Surviving and Thriving: Autech

Surviving and Thriving: Autech article image

While Australia escaped the worst of the global financial crisis, there's no doubt that a number of our destination markets were badly affected by the downturn. Fortunately, there were a number of exportersthat not only survived, but also thrived in this period.

Colour by numbers

Five-time winners of the Tasmanian Export Awards, part of the Australian Export Awards, Launceston-based design house Autech have become world leaders in software development based around colour and its use in different industries, including fashion, cosmetics, building products, paint supplies and interior design. They have gone on to develop smartphone applications, and are developing a product for the much-anticipated Apple iPad. Managing director Rex Hesline founded Autech in 1993, and in 1997 he offered chief executive officer Darren Alexander a partnership. When Hesline began marketing his first software system, it cost a cool $35,000. Alexander believes that in today’s economy it would be the equivalent of $100,000-a lot to pay for a single application. When he came on board, he let Hesline know he had different ideas very quickly, and has since gone on to restructure the product to have broader commercial appeal. "I didn’t think he had the right business model," Alexander says. "Suppliers and retailers were not going to pay such a huge amount of money. I said the only way it would work is if we developed the application for the [cheaper] CD-ROM format. We made it commercial so that mums and dads would buy it." Alexander took this new product to the Color Guild trade show in the USA’s most well known tropical destination, Hawaii, but didn’t spend his time sipping pina coladas. Instead, he spent the company’s last $30,000 on a presentation that he delivered to representatives from 500 paint companies around the world. He walked away with $1.5 million in sales: "And that’s when the Australian dollar was worth US49 cents!" he quips. The 40-odd clients he picked up that day have become regular customers; he has since worked hard to build trust and gain credibility for the company by ensuring products were delivered on time and on budget. The next phase was about ensuring repeat business, he says. "We’d visit them every year and look at other areas of their business where we felt we could add value. If you do the right thing, customers will continue to spend with you." When the economy first began to reel from the downturn, he believes businesses began to panic and stopped spending money on marketing: the complete opposite action that should be undertaken, according to Alexander. "A downturn is the most important time that brands need to be in front of the consumer’s face," he says. Instead, they cut a nominal amount from their annual $250,000 R&D budget and used it to improve their cash flow so they could offer customers flexible payment arrangements, which was a strategy that proved to be a great success in keeping business steady, and even growing. "We increased our price but allowed [the clients] to pay it off," he explains. "We knew they wanted to do the project but, because our price was higher than that of other people’s, we said our show of commitment to them was to offer interest-free payment arrangements. When I increased the price, though, I inbuilt a percentage rate so we wouldn’t lose money. In the end, we found we actually had more people wanting to spend." Autech can now count Jotun, one of the top 10 paint suppliers in the world, and the Color Society of the United States, who commissioned them to develop an e-learning application for the make-up artists at L’Oreal, as just a couple of their high-profile clients. The 2008/09 financial year saw the company experience a 451 percent jump in profits from the previous year. Alexander notes: "Just because we come from a small place, we don’t think small. The technology we’ve developed is state-of-the-art, and we’ve been a world leader for a number of years." To what does he attribute Autech’s unusually successful expansion in the face of such a dismal economy? He is quick to proclaim that a lot of the success is down to his team. "At the end of the day, a company is only as good as its staff. I’m lucky that I have some very talented young people that all have the same agenda I do," he says.


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