If in doubt, travel. It's a great mantra for a company that has built an export business putting LCD display systems into planes. For Will Hutchinson, managing director of Thomas Electronics of Australia, it’s the best advice he has to offer potential exporters. "If a customer either wants or needs to see you, just hop on a plane. You haven’t a choice. You have to be there. Don’t think about not travelling." Wise words from a man who has spent 20 years putting Australian avionics products on the instrument panels of German, American and British planes. Thomas Electronics has been in the display business in Australia for more than half a century, doing everything from repairing old CRT televisions to developing complex display systems for defence vessels on land, in the sky and underwater. Now working principally in aerospace and defence electronics, the Australian company is punching well above its weight as an SME in a global market dominated by multinationals. Hutchinson has led Thomas Electronics from an annual turnover of $2.5 million in 2000 to well over $25 million in 2009, and in recognition of his export success, was named an Export Hero by the Australian Institute of Export this year. The affable director shrugs off the justifiers for this accolade. "Perhaps it was because I’ve got a nice smile?" he laughs. Scratch the surface, though, and you reveal a man who is terribly proud of his business. "People look at us and say ‘How dare a little Australian SME in Bankstown be successful in such a big industry?’ It’s unusual for an Australian SME to achieve export success in such a high tech area, but over ten years we’ve proven that we can." The journey from respected Australian avionics developer to Export Hero, however, has been long and not always financially fruitful. Hutchinson, along with his "great team" has combined business savvy with shrewd investment in new technologies and a fair helping of persistence to succeed. When, in the 1990s, it became obvious that the days of CRT were numbered, Thomas Electronics invested significant money into building up knowledge and capability in the LCD space. Right now, Thomas Electronics still does 75 percent of its work with CRTs, but over time Hutchinson expects the LCD part of the business will grow. "The investment we made early on was a leap of faith and certainly we haven’t made much money out of it so far. Just this year we won a good contract with Sony, our volumes have increased significantly and there’s a very good chance that we’ll be making a reasonable profit out of that business."
The business of jetsetting
Having saturated the local Australian market, the decision to export came naturally. "We’d been doing pretty good business with Ansett and with Qantas and we recognised that because they operate the same type of aircraft as overseas operators, we could offer the same services to overseas carriers. It was the only way we could expand our market." The first major challenge was gaining international certifications, as the Australian Civil Aviation Safety Authority certification is not recognised outside of Australia and New Zealand. Hutchinson began by approaching the United States Federal Aviation Administration (FAA) in 1995. "It took a lot of persistence. If we’d been situated in the US it would have been a much more straightforward exercise. But I guess as a foreign company they don’t make it easy for you," he says. It took over four years to achieve the FAA certification, but after a lot of trips to San Francisco, Thomas Electronics had its certification and a contract to export for Delta Airlines. Now, Thomas Electronics has five international certifications and three more pending. Overcoming regulatory requirements has been a major barrier to export for Hutchinson, but patience has served Thomas Electronics well. More than two-thirds of its business is now export oriented, and with five representatives on the ground in North America, Central America, the UK, Singapore and Tokyo, the business will only expand its share of the export market.
Having representatives in export destinations has proved invaluable; 10 years of negotiation with British Airways finally came to a deal in 2004, the year Thomas Electronics put a representative on the ground in the United Kingdom. Hutchinson advises other companies planning to export to get local representation. "Having reps based in local time zone is critical. If you don’t have that, you’re just wasting your time. For Australian companies to try to do it from here without any feet on the ground you’re never going to succeed." Thomas Electronics’ five representatives service Canada, the USA, Central and South America, the United Kingdom, Europe, the Middle East, Africa, South East Asia and North Asia. Each new contract in turn advertised the Thomas name. "The more reference sites we had, the more comfortable other major airlines felt about using us," Hutchinson says. Two other major challenges plagued the company’s plans for export. "The tyranny of distance, the perception that Australia is just miles from anywhere," Hutchinson says. "Our other major challenge was the credibility factor. We’re this very small company dealing in an industry where most of the suppliers are multibillion-dollar companies, and we were turning over $2 million a year. We were minute." For major airlines that hadn’t seen their work, Hutchinson understood the risk factor was high. So Thomas Electronics exhibits at every major trade show and talks to airlines it hasn’t yet reached. Lufthansa and Delta Air Lines were Hutchinson’s first overseas customers, and it was their "can-do" attitude that first broke Thomas Electronics into the overseas avionic market: "They decided to give us a go and they’re still very good customers now."
"The period from 2000 through to 2007 was very exciting. The export part of our business was growing almost exponentially," says Hutchinson. Success breeds success, and the small Australian company now have 50 international customers. Now competing with the major players in the avionics export market, it is easy to lose sight of its status as an SME in Australia. But for the director, "every new customer that we win is a triumph". The nomination as an Export Hero is the latest in a string of awards for the Australian business, and he sees the value of such awards in the opportunity to celebrate with staff and reward their hard work: "As a small business it certainly enhances our profile, and that’s something that we’re always trying to do." The risks of exporting are not lost on the successful director. "It is very difficult to protect yourself against the volatility of the Australian dollar. Over the last year we have been severely impacted by the increase in the value of the Aussie dollar and I can tell you, from an exporter’s perspective, it’s horrible when the Aussie dollar is strong." But Global Financial Crises or economic boom, nothing will stop the ambitious company. Hutchinson says Thomas Electronics has plans to grow its business to an annual turnover of $60 million in the next five years. "We’ve invested significantly in the expansion of our engineering team, which gives us more capability. We’re looking forward to taking bigger subcontracting roles in defence projects working with primes [major defence contractors]. Certainly in the specialist area we’ve got more technical horsepower than anyone else in Australia." Thomas Electronics will also move from its current headquarters in Milperra to a larger, purpose built facility nearby. Of his plans for the future, Hutchinson is adamant that good product and ambitious marketing will continue to place Thomas Electronics as a leader in the Australian avionics sector, both here and for export purposes. "We’re setting ourselves up as a centre of excellence for display technology. We certainly see the export market to be a significant part of our business as we move forward."