Made in Australia

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-By Claire Suttles

The Macnaught name – and the reliability of its goods – can be recognised across the globe by the iconic blue colour given to all its products. Perhaps best known for its innovative minilube greasing system, the Sydney based, family owned company designs and manufactures a full range of equipment for the fluid transfer and lubrication industries. Products include flow meters, hose reels, grease pumps and guns, oil pumps and guns, and fuel pumps. The equipment serves the industrial, automotive, aviation, mining, agricultural, and marine industries.

Colin Macnaught launched the company in 1948. “There were some gaps in the market and lots of opportunities,” his son and Executive Chairman Peter Macnaught says. “I think it was an ideal time for manufacturers to start.” Macnaught partnered with Castrol almost immediately, and the oil and lubrication supply giant quickly became the fledging company’s sole distributor. “It was one of those opportunities that were probably abundant after the World War,” Peter remarks. “He landed on his feet.”

By the early 1950’s, Colin Macnaught took his wares overseas. “In those days the Australian Trade Commissioners would do the hard work of finding distributors for you,” Peter Macnaught remembers. “Then they would actually meet you at the airport, wine and dine you, and take you to meet distributors. So once again, he landed on his feet.” The Commissioners helped open markets, but there was another critical factor in the company’s initial exporting success to South Africa, Canada, Japan and France. “My dad designed unique product,” Peter explains. “And to get into markets like that you had to have unique product.” Today, Macnaught exports to more than 60 countries worldwide and is the only company in Australia to manufacture a full range of lubrication equipment.

The minilube – known and loved by farmers around the globe – is the company’s classic product and breakout exporting success. Colin Macnaught focused on agriculture out of “a passion for the land and the Outback,” and developed the flagship product in order to ease the burden of fieldwork. “He had an instinct for understanding the needs of the customer,” Peter explains. The senior Macnaught realised that agricultural workers couldn’t afford the time to take their farming equipment back to the shed for lubrication during the harvest. He also found that the current grease guns didn’t hold enough grease. He solved the problem by putting a 5 kg bucket under a fully portable grease gun he dubbed the minilube. “That idea, the minilube, is brilliant,” Peter says. “You could carry it out into the field and grease the tractors in the field without any heavy duty equipment. And this portable greasing system, when he took it overseas, particularly in Japan and France, it had wow factor.” Over fifty years later, the minilube remains a staple for farmers everywhere.

Another breakthrough product followed close on the heels of the minilube’s success. “My dad had a brilliant design engineer who designed a grease pump made of plastics that require no lubrication,” Peter remembers. “You’ve got all these moving parts inside – and anything mechanical with moving parts needs lubrication – and they developed this [nonlubricated] P3 grease pump. That was breakthrough. No one’s actually even copied it today.” In recent years, the P3 pump has become a must have for Chinese manufacturers. “From their point of view, [these pumps] are the only ones reliable enough to run 24/7,” Peter reports.

Manufacturing industrial flow meters is another key area of the business. These instruments are oval gear technology used to measure the flow rate of liquids. Other technologies can be quite basic, such as a paddle wheel that spins faster or slower depending on the volume of passing liquid. Many industrial needs, however, call for a more precise measuring system. For example, “if you’ve got a corrosive chemical flowing into a process and it needs to be precisely batched, you would measure that with our [more advanced] oval gear meter,” Peter explains. This measuring system works through positive displacement. “You fill a bucket up to the top. You know exactly how much is in that, so you can then tip it out and you’ve got one. You go back and fill that bucket up precisely to the top, tip it out, and you’ve got two.” Oval gears rotate sending pulses to a computer, grabbing buckets and dropping them in carefully measured volumes. A different type of technology comes into play when dealing with solids within fluids. In this case, magnetic fields may be utilised rather than meshing gears to prevent the device from jamming.

