OUT FRONT – AND MOVING AHEAD

Econo-Heat

Globally we have seen increasing pressure facing manufacturers competing in export markets due to financial pressures limiting the ability to compete with stiff competition from the East. However this is not a foregone conclusion as reflected by Econo-Heat, a South African company demonstrating how a great product combined with effective marketing and optimal business efficiency can lead to success on the world stage.

The main line for Econo-Heat is a unique and highly innovative, wall mounted, low energy and low cost convection heating system for the home. The product features an ultra slim design and is effective as an entire room heater whilst allowing savings of up to 50% or more on home heating costs. Perhaps most importantly the system is also designed for easy DIY installation with straightforward instructions for optimum positioning in the home.

The company has demonstrated phenomenal growth, developing from a homemade invention to becoming a slick and efficient industrial manufacturer and a leading exporter in South Africa. Current CEO Pieter Bräsler explains how the product came about:

“The product was originally invented by father and son Rod & Russell Davis working from their garage in 1990, but it wasn’t until 1997 when the product won the Design For Living award for innovation that the product really caught the attention of the South African big name retailers.”

Pieter joined the business in 2004 bringing a background of experience in financial services and Lean Manufacturing at a stage when the company was becoming a well-recognised brand in South Africa.

“What I saw was massive export potential and a great opportunity for the product to flourish in markets beyond South Africa so we embarked on a major export programme focusing on the retail market as a consumer product.”

The power behind renewable energy

The IDC is the biggest supporter of tenders awarded in the

Department of Energy’s Renewable Energy Independent Power

Producers (REIPP) programme.

In the first round of REIPP tenders, the IDC participated in twelve

successful bids, and seven more in the second round. The green

energy bids include wind power, concentrated solar power,

photovoltaic and small hydro projects.

Over the next five years, the IDC will make available R25 billion

to fund projects related to green industries.

The IDC is identifying and providing funding for many projects

that will contribute to building South Africa’s industrial capacity

and creating jobs. Visit www.idc.co.za to find out more.

Chillibush8359IDC

To apply online for funding of R1 million or more go to www.idc.co.za

Telephone: 086 069 3888Email: callcentre@idc.co.za

Econo-Heat

Under Pieter’s direction the company embarked upon a significant marketing initiative aimed at bringing the product to new international markets through leading retail outlets. The product was well received and subsequently demonstrated a period of significant growth culminating in production of 1600 units per day distribution to a total of 38 countries worldwide by 2010. That year the company narrowly missed out on top honours at the Exporter of the Year Awards organised by the Chamber of Commerce and Industry but the upward trend of international sales through effective distribution agreements was set to continue leading the company to claim both the Exporter of the Year Award and the award for Excellence