28/04/2011 - 00:00

Designtec stands up to import threat

28/04/2011 - 00:00

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ALMOST two decades ago, husband-and-wife team Sten and Rita Campbell bought Designtec, a manufacturer and wholesaler of free-standing office furniture.

ALMOST two decades ago, husband-and-wife team Sten and Rita Campbell bought Designtec, a manufacturer and wholesaler of free-standing office furniture.

The Campbells had never previously owned a business and had no experience in the furniture manufacturing industry, but have since grown the company from two to 33 staff, moved into a $10 million Wangara facility and have achieved an eight-fold increase in turnover since 1999.

“We basically had no money, we were building a house and Rita was pregnant with our second child; it seemed like the perfect time to buy a business,” Mr Campbell joked.

Mr Campbell, with a finance background, and his wife, who had a career in marketing, wanted to work for themselves and saw Designtec as a good investment opportunity.

“We opened the paper one Saturday morning and saw a little advertisement that said ‘office furniture manufacturing business for sale’,” Mr Campbell said.

“The owner of Designtec wasn’t a business man, but the figures showed he was still making money. We had no real knowledge of how we were going to run the business, but we knew the business had a good client list and relationships that could be developed further.”

The Campbells decided early on that they had to invest in machinery to keep up with the needs of Designtec’s customers, which included stationary company Corporate Express.

Mr Campbell said that, from 1993 to 2001, the business experienced its greatest growth, with turnover increasing by 30 per cent every year.

“Some of our customers were growing quickly, so to keep their business we too had to grow quickly. You need to be pretty gutsy to go out and spend a few million dollars on machinery just so you can keep pace,” Mr Campbell told WA Business News.

Building the machinery base meant the business could produce a quality product more efficiently, which enabled the Campbells to keep competitors largely out of their distribution network.

In addition to technology efficiencies, Mrs Campbell attributed Designtec’s growth to ramped-up communication with distributors and its ‘wholesale’ business model.

“A lot of manufacturers were manufacturing but also competing against the retailers/distributors. We have always been wholesale only, so when our distributors got a quote from us they knew that we weren’t undermining them at any time,” she said.

Mr Campbell said while Designtec had a number of smaller cabinet-making competitors, overseas imports had been the company’s greatest competition, with more manufacturers electing to sell their imports wholesale, instead of making products locally.

“Probably five or six years ago manufacturers started to bring in imports from China because they didn’t want to spend the capital on machinery to try to compete with the growing retailers,” he said.

“It has become worse with the strength of the dollar and we’ve probably lost 20 per cent of our market to imports.”

To compete with imported products, Mrs Campbell said the company had to promote itself as high-quality and environmentally friendly.

“There are no checks and balances with this imported furniture and some of the Chinese product has high formaldehyde levels. We recycle and are very conscious about putting out a carbon-neutral product,” she said.

While Designtec can’t get down to the price of imports, it competes by having a 10-year warranty, by manufacturing and employing locally, and by being green, according to Mr Campbell.

The company started to distribute its products to other states in January, with a focus on a new ‘flat pack’ style of office furniture.

“We will continue to service our local market but are looking to explore new territories, our flat pack product means we are not limited to a WA market,” Mrs Campbell said.

However, she said their vision for the future of Designtec involved continuing to develop relationships with suppliers and distributors and promoting locally manufactured products.

“We hope to keep on a steady growth, continue to develop relationships with our clients, expand our product line and ‘kick arse’ on the imports,” Mrs Campbell said.

 

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