Taking over a business isn’t easy at the best of times, so Ian Melville faced a tough induction when he took charge of G&O Kert just before the global financial crisis (GFC). However, the Queensland-based company survived and continues to battle for its place in a market that remains uncertain. By William Poole.

G&O Kert was founded in 1974 by its namesakes, George and Olympia Kert, as an enterprise run from their house. The Kerts eventually moved on, but the business continued to flourish over the subsequent years, retaining their names through several ownership changes. Ian Melville joined in 1993, as the company was undergoing the transition from a pure manual machine shop into a CNC-based operation, and he became the fourth owner of the business in September 2008 – a date that would prove symbolic in many ways.

“I took over about three weeks before the GFC hit,” he recalls. “We were extremely close to going out of business for probably the first four months. Our income stream dropped more than 50%. And from that period, I never want to go through that again, so we focused on diversification right from that point.”

While the company got through that tough initial period, it has encountered markedly different market conditions in the years since. Many of its customers have lost the stable, predictable work streams that they used to enjoy, which has impacted in turn on G&O Kert. Demands are far higher in terms of turnaround times, quality and cost, and the company has had to change its approach accordingly.

“We were born as a small-batch production engineering company and have grown that way from the 1980s and 1990s and into the 2000s,” says Ian. “But a lot of that market has disappeared for Australian manufacturers. We’ve found we’ve had to be a bit more agile, a bit more fleet-of-foot and a bit more flexible in our approach to the work we do.”

This in turn has seen the administrative burden increase significantly, as the company has had to continually go out and pursue new work and one-off jobs. Traditionally 70% of the business’ work was repeat work, but according to Ian that has now been turned on its head. With repeat work only accounting for around 15-20%, more resources have to be allocated to drafting, re-engineering and in-office processing before anything even gets into the workshop.

Nonetheless G&O Kert has adapted to meet these challenges, and Ian attributes the company’s ability to do this to his team – a workforce of 25 including three apprentices, based at its plant in Acacia Ridge, 15km south of central Brisbane.

“I put it down to the guys,” he says. “We’ve got about 300 years’ experience between us, and I put it back to them to come up with solutions. One was to put a second shift on, so we’ve been running that for a couple of years now. It gives us a bit more flexibility and adaptability, in that we can service those quick-turnaround, demanding customers. That’s worked for us.”

Transport, resources and infrastructure have traditionally been G&O Kert’s key markets, and it still has exposure in those sectors, but their overall share has declined as the company has diversified. It has established a foothold in aerospace and defence, including the manufacture of a component for the Joint Strike Fighter (JSF) project. It also does some work with both conventional and alternative energy companies.

“At the moment, we’ll look at any work opportunities that comes along,” says Ian. “It sounds a bit vague, but I think it’s probably a fair reflection of our market, that we don’t really see a clear slot anymore in the marketplace. It’s really whatever work becomes available. We adapt and apply ourselves to it.”

Although G&O Kert continues to seek out new opportunities, Ian adds that they are often slow to develop. He’s candid about the scale of the challenges facing his business, and the options available for overcoming them.

“I guess our short-term plans are about survival, making sure we keep the company Lean, and improve on efficiencies where we can. Our future’s a little bit cloudy: unfortunately we’re not generating the income stream that we need to be upgrading equipment, so we’re really just marking time until we see some sort of positive outcome in our customer base and our profitability.”

Strategy and values

While market conditions are difficult to say the least, it is clear that G&O Kert retains a clear set of values that underpin its overall strategy.

“We’ve built a strong reputation, based on reliability and quality,” says Ian. “We’re serious about the relationships we form with customers, suppliers and employees. Those relationships are the cornerstone to the business, we want them to be real and ethical, and that’s what we try and do in our dealings. And that’s what we expect in return as well. I don’t know if ethics is something you can afford to have in the current market but we intend to still operate on that basis.”

The focus on customers saw G&O Kert secure its ISO certification for quality assurance in 2012. According to Ian, achieving the certification was in itself a time- and resource-consuming process, but the resulting benefits justified the effort. A commitment to internal training has also helped to ensure that staff can adapt to meet the requirements of a changing market. Meanwhile the company has invested heavily in top-end equipment, with an emphasis on multi-tasking machines that offer the flexibility and capability to take on more advanced machining work. Ian cites reliability as crucial, and while this comes at a cost, it’s one that’s worth paying.

“The last bit of gear we put in was a VTC 800 SR machining centre from Mazak,” he adds. “That’s a bit bigger than our normal range of machines, so it allows a broader scope of work. With that machine I thought if we put something in that’s less common throughout the Australian market it would give us the opportunity to get work where there’s less competitors. And that’s worked in our favour.”

The ability to change and adapt seems to be one of G&O Kert’s clear strengths, but Ian maintains that it was something the company was forced to do.

“We’ve had no choice. I think we had a fairly comfortable run for the last 15-20 years, and I don’t know that those days are coming back in the short term. As a group we’ve got to be able to change, and change is difficult for anyone. I don’t know that I always enjoy it. But I don’t think we’ve got the option to not be open to change. Equipment, processes, people.”

Future plans

“I’m going to buy a post office,” laughs Ian when asked about plans for the future (and given the recent reports about proposed hikes in postage costs, it could be a lucrative move). However, joking aside, he is pragmatic about the difficulties facing Australian manufacturers, and what G&O Kert needs to do to overcome them. As well as diversifying in terms of the sectors in which it operates, the company is taking steps to broaden what it can offer to the market.

“Obviously we’re working for survival – that’s the main aim,” he explains. “But we’re moving into some areas we wouldn’t have looked at before. We’re doing a bit more assembly work, making not just the machined components, but the full-assembly fabricated frames, and testing and getting involved with pneumatics and hydraulics, where before we wouldn’t have even entertained that sort of stuff. We call ourselves machining specialists and that’s really been our focus for the last 30-odd years.”

The company is also increasing the value it can offer its clients by forming partnerships with other companies that can offer services that G&O Kert can’t perform in-house.

“That’s been part of our programme, to look at what the market needs that we can’t offer, whether it be wire-cutting or waterjet cutting, folding and bending, or different treatments or coatings, powder coating, zinc coating … any process that someone else has already done their homework on, we’ll try and partner with those guys. We try and sell their work, and in turn they’ll try and sell our capabilities. We’ve seen that start to develop in the last eight or ten months.”

G&O Kert has weathered some of the toughest years manufacturing has seen, and the company continues to navigate a challenging landscape. But Ian remains refreshingly positive about the state of the industry in this country, and believes Australian manufacturers can still act to define what the future holds for them.

“Look, I think if people could stop looking at the negative that would be a big step forward,” he says. “It’s up to us, it’s up to manufacturing to create a bit of momentum. There’s a lot of talk about blaming the government and blaming everyone else, but really we’ve got to get our finger out and create the opportunities. And there are a lot of Australian companies doing that. There’s some big Australian manufacturers that are really kicking some goals.

“Manufacturing is weak, there’s no question about that. But if you get out there and try and be a bit smart with your approach, there are opportunities. You have to work harder to get them than ever before, but there are opportunities there.”

www.gokert.com.au