Strong growth in the Middle East and emerging markets in China and India are helping a small Australian loudspeaker manufacturer re-establish its reputation as one of the leading names in cinema sound around the globe.
Krix Loudspeakers was established in 1974 in South Australia and had its systems in cinemas around the world by the year 2000.
But the GFC threatened to cripple the family-owned company, forcing it to streamline its production and business approach to remain competitive.
The company is still based in Adelaide’s southern suburbs and has about 25 staff including five Krix brothers.
“Every year since about 2015 has been the best year on record and this financial year is looking better again,” Commercial Cinema Sales Director Ashley Krix said.
The growth has been largely driven through a partnership with Dubai-based VOX Cinemas, the Middle East’s largest and fastest growing cinema chain, which has more than 300 screens in the region. VOX has cinema complexes in the UAE, Oman, Egypt, Bahrain, Lebanon and Qatar.
This has led to Krix installing systems in more than 300 cinemas in the region in the past three years with another 200 planned in the next two years.
Rising middle class in China and India
A second cinema chain in the Middle East has started using Krix systems and a distributor selling into the consumer home cinema market is also boosting sales to the region.
Ashley Krix said China was also emerging as an important market with about 30 cinemas installing the Australian sound systems in the past few years. He said the rising middle class in China and India had also been an important driver of demand for its high-end home cinema systems such as the MX-20 and MX-30.
“We’ve just done cinema shipments to Muscat in Oman so throughout the region it’s been pretty good,” he said.
“The first Krix system has just been installed in an Indian cinema and China is growing steadily for our cinema products. We have also seen very strong growth for our consumer home products in both of these markets.”
“Australia is still very strong for us as well, there’s still good cinema growth here and in-home as well.”
Exports now account for 50% of company revenue
Krix have made speakers for over 3500 cinemas in more than 30 countries worldwide and thousands more systems for private homes.
A typical cinema has about 20 speakers including three main front speakers, two sub-woofers and about 15 surround speakers along the side walls and back of the cinema.
Exports have grown to now account for about half of Krix’s revenue, which is also split fairly evenly between cinema and in-home products.
Electronic engineer Scott Krix started the business as a consumer hi-fi speaker manufacturer out of his garage in 1974 and soon opened a small shop in Adelaide.
But the big break came in 1980 when the Capri Cinema down the road in Goodwood became the first theatre to have a Krix system installed and within five years they were providing sound in cinemas all around Australia.
GFC almost crippled business
Export took off in the 1990s but the GFC, which led to soft demand and a high Australian dollar, almost crippled the business.
“The Australian Dollar went above parity so not only was the world in a recession, we were also struggling to remain competitive so we had to find more efficient ways of manufacturing our products ” Ashley Krix said.
“So we developed new software programs for our CNC machines to make the products more efficiently, better, stronger, we improved all sorts of things and then we started pushing ourselves harder to develop new markets and it’s all now paying off.
“In a way we’re glad we went through it – we don’t want to go through it again – because we learnt so much and if we didn’t go through it we may not have made some of the changes to make us better and more efficient.”
Ashley Krix said while it was difficult to compete purely on price against multi-nationals with products mass-produced in low labour cost countries, Krix had developed a reputation for reliability, acoustic performance, build quality and service.
Keeping customers happy is very important
“We have to compete on the world stage and we can manufacture competitively just through the way we’ve managed to engineer our products without them being built down to a price,” he said.
“We’re a first generation family-owned business, Krix is our family name, so it’s very important to us that the customer is happy with what we do.
“I do remember when videos came out and then DVDs we all thought people would stop going to the cinema but I think people still want to go out and there’s nothing quite like seeing it in the cinema but the sound quality and picture quality has got to be there.”
“Commercial cinemas are a tough business and it can be very price driven but some of them will look further than that and they’ll see us as more cost effective in the long-run – we have product still in operation in Dubai that was installed in 1999 and when they see that and they hear it they say ‘wow, this is still good after 20 years.”
Andrew Spence is a senior writer for The Lead, South Australia