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Methven’s Luxury Turnaround Wins Award

Friday, September 19, 2008

Methven’s Luxury Turnaround Wins Design In Business Award 2008

Luxury shower and tapware manufacturer, Methven Limited, is the major winner of the Design in Business Award 2008, organised by the Designers Institute of New Zealand in association with Better by Design.

The Design in Business Awards, which were presented in Auckland last night (Thursday, September 18), recognise and celebrate New Zealand companies who have strategically used design to achieve commercial success and business growth.

Highly Commended Awards were made to AuCom, of Christchurch who manufacture and export soft starters for electric motors, and phil&teds, Wellington based designers and manufacturers of inline buggies and innovative nursery equipment.

Methven’s recent rapid growth and international success is an inspiring turnaround story. Until ten years ago, the company, which began in Dunedin in 1886, was a traditional tap and bathroom valving products company. However, in 1998 the company decided to change its strategy to concentrate on research and development with the aim of setting up a world class business with New Zealand as its design and engineering hub.

The company, still with headquarters in New Zealand but also bases in Australia and the UK, is now a world leading designer of luxurious proprietary water and energy efficient showerware, tapware, and valving products.

Design strategist and award judge David Walker, said he and fellow judges (Derek Lockwood, Worldwide Director of Design, Saatchi & Saatchi and Nevil Gibson, editor in chief of National Business Review) were looking for a company where design was built into the structure of the business and “infused in every outcome, act and operation.”

The judges said that as well as a track record of growth and exports, Methven was impressive in its communication skills, its brand story and the quality and sophistication of its products. So were many other entrants, but there were extra dimensions which set Methven apart.

Said Walker: “Firstly, Methven has a commitment to research and development as the platform for good design and success. Many companies do have good design, coherent stories and respectable business success. Fewer have a strong commitment to research and development.

“Secondly, Methven has a commitment to sustainable targets. This is especially crucial in products that rely on water supply. True, there are some gestures by NZ companies towards sustainability, but they are often superficial. Here (with Methven) we have the real thing”.

While Methven had already developed core strategies in 1998 for long-term growth, the turning point came in 2005, after the company underwent a Better by Design audit, now called the Design 360 programme.

The design audit recommended that if Methven was to grow its business and product offerings it needed a global design head to lead the way; a stronger brand; and more marketing expertise to launch the company’s products into the highly competitive global marketplace. Methven soon appointed a Design Director, Kent Sneddon – the company now has a design team of 25, compared with two in 1992.

The Methven team then worked to identify gaps so they could develop products for specific markets and set up a “wet lab” so that all products could be tested from a human perspective.

This research led to the development of Satinjet shower technology in 2004, with its water saving capabilities (it uses less than half the water of a conventional showerhead) which made it ideal for the Australian market, where it is now the leading shower brand. Since 2006, the company has developed Maia, the world’s first beauty shower with a Vitamin B filter to eliminate chlorine; the Kiri showerhead, an ultra low flow shower aimed at the hotel market; Kiri tapware, an upmarket range to compete with Italian and German manufacturers; the Tahi, a high end Satinjet shower system; and infusions, therapeutic and aromatic formulae delivered through the shower system.

These proprietary technologies have led to Methven winning a number of design awards (including a GOOD DESIGN award for product distinction awarded by Chicago’s Athenaeum Museum in 2005).

Forty per cent of the company’s sales are now offshore and last year the company completed acquisition of UK tapware firm, Deva. In its financial year until March 2008, Methven reported an after tax profit of $9.8 million, up 37 per cent from 2007. Since it listed on the NZX in 2004 the company has had an unbroken record of profit growth.

Highly commended company AuCom is also a true Kiwi technology turnaround story. Founded in 1981, Christchurch based AuCom makes soft starters which reduce the maintenance for heavy machinery, particularly in the irrigation, marine and forestry areas.

AuCom manufactures the soft starters in Christchurch, which are sold through distributors in more than 70 countries. Sales have always been solid, as 50 per cent of the world’s electricity is used by electron motors, which require soft starters.

However, by 2005 the company was at a crossroads. Their technology was sharp, but their product design, service delivery and marketing collateral were anything but. As international companies began to develop copy cat products the company realised style and design were important, particularly if it was to continue to compete with international giants such as Siemens & Schneider, ABB and Rockwell.

