Positive stories about Australian manufacturers are few and far between these days.
But Barry Kearney says his business has never been busier, with domestic and export orders going crazy at the moment.
Kearney is CEO of Footcare International, the 98-year-old local business that exports to 20 offshore markets, including China.
He says the “Made in Australia” descriptor still denotes quality, and his language skills – Chinese, Indonesian, Japanese, Russian and Italian – have helped him do deals overseas.
The family-run business is turning over $7 million annually and expects revenues to double over the next two years.
But its largest market is Australia, with foot comfort, shoelaces, and shoe care products sold across the country.
How are you, Barry?
Actually, I’m flat out. I’ve never been so busy actually.
Is that right?
It’s going crazy in the local market and export too.
But the mail is that manufacturing is suffering at the moment. Is that a false impression?
Probably not. We tend to operate at our own pace and not necessarily be part of the crowd.
I think some Australian manufacturers are probably suffering because of the high Australian dollar. The importers would be happy, but there are Australian manufacturers that would be trying to compete against imported goods and would also being trying to export and they must be suffering. But I don’t know if there are many Australian manufacturers left.
We were getting help from the Textile, Clothing and Footwear grant people but they closed down the footwear side of it, except for a very limited amount of funds and don’t fund footwear manufacturers anymore. I really don’t understand why they left textile in and cut footwear out.
I was really disappointed about that because it was a Labor government that did that and they supposedly support Australian jobs and the workers, and they cut off help for Australian footwear manufacturers, not that there’s many of us left.
At the moment what’s your largest offshore market?
It’s Asia and, in particular, China. We’re doing about $1 million worth of business or more actually in Asia.
We supply Watson’s pharmacies in Hong Kong; they’ve got 2500 pharmacies in Asia under their brand and we supply all of them. I think there’s about 1000 of them in China, and we recently sent 120,000 Australian-made insoles to their China warehouses.
So Asia’s our biggest market and in particular China, and our business will expand there but India could quickly be much, much bigger.
What’s happening in India?
We’ve just got our first order from Bata shoes in India, which is the biggest shoe retailer in India with about 1000 shops. They’re just ordered 11 products from us under their brand and they’re going to trial them in 50 stores and then going to put them into 200 and then into 1000.
It’s potentially $3 million or $4 million worth of business. I went to India twice last year and had meetings with Bata and with other people.
And we’ve got another customer there already and another one there to follow. So we could end up doing $7 million or $8 million of business in India.
There’s a huge potential market for us in India.
But overall your biggest market is still Australia?
But that could easily change within the next two years with this India business, and we’ve just started distribution in Russia. We just sent our first order to Russia; we’ve got a national distribution company over there.
And we’ve got a very good company in Turkey, there’s a big market in Turkey as well.
Overall your revenue is about $7 or $8 million?
At the moment, but by the end of this year it could be on track to be about $10 million or $12 million and by the end of 2013 it could be on track to be about $15 million.
Did you suffer during the GFC?
No. We’ve been picking up new business gradually and now it’s starting to accelerate.
And why was that do you think?
It’s a niche market, our market, and we’ve got the lowest prices. We’ve also just developed over the last few years the best range. We’ve spent a lot of time choosing products and we have really good quality and our branding and packaging is really well made. The companies that are against us are more expensive and sometimes their products don’t have the same quality.
Are you 100% family owned or have you taken on investors?
My wife and I own the company and before that it was her mother and father and before that her grandfather.
And how have you funded it?
Well, we have a very good relationship with the ANZ, and we also got a loan guaranteed by the Export Finance Insurance Corporation, which is a federal government organisation.
So it’s a combination of locally manufactured and imported goods. How did that combination come about?
Well, in the beginning we made everything here and that was good, but then I decided we needed some gel products so I made the big step and arrived in China about five years ago.
I didn’t know anybody there. I think I had a couple of appointments lined up and now we’ve got a Chinese agent, and I speak a fair bit of Chinese and I’ve been there about 15 times.
We just got back actually the week before last from China and Hong Kong and we go around the world looking for new products, which probably all come from China, but we pick the ones that we think are the best.
We were in America recently and Canada and we saw a working sole and they’re just about not available in Australia.
So we developed that, spent a lot of time on the product and the packaging and then imported that from China and I think that’s possibly going to be our number one selling insole.
So do you consider local manufacturing a long-term proposition for your company?
Yes, I do. We were talking to Watsons in Hong Kong the week before last and they called it the USP – the unique selling point – the fact that some of our products are made in Australia. So we highlight that on the front of those packs and they love it.
Does that work for an Australian audience too?
Both. They say it value adds to the product. People see it and think quality.
Learning Chinese, did you do that for your business or as a hobby?
No, I did it for the business. I used to teach Indonesian when I was in the Air Force, that was 30 or 40 years ago, so I actually taught that for two years but that’s a very easy language.
And then just for the fun of it I did a bit of Italian, and then I thought I’d learn Japanese for business, so I learnt that for a year and enjoyed that.
And then when I started going to China I got serious about Chinese so I’ve been learning that for about four or five years.
Sounds like an aptitude for language.
What advantage does it give you?
Well, I think it actually shows respect to the country and the people and it helps me understand some of the conversations that are going on.
I still need an interpreter if they start talking fast, but my Chinese is very high quality in pronunciation. I can’t often understand them because they talk so fast but they can always understand me.
I went to Russia and I learnt Russian for about two or three months before and I think that was quite significant. I was asked in Russian what I thought of Vladivostok by the boss of this company that employs 1400, and I was able to respond to him and say what a splendid city it was. He was quite surprised.
And chuffed, I’d imagine.
Yes, and in the end a lot of business has to do with relationships, especially when you’re dealing with someone in a country with a different culture or any culture really. But if you go to the trouble to learn the language and read about the culture and learn about the practices, I think it makes a difference.
There was six or seven people at the meeting, the guys were all in suits, sitting around in this big boardroom and all of the sudden the boss of the company said in Russian, ‘I don’t know how we’re going to go but I’m going to take your product’ and laughed and everybody laughed.
It was just a spur of the moment decision and it could have gone the other way because they actually sell tinned, canned fish and meat and sausages.
So I think it’s really helpful to know the language, so I only learnt a little bit of Russian but a lot of Chinese and I think it’s helpful, but it is difficult.
You must have seen remarkable changes in your decades in business.
Yes, when we started we had one full-time and two part-timers and basically one customer and two products and we had about 130 square metres.
Now, we’ve got 3000 square metres of warehouse. We’ve got 20 employees and about 70 products and we’re selling to over 20 countries around the world, so things have changes a lot.
How do you keep your costs down in Australia?
Well, we’ve upgraded our machinery and our processes. It was very manual before. We still have staff who pack and cut our insoles, but we have Italian machines that cut very fast and reduce wastage.
We have automated packing machines although we still do a lot of manual packing as well, but for our export market we use automatic packing machines. Our labour would cost us a little bit more than what it costs overseas, but we can stamp on our product “Made in Australia” and that sort of counteracts that.