NZ company sparks up growth plans through ICN

When Whangarei-based electrical and instrumentation engineering and contracting business McKay in 2003 embarked on a high growth path it decided to use a number of New Zealand Trade and Enterprise (NZTE) programmes to help it on its way.The president of the 70-plus year old company, Lindsay Faithfull, says McKay’s current strategic plan has “significant growth targets in it and we looked at where NZTE could help”.One of those places was the Industry Capability Network (ICN) which works with New Zealand and Australian businesses and government agencies to identify major project opportunities that can be fulfilled locally.In McKays case this was the New Zealand Ministry of Defences Project Protector to build seven new ships for the Royal New Zealand Navy. McKay designed, built, installed and supplied switchgear and electrical distribution systems for the two offshore and four inshore patrol vessels. This success provided a platform for McKay to launch into new markets, including the marine sector and in particular superyachts. “When you try to reach into other markets, extending yourself more, your company becomes more exposed,” says Mr Faithfull. “So you need to get professional help and we saw NZTE as part of that.” While New Zealand will remain an extremely important market for McKay, under its growth plan the company wants to have a worldwide profile – and sales - in the marine industry. Its other experience is in the petrochemical, dairy, power generation and aviation industries. “Our ratio of exports to onshore work goes up and down,” says Mr Faithfull. “Exports have ranged between 10 and 50 percent of turnover.” Under its export-driven growth plans McKay wants to see exports running at 30-40 percent. “Our major growth will come out of exports.” Mr Faithfull sees McKay’s focus on superyachts as the powerhouse of this growth and a natural fit for the company. “This part of Northland has a long history of marine work. It also utilises a lot of the skills we already have.”

Growth boost

The Project Protector contract helped McKay grow both in size and capability, providing a foundation for the company’s expansion offshore. From the start of Project Protector in 2002, ICN and McKay worked closely, with ICN backing McKay’s case to the prime contractor, Tenix Marine. Mr Faithfull says ICN was a good conduit for information to and from Tenix Marine during these early stages and was a key player in helping McKay get the contract. The Tenix Marine contract paid off in more way than one for McKay. It allowed the company to develop new skills and gave it a track record and credibility sought by world markets. “It was a large piece of work which we can use as a reference for other work.”

Richard Harrison, ICN Project Procurement Advisor, says McKay’s work with ICN and NZTE is an excellent example of a company realising its potential through access to local opportunities that have grown their scale and capability.

Growth proofing

Mr Faithfull says McKay, while ambitious, wanted to ensure that any growth was solid and sustainable. “We needed to prepare the company for being larger. ”In 2004 McKay applied to NZTE for co-funding, through the Growth Services Fund, for internal programmes (including training and IT) to growth proof the company’s infrastructure. The Growth Services Fund offers support for high growth potential firms to purchase external advice, expertise and market development services.

Establishing an international profile

Profile wise, McKay Electrical is well known in Northland, has a low profile elsewhere in New Zealand, while internationally has virtually no recognition. To be successful with its marine plans, McKay had to turn this around. It used a Market Development grant to target specialist conferences and seminars to learn about the industry and network with its key players.

Market Development co-funding can be used to help businesses enter a new export market or undertake new activity in an existing export market.

US Beachhead

McKay joined the US Beachhead programme in 2007 to help find a US-based mentor and develop a presence in the US. The company has clients on the eastern seaboard.

The Beachheads Programme is designed to give high-growth-potential companies faster access to better international networks.It is a partnership between NZTE and successful executives who are willing to share their experience, skills and business networks to mentor New Zealand businesses, accelerate their market entry and growth in key export markets.

Being design led

Mr Faithfull says McKay was looking for growth in markets where it had a competitive advantage, but realised its traditional strengths might not be enough, particularly in international markets. “We’re light on our feet, responsive to customer needs, very technically able and flexible. ”That can only take you so far as that’s what pretty standard.” You need some more substantial competitive advantage. That recognition led us to join the Better by Design programme in 2007. “There’s a whole philosophy around being design led that we liked.”

Better by Design aims to help New Zealand exporters differentiate themselves in global markets by producing superbly designed products and services. It includes education programmes and practical support and assistance to help companies integrate design more effectively into their business.

McKay designed, built, installed and supplied switchgear and electrical distribution systems for this offshore patrol vessel as part of a package of work it did for the New Zealand Ministry of Defences Project Protector. McKay chief executive Lindsay Faithfull, left, is pictured with the ICN’s Richard Harrison and NZTE’s Australia Trade Commissioner Tim Green at the launch of the vessel in Melbourne in December 2006.