founders are Chris Mardon, a former New Zealand Young Engineer of the Year, and Tom Mackenzie, an engineer with specialty experience in project management and energy.

Mardon says electricity savings improve lives through reductions of carbon dioxide, consumer electricity bills, and the need for new electricity generation.

Energy Mad employs 14 people, with a small but focused international business team of five.

Energy Mad has committed significant research resources to plotting its successful path to export.

In 2008, it built a new Ecobulb factory with Energy Mad’s joint venture partner in Fuzhou, China. The factory gives Energy Mad the capacity to grow its Ecobulb sales up to 8 million a month.

Three years ago, offshore sales accounted for just two per cent of Energy Mad’s revenue. Today, international sales are 93 percent of total revenue.

Mr Mardon says Australia, the US and Europe were also early choices as their technical, regulatory and commercial environments were similar to New Zealand’s and therefore compatible with Energy Mad’s products and services.

“Considerable analysis and thought has gone into undertaking which market segments to target, and to understanding the needs and requirements of those segments,” Mr Mardon says.

Dunedin company Seperex Nutritionals develops its bioactive research discoveries, such as peptides and lipids found in milk and seafood, into export earning food and health ingredients.

An example of a successful export product is CBP (colostrum basic peptide) which is derived from the colostrum present in a cow’s milk immediately after its calf is born. Seperex researchers, in association with laboratories at top New Zealand universities, showed CBP could increase bone density. Export sales to China, Japan and Taiwan have generated revenue in excess of $3 million since CBP was launched.

The company’s overall revenue over the past three years has exceeded $20 million, all of which was export earnings. Seperex is sending product to Australia, China, Singapore, Japan, Taiwan, Korea, Indonesia, Philippines and Hong Kong.

Seperex provides customers with innovative bioactive ingredients which are in turn added to premium consumer products. The ingredients in Seperex products are based on original research, which creates a formidable barrier to any competitor product.

Seperex maintains a fully resourced office and laboratory in the Hong Kong Science Park (the premier technology and innovation site in China and Hong Kong).

Founding Director Charles Williams says Seperex has internally funded significant scientific R&D work with universities, Crown Research Institutes and specialist laboratories in New Zealand and overseas. In addition the company has had early success with a second generation marine lipid bioactive product focused on the alleviation of pain and inflammation.

BioLex^® and BioLex-Plus^® are new and original researched novel bioactive lipid extracts manufactured from New Zealand green-lipped mussels as functional food ingredients or dietary supplements. Development was completed late in 2010 following an intensive six year R&D program involving a number of leading New Zealand contract research organisations, and export has begun.

Technopak designs, manufactures, installs and commissions hygienic bulk powder packaging equipment. In the dairy industry, it is the market leader for the accurate and reliable packaging and weighing of bulk milk powder. It also packs infant formula, pharmaceuticals and food products.

Director Henri Hermans says: “We promise accurately filled, sealed, stackable, traceable and tamperproof bags produced cost effectively”.

The company is dominant across Australasia with strong sales in the United States and a loyal customer base in Asia.

Mr Hermans says Technopak delivers competitive advantage to New Zealand’s dairy industry through improved quality, lower cost and decreased shipping volume.

“We help New Zealand exporters do more volume in less space and do things smarter, meaning greater efficiency, smaller footprints and lower energy consumption. “

“We believe that we contribute to New Zealand’s standard of living and have massively contributed to our export dairy sector, saving many millions in efficiencies.”

Technopak has a strong patent culture and research and development undertaken during the global financial crisis has won the company several large and strategic US contracts.

“The edge we have built during the recession is giving us massive traction in the recovery that started late in 2010. We now have an unprecedented level of interest not seen in the past 25 years as our global markets recover and make up for lost time,” Mr Hermans says.

In the first four weeks of the 2012 financial year, Technopak’s revenue was $5 million - equivalent to that for the whole of the 2011 financial year. In 2011, $2.4 million was earned offshore but this year international business is expected to contribute a higher percentage of the company’s revenue.

“We manufacture multi-million-dollar solutions. Our innovations continue to take us into higher-value areas.”

Westland Milk Products is the third largest processor and exporter of dairy products in New Zealand. It specialises in the sourcing and processing of more than 500 million litres of quality milk annually into a range of dairy ingredients and finished products such as milk powders, butter pats and infant milk powder.

Chief Executive Rod Quin says Westland, an 84-year-old company, has approximately 340 West Coast-based dairy farmer shareholders, more than 400 staff and manufactures and sells more than 90,000 metric tonnes of dairy products per year – 84 percent of which is sold into the international market place. It exports to over 40 countries and has more than 70 customers globally.

Mr Quin says the majority of Westland’s core business is in the production of ingredients for other businesses, particularly those making nutritional products. It also retails products such as its own Westgold Butter to markets such as Azerbaijan, Hong Kong and China.

“Our customers manufacture everything from baby formula to premium sports and health and wellness nutritionals. They include global food giants such as Danone, Nestle, and Amway.”

International revenue made up 86 percent of Westland’s sales for the 2010-2011 dairying season. In the past three years the company has generated $1.2 billion in export earnings.

Westland is an experienced collaborator, pairing up with one large European company to develop a “growing up” milk-based powder for an emerging Asian market.

The company’s research and development team works direct with clients’ engineers to create a customised end product. Its flexible manufacturing facilities offer short or long manufacturing runs to suit to customer needs.

Westland will this year expand its offerings in the nutritional ingredients market following $35 million of infrastructure investment.