Even though the company engineers were highly sceptical, the management team decided to invest in attending a Better by Design conference. They were so impressed that afterwards they decided to “give this thing called design a go” by undergoing a Better by Design 360 programme.

Since then the company hasn’t looked back. It has appointed a Director of Design, Craig Tufnell, and design has been introduced at every level of the company, and included a rebranding project and ongoing “usability” studies involving designers, engineers and customers.

Since 2005, sales have increased nearly 60 per cent. The company has had an international partnership with Danish Company, Danfoss, since 2001, but brand partners now include Toshiba (Japan) and Electronica Santerno (Italy). At the end of 2008, AuCom will start manufacturing a new product range for Danfoss, as well as product ranges for a new partner CTLS (Emerson).

The new products for CTLS will be successor products for existing soft starters currently being manufactured and sold globally for CTLS. CTLS have chosen to retire their own design in favour of products made by AuCom.

Also highly commended were phil&teds, another graduate of the Better by Design Design 360 programme. While phil&teds already had an innovative product - the market leading inline buggy – and a successful company, they had ambitions of expanding their business.

The Design 360 assessment challenged the company’s thinking and showed if they wanted to achieve global success, they needed to place more emphasis on using design throughout their business.

So phil&teds initiated a two part strategy: the first involving a complete rebranding, and the second, a major expansion of its industrial design capabilities.

Since adopting their new positioning based around the premise that nursery products should be aimed at helping parents manage their day, live their chosen lifestyle and retain their sense of self – even with kids in tow – the company’s overseas sales have increased tenfold.

The next step, which came a year later in 2006, involved expanding its design team to eight, led by Phil Brace, industrial design veteran and co-designer of the legendary Fisher & Paykel dishdrawer.

Differentiated products, such as their inline buggies which ‘adapt’ to take two kids, are key to phil&teds success. As well as inline buggies, the company now offers travel cots (including one which is lighter than a baby), car seats and high chairs.

phil&teds has experienced massive growth since embracing design. They now do business in over 45 countries with a presence in more than 2,000 retail outlets. Exports make up 95 per cent of their business and full time employees have grown from 12 to 47 in just three years.

Eighty per cent of sales come from products they have created within the past three years. In 2007 phil&teds launched ten new products, and they intend to launch the same amount this year.

The company is making international ripples, with UK’s top nursery brand, Mothercare International, naming phil&teds as their first ‘brand of choice’, reporting that of the key brands introduced last year, phil&teds outperformed all of them in terms of sales and profits.

Other finalists in this year’s award were Amie Design Group, the makers of merino sleepwear for infants; Xero, an online accounting programme for small businesses; Sonar6, an online graphic based HR management tool; and Winegrowers of Ara, a Marlborough winery designed from a blank canvas of 1600 vacant hectares to (one day) become a global wine business.

This year, for the first time, a Design in Business Outstanding Individual Award was presented to Rick Wells, chairman of Formway Furniture, for his vision, leadership contribution and achievement in the field of design in business in New Zealand. He and a partner bought Formway Furniture as a small, locally focussed company in 1981 and turned it into a global exporting business with more than 200 staff by making design central to their business approach.

Previous winners of the Design in Business Award include Formway Furniture; Icebreaker; Furnware; OBO, and 2006 winners, Mokum Textiles, a family based company that designs and exports its own fabrics.

Cathy Veninga, Chief Executive Officer of the Designers Institute of New Zealand, says that the Institute was delighted with the standard and variety of entrants in this year’s Design in Business Awards.

“It shows that more and more companies are adopting a design led approach to develop more internationally competitive products. The Designers Institute believe this approach has never been more important in an increasingly competitive global marketplace.

“We believe that businesses who are using design to develop more internationally competitive products are better able to adapt to pressure and more resilient and in the end, more successful.”
Judith Thompson, Director of Better by Design, said that more New Zealand export businesses were recognising robust design-led processes as the key to selling products and services for a premium to global markets.

“Growth focused companies know that ambitious targets cannot be achieved through a business as usual approach. Design is the essential ingredient in the development of breakthrough products and services and achieving long term success. We are increasingly seeing companies who are producing better results and greater global impact because they have applied design principles across their business. It's time to recognise and celebrate this success."

ENDS

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