Overall, Macnaught flow meters are made for heavy industry purposes and are fashioned out of aluminium, stainless steel, and special corrosive resistant resins. “It is a fantastic, fantastic business to be in,” Peter reports. “The market is such that… if you’ve got a good product and you’ve got a good reputation [the customer] will always buy [your product] because it is part of a system. And you don’t want to risk your million dollar system falling over because of a two thousand dollar flow meter… You will pay the dollar for it.” In fact, the company believes that this area of the business will double within the next two to three years. Furthermore, focusing on two very different types of products – lubrication equipment and industrial flow meters – stabilises the business. Targeting diverse industries in both domestic and foreign markets spreads the risk and ensures that the company is always up in at least one area.

Peter Macnaught says that much of the company’s success comes from having “top quality people” with a commitment to offering the best product possible. “We are a reputation player,” he explains. In other words, the team doesn’t try to grab a customer’s attention through fancy gimmicks, by following fads, or by offering cheaper, mass produced product. Instead, with outstanding customer support they let the quality and integrity of the product offering speak for itself.

Peter believes that the company’s manufacturing capability is the key to offering superior product and long term spare parts availability. “We have control over our quality and spares… whereas the importer doesn’t,” he explains. Manufacturing their own product also means that the team can “respond to the customer through either modification of products or special order. We can just call down to the factory, ‘run some in overtime tonight because someone needs this tomorrow.’”

The company also has key capabilities that go beyond manufacturing. “We are stand-alone here,” Peter says. In-house support is provided by four technical support staff, three product managers and nine engineers across five disciplines, including mechatronics, mechanical, robotics, production, and design. “Our technical backup and support in Australia is massive compared to our competitors. They are just importers.”

In 2006, after nearly six decades with Castrol as its exclusive Australian distributor, Macnaught started going directly to resellers. Before the switch, “all we had to do was ship to Castrol,” Peter reports. “They had a Rolls Royce marketing machine.” But, after BP bought out Castrol in 2000, “they couldn’t see themselves as an equipment distributor as well as being a fuel and oil distributor.” Macnaught has restructured as a result, and the team is thrilled with the positive results. “It [created] such a change in our business,” Peter reports. “We deployed our own sales force and customer service. It took the filter off… from between us and our customer. So now, the customer drives Macnaught.”

Understanding more clearly what the customer really wants has been huge and the company is already reshaping policy in response to market demands. “For example,” Peter says, “it has enabled us to move toward a full replacement warranty policy because that’s what our customer wants.”

Through insight and careful planning, Macnaught was able to tread carefully through the GFC and actually came out ahead. “A philosophy we’ve had at Macnaught is to invest in recession,” Peter explains. Armed with a finance background – and a gut feeling – he predicted the financial melt-down and was prepared when it hit. “We did a major investment,” he says. The team brought outside processes in-house, particularly machining. “We invested $5 million in CNC machines at a time when the [sellers] were on their knees begging me to buy machines from them,” Peter says. “So you can imagine the terms I was getting.” Loans were interest free, and the machines have already paid for themselves. “And of course,” he adds, “The critical thing is that labour became available. And to get the quality labour in Australia prior to that was very difficult.” The company was able to recruit top notch machinists from industries suffering heavy lay-offs. “We just went and grabbed them,” he recalls. “What an opportunity.”

Peter Macnaught believes that his company will remain ahead by continuing to embrace new technology. “The future for us is high tech lean,” he says. Technology reduces overhead, he insists, “and that’s where manufacturers are getting dogged – with their overhead burden.” His vision for the future centres on “some core competitive strategy that we’re doing on the overhead that’s absolutely breakthrough.” But, he is careful not to give away too many details. “I have a major competitor who just lives and breathes to understand our strategy,” he laughs. There is one ongoing Macnaught strategy that is no secret, however. The company will continue producing durable and reliable product in the blue colour that has been recognised – and trusted – for over sixty years.

Making Sense of Management

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?

October 19, 2018, 6:27 AM AEDT