Like many Australian manufacturing companies, Engineered Components has seen some tough times in the last few years, but this Queensland-based outfit has the experience and capabilitities to see it overcome the setbacks and win some exciting projects.
Today Engineered Components employs five personnel at its workshop in Loganholme, a half-hour drive south of Brisbane. Its founder and director Adrian De Villiers remembers clearly the day he first set up the business.
“The tenth of October 1981 – I bought my first centre lathe,” he recalls. “I worked by myself for something like six years, then I employed somebody to assist me; he came in afternoons and we’d stay till about 10 oclock at night. I bought my first CNC lathe – a second-hand machine – and had that for about six years, then I bought another CNC lathe. The problem is every time you buy a machine you’ve got to employ another person. But we went on from there and kept on buying machines, expanding the customer base.”
The company started off mainly producing earthmoving components. It also worked with a local firm that made overhead cranes, with Engineered Components making all the machined components for them.
“We did that for a long long time, till they decided to shut up shop,” says De Villiers. “I think they sold to Monocrane, who had their own suppliers, so we missed out on that. But we continued with the earthmoving work. We did a lot of rebuilds on earthmoving gear, like the CAT front-end loaders and so on – we did complete rebuilds. We built a line-boring machine, so we used to go out and do line-boring. We even got enquiries from as far away as Innamincka.”
From there the company moved into general engineering, taking on a variety of projects in collaboration with local companies Techniplan and A&S Steel. This in turn led to a significant involvement in the rail industry.
“We would do the machining, which we specialise in, and A&S Steel would do the fabrication and assembly, so we would have a complete package. For Techniplan we would supply the railways. We did that for many years. It’s sort of died down now, but we made a lot of components for that.”
The years that followed saw a steady flow of work across a wide array of sectors, from the construction industry – making parts for concrete mixers – through to transport and logistics, with the company making container straddle carriers for the ports.
“We built about 80 of those,” adds De Villiers. “We used to build them six at a time, and we’d also build parts for them. So we were very busy from that.”
While much of that work from the early years has gone overseas, Engineered Components has still continued to pick up work for the earthmoving & construction industry. Moreover De Villiers is happy to take on any challenge that comes through the door: “If people want a prototype we’ll make them a prototype.”
On top of this the company has developed a specialism in directional drilling, manufacturing a comprehensive range of crossover subsavers and other components and accessories for the drilling industry.
“It so happens that someone drove up the road here and went to see someone down the road and said ‘Can you make this?’” De Villiers recounts. “He said ‘No, go to Adrian. He’ll do it for you.’ And I’ve been doing it ever since then, since about 1998-99. We do that for all the different types of machines.”
Testing times
According to De Villiers, the first year after the global financial crisis (GFC) was the company’s best ever, in terms of both profits and turnover. However, as has been the case throughout the Australian manufacturing industry, the years following the crisis have been a difficult time for Engineered Components, with market conditions fluctuating drastically.
“After the GFC it slowly died down, and it got to the stage where the last three to four years have been very tough,” he says. “It showed signs of picking a few months ago. It actually picked up a bit just before last Christmas, then in April it started dying down again, and then about two months ago it started picking up again. But after the financial year-end it just died.”
Like many Queensland manufacturers, Engineered Components is also heavily engaged in the resources sector, and the downturn in mining over the last two or three years has also had an impact on the company.
“Mining has affected us. We do a lot of components for people that supply to the mines. There’s not much of that going on at the moment. Everyone is waiting on the Adani mine to happen, but I think everything there is going to be brought in from India. I don’t think we’re going to benefit from that much.”
De Villiers cites cashflow and rising costs as some of the biggest challenges facing his business, while the unpredicatable flow of incoming work is a problem that needs constant managing.
“Cashflow and continuation of orders from established customers are the big challenges,” he says. “With established customers, some of them give you the overflow of work, some just don’t have the work to give you. The other problem is everyone wants everything and they want it now. Mainly because people don’t keep stock any longer, and people don’t do scheduled maintenance. So when something breaks down, they need it fixed now. And it just throws the whole schedule into disarray.
“Running costs have all increased, so what you do is try and work more productively. Some people put a robot on instead of putting a man on the machine, because robots don’t take sick days or holidays. But you’ve got to invest in that, and you’ve got to have the type of work to do it. We’re a general jobbing engineering shop, so every job is different.
“Another thing is insurance on machinery, breakdown insurance. That’s just skyrocketed. There’s not too many companies willing to take it on, and those that do want a premium. And that’s another cost.”
The dificulty in finding skilled staff is also a big issue, which De Villiers believes has worsened recently.
“I’ve had an ad on SEEK for probably close to four months, and I’ve done countless interviews,” he remarks. “People just don’t have that skillset like they used to have. For example, a year and a half ago I had an ad on SEEK and I got 26 people applying within about three weeks, and out of the 26 about ten were competent candidates. But now, I’ve had this ad for about four months and I’ve had four.
“There’s also been a sudden spike in the recruitment agencies getting into it as well. I’ve had a couple of recruitment agencies take my ad and they bumped it up, and people reply to them. So they send you the résumé of this particular candidate, you agree to it, and they want 10% of the annual wage. If you’re paying someone $60k a year, they want $6,000 plus GST. I’ve actually got two people here that I got from recruitment agencies because I couldn’t find anyone else. It’s a matter of having to do it.”
Once staff have been taken on, there’s also the issue of retraining them to meet the company’s specific needs: “You get somebody – and I mean , nobody’s perfect – but to get them to do it your way, it takes you about six months to train that person. And then in the ninth month they leave you.”
De Villiers believes improving the supply of skilled personnel is the key area where the Government can help manufacturers such as Engineered Components.
“I think they should reopen those TAFE colleges,” he says. “Apprentice training is what is required desperately. I’m originally from South Africa. I was talking to someone there the other day, and they’re actually starting up an apprentice training centre on CNC machines. They take them in, and train them. You can either pay for your own training, or your boss can send you in for training. But when you leave you’ll have a pretty good idea of what it’s all about, and you’ll be able to go onto the machine and do it.
“You can’t let somebody loose on a $500,000 machine who might smash the thing. It’s always been a problem that you get a new employee and you stand there and watch him, walk past all the time to see what he’s doing, mainly to see that what he’s doing is not going to be detrimental to the machine. I mean, machines cost a lot of money to replace.”
Signs of recovery
De Villiers believes the current state of manufacturing in Australia could be better, citing the situation in Queensland in particular as “fair to middling”. However, he sees signs of recovery on the horizon.
“It’s not great. It’s not depressed, but it could be better,” he explains. “I think it’ll take another year for things to improve. On the current trend, which is very, very slow growth. We’ve gone through everything to cut costs left, right and centre, to improve the margin. Even things like hand towels, you ring around to try and save a few dollars here and there.”
Nonetheless, while De Villiers acknowledges that times have been tough, his company is still managing to win some interesting jobs. One notable recent contract has been in the defence sector, producing machines for the US Navy.
“We’ve built 12 of those machines so far, and there’s another four machines to go on that contract,” says De Villiers. “And they’re talking about extending that contract to 2027. We’re building two machines on average every 13-14 months. That’s a good little moneyspinner because it keeps us busy for three to four months at a time.”