Growing up in Port Augusta it wasn’t a huge leap for Anthony Kittel to move to Whyalla to train as a mechanical engineer for BHP after finishing school. But his career progression since has been nothing short of colossal. Kittel bought a small electronics workshop with eight staff in Adelaide’s southern suburbs in 1997. Redarc now has 150 employees and annual sales of about $50 million, which he aims to double by 2020.
We caught up with Kittel to find out how a country boy evolved into one of the state’s most successful businessmen.
How did your career begin?
I did my high school in Port Augusta and I applied for an engineering traineeship at the BHP steelworks in Whyalla, now known as Arrium. It was a five-year degree that was a mixture of the practical side and the study.
I then had five years working as a qualified engineer and gained some management experience before I left and came to Adelaide and did my MBA for two years full-time at the University of Adelaide. I loved my engineering but I knew that I didn’t want to be a practising engineer for the rest of my life – I liked management and leadership and business. I thought ‘how am I going to transition from engineering into business’ and I saw the MBA as that vehicle. I graduated from the MBA in 1993 when I was 28. I then went to work for ROH in wheel manufacturing for automotive and quickly worked my way up from project engineer to manufacturing manager to general manager all within the space of three years. I stayed on as the GM there for two years and that reinforced that I really wanted to go into business on my own and that was when I left to buy Redarc.
Did the MBA help fast track your career progression?
It certainly did. As a purist engineer, the things I was looking to develop through the MBA were my finance skills and my marketing skills in particular. So I chose every marketing and finance elective and that enabled me to at least have the theory and helped me quickly get elevated to General Manager. Once I was there I was able to utilise those skills because I was looking after distributors all over the world doing sales and marketing in different countries as well as running a manufacturing plant looking after about 120 people. That was the perfect foundation then to run my own company. I had the privilege that BHP funded most of my education so now I do the same for our employees and it really creates strong loyalty – our turnover rate of staff is less than two and a half per cent. At the moment we’ve got three people going through the University of Adelaide MBA program. The value of an MBA hasn’t changed. It’s still a really positive development tool that can help people take a step jump in their career.
In the MBA, not only do you learn a lot from the lecturers but it’s also the quality of the people who you are studying with in the course that you get so much benefit from.
I’m passionate about continuous learning and development. That’s the thing about Australia, we’re never going to be the lowest cost country so what are our advantages? In my opinion it’s our talent, it’s our universities, it’s our education system. For us at Redarc because we invest a lot of money in innovation you’ve got to have great people.
When did you buy Redarc?
I bought Redarc in 1997. It was eight people and it manufactured electronics in a little job shop in Lonsdale and the main product was called a voltage converter.
European and Japanese trucks run two batteries, so they are 24-volt but all the accessories are 12-volt so they needed some form of converter to change the voltage and that’s what Redarc made for the vehicles the came into Australia.
How and when did the business take off?
The first couple of years were just bedding down the business. Because the inventor and original owner passed away several years earlier, the company wasn’t investing in research and development any more. Some of the products started to have a few issues and the customer service needed to be really sharpened up. It took two years to change the culture and start to make some progress. In the year 2000 I set up the first real business plan and the aim there was to take the business – at the time it was around $700,000 a year revenue – and grow it to $5 million a year by 2005. Some of the key pillars of that plan were to set up an R&D team, which we established in 2002. We had the slogan ‘the customer is king’ to make our customer service the best in the industry, which we’ve done. By 2005 we hit $5,020,000, so we just made it but it was a massive goal at the time.
Redarc received a Federal Government grant to boost the southern suburbs economy following the announcement that Mitsubishi’s Lonsdale engine plant would close, what effect did that have on the business?
In 2005 we sat down and began working on the next plan and that was all about putting down roots and building a home because we’d moved facilities several times and we knew that we needed to invest in capital equipment. We bought some land in Lonsdale in 2005 and then I read that Mitsubishi was closing its engine plant down here and I thought let’s have a go at that. So we put the application in to build a state of the art manufacturing plant. We’d grown to 34 employees at that time and we said as part of our plan we’d take it from 34 to 68. We received around $2 million from the grant and we invested $6 million. The rest of the money was retained earnings but we also went to the bank. At the time we were only earning $5 million and we were going to invest $6 million in a new factory so it was a massive risk but that was really the springboard for the future development of the business.
How has the product offering expanded beyond voltage converters over time?
In 2001 we identified that while the trucking industry was a good market to be in it really suffered with the economic cycles, there were peaks and troughs. So we identified that if we were going to grow we needed to look at other markets. We diversified into the caravan and the recreational vehicle industry. We identified back then that there would be 20 years of really strong growth of baby boomers retiring. With the caravan industry we got in at the very early stages and built a nice foundation of products for that industry, which is now one of the key pillars of our business. What we try and do is allow people to go camping to remote places by looking after the energy in their vehicle if they don’t want to stay in a powered site. Our products allow people to utilise solar and all the different sources of energy so they can get away from civilisation. We’ve developed a whole host of power management products for recreational vehicles but then that carries over into other industries such as mining and emergency services. Our mandate now is that if it’s got a battery and it moves, it’s a customer.
Has export been a part of the success story?
Export has been a plan that we’ve been working on for the last five years and it’s really ramping up right at the moment. The first few years we studied which markets we wanted to play in and we decided that France and Germany in the motorhome industry was a key target and in the automotive industry in North America.
We’ve set up a third-party logistics warehouse in Poland and another one in North Carolina in the US. To be successful in export markets you’ve got to have the very best products on the market, it’s taken a few years but now we believe we’ve got a family of products that are the world’s best. So we’re working with motorhome manufacturers in France and Germany and with vehicle manufacturers in Detroit to get our products fitted as standard in those vehicles. We’re making really good progress to the point where we’ve got products out in the field on trials.
What are the next steps for Redarc?
Part of our next five-year plan to 2020 is to double the size of our business – from $50 million to $100 million and to gain 15 to 20 per cent of those sales from export. We currently employ about 150 people. We’re about to do another major expansion – I’ve bought the block of land next door to us here – and we’re about to invest another significant amount of money and put in new state-of-the-art equipment, expand the factory by 2000sq m and we’ll grow from 150 employees to 240 over the next five years. One of the keys to our success has been investment in innovation. We invest roughly 12 to 15 cents in every dollar of sales back into R&D so we’ve got a really strong pipeline of new product that we can release to the marketplace on a regular basis. That gives us really strong organic growth. We plan to make at least two more acquisitions in the next three years and that will help us find good engineers. We’ve got a really good relationship with the universities and we encourage undergraduate students to come and do work experience here and eventually employ them when they graduate. But one of the toughest things to do is find really experienced engineers so acquisitions where we can get talent is important as well.
Solstice Media has partnered with the University of Adelaide to profile MBA graduates.
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