Skellerup Industries Ltd

An iconic Kiwi brand best known with the New Zealand public for its gumboots, Skellerup Industries Ltd is also a sophisticated international business, manufacturing and marketing technically superior rubber and polymer products, with total sales of $122 million in 2005.

Established in Christchurch almost 100 years ago, Skellerup has developed a vast portfolio of rubber products and vacuum pumps which are used in a growing range of applications in industries throughout the world, including agricultural, mining, industrial and liquid waste. Products include rubber liners and tubing for milking machines, flashing for sealing pipes on steel roofs, closed cell foam for ski boots and waterski bindings, gumboots, and vacuum pumps.

Chief Operating Officer Mike McKessar says following its public listing in 2002, Skellerup embarked on an ambitious export growth strategy which has resulted in a 50 per cent increase in international sales in the two years to 2005, to $53 million.

“Our goal is to increase international sales to 60 per cent of revenue in the next 12-18 months, and that could well expand to upward of 80 per cent in the next five years when we’d like to be a $500 million sales company.”

Skellerup’s export strategy is based on organic growth and the acquisition of businesses or products that are closely aligned to its existing core businesses.

The organic growth strategy includes broadening Skellerup’s brand base by investing in strong branded products; using its technical intellectual property in new markets and new niche segments; and encouraging new and innovative products and formulations. Its Woolston operation recently established a stand-alone R&D department to drive innovation. One product nearing completion is a firemen’s boot that meets the joint requirements of a number of countries’ specifications – this market alone is worth around $100 million annually, says Mr McKessar.
 
“Our knowledge base has also expanded as a result of integrating staff from companies we’ve acquired. Having world class chemists, engineers and production staff who have extensive knowledge of our customers and the markets they operate in is an important competitive advantage.”

Mr McKessar says a Skellerup product might only be a small part of a customer’s whole process, but it’s typically critical to its quality and performance. And he says Skellerup’s technical expertise and manufacturing flexibility mean it’s able to respond quickly to customers’ requirements.

Last year Skellerup set up a new manufacturing facility in China which has enabled it to remain competitive in the manufacture of various products, including gumboots and vacuum pumps. The low cost manufacturing advantage is also helping the company develop significant new business in international markets where it’s struggled to compete in the past. It’s also actively seeking out contract manufacturing opportunities for the plant globally.

Skellerup’s target export markets are Australia, the USA, UK/Europe and Asia.

“Our acquisition of Australian company Deks in 2003 makes us one of the largest producers of roof flashings in the world,” says Mr McKessar. “We’ve expanded this business into key European markets with the establishment of a marketing and distribution operation in the UK.

“The buoyant mining resources market in Australia has also driven up demand for our rubber components, making this one of our fastest growing businesses and one where we are outperforming Australian competitors.”

In the USA, Skellerup is an industry leader for quality in dairy rubberware and a preferred supplier of vacuum pumps to key distributors in the US dairy industry. It’s also a major supplier of vacuum pumps to the US mobile liquid waste removal industry – demand for this product surged in the aftermath of Hurricane Katrina.

New initiatives in the UK/Europe have seen export sales to the region increase by 12 per cent in 2005, which Mr McKessar says firmly cements Skellerup as the third largest manufacturer of dairy rubberware in the world.

He says Skellerup has identified what it considers the main growth opportunities are within its business portfolio and will allocate its resources to realise those. He says researching markets well will be critical to its success and is something Skellerup has got much better at.

“My advice to New Zealand companies is to research export markets thoroughly to understand what the key drivers are before you start spending thousand of dollars visiting a market. Spending $5000-$10,000 on a research project is far more effective than rattling round in a new market seeing a couple of contacts.

“Also determine what the differentiating factors are that you will take to that market – typically in the USA and Europe you have to have something different.”

It’s been an exciting two years for Skellerup, with strong growth and a string of successful acquisitions. Mr McKessar says the company is also learning how to get the most out of its business processes and maximise its scale.

“What we’re seeing now is the platform for growth, but if we’re going to be a $500 million company, we’ll be ramping it up even more from hereon in."

Image: Mike McKessar, Chief Operating Officer, Skellerup Industries Limited.

Contact:
Mike McKessar
Chief Operating Officer
Phone:   +64 3 389 9189
Email:     mckessarm@skellerup.co.nz
Website: www.skellerup.co.nz