In
the 1,500 square foot showroom at Techtronic Industries’ headquarters in Tsuen
Wan, Stephan Pudwill plays with the latest men’s toys – cordless power tools
such as hedge trimmers, mowers and chainsaws – and cleans the carpet with
arguably the world’s lightest vacuum cleaner.
President
of strategic planning at the family business his father, Horst, co-founded 29
years ago, Pudwill, flanked by the firm’s finance chief and public relations
people throughout the interview, repeatedly mentioned “new products” like a
mantra.
Having
amassed a portfolio of brands in the late 1990s and created new models and
products in the 2000s, the power tool manufacturer is now betting its future on
advancing the technology, pumping out new products and raising the level of
automation so as to survive the changes in the industrial landscape in the
Pearl River Delta (PRD), Pudwill said.
He
said the firm spends about 2-2.5 per cent of its revenue annually, or about
US$107 million last year, on research and development, with a focus on making
its products cordless and increasing the performance of lithium-ion batteries.
“New
products account for one-third of our revenue annually,” he said. “We keep
investing in our brands. It is critical to keep on the forefront of
technology.”
About
US$1.4 billion of last year’s US$4.3 billion revenue was derived from new
products of various brands, including industrial power tool label Milwaukee,
AEG, outdoor power equipment brand Ryobi, and floor care labels Hoover and Dirt
Devil.
The
products are widely sold by retail giant Home Depot in the United States.
Net
profit at Techtronic, one of the largest power tool makers in Dongguan, an
industrial hub in Guangdong province, leaped 24.5 per cent last year from 2012
to US$250 million.
Revenue
jumped 11.6 per cent from a year earlier, while gross profit margin rose 0.7
percentage point to 34.2 per cent.
The
firm is one of the few surviving players in the PRD (Pearl River Delta), the
reputation of which as the factory of the world shows signs of rust amid
protracted labour shortages, constantly rising wages, shifting industrial
policy and an exodus of exporters from the mainland to lower-cost Southeast
Asian countries.
The
PRD is striving to move higher up the value chain with enhanced technology and
more environment-friendly products.
For
Techtronic, this means a greater use of automation at its production base,
which employs about 8,000 migrant workers, down from about 11,000 in 2011.
“We
are not a big fan of workers,” Pudwill said.
“We
constantly automate areas that can add value.”
Despite
relying largely on growth from innovation in its existing business, Techtronic
is open to expanding via mergers and acquisitions, he said.
A
case in point was the purchase last year of Oreck, a US-based manufacturer of
vacuum cleaners, primarily for the hotel industry. Pudwill declined to reveal
the acquisition price.
“We
don’t need to do M&A’s in order to expand the company, but it does not mean
that we are not looking at any opportunities,” he said.
Analysts
at HSBC estimated Oreck would generate about US$80 million in revenue this
year, compared with about US$30 million last year.
HSBC
recently upgraded its net profit forecast for Techtronic to US$309 million this
year from US$308 million and to US$369 million next year from US$366 million
previously.
Identifying
business opportunities that will complement the group’s operations is a key
responsibility of Pudwill, who stands to take over the torch from his father.
Pudwill,
37, joined the group 10 years ago and became an executive director in 2006. He
had previously worked in product marketing and strategic planning at
Mercedes-Benz in Germany.
At
Techtronic, Pudwill said, “I work closely with [chief executive Joseph Galli
and my father and am actively involved in all areas.”
He
does not think his father, who is 69, will retire in the near future.
“Sometimes,
I have different opinions with my father, which is healthy,” Pudwill said.
“It’s important to have different opinions and think differently.”
www.scmp.com South China Morning Post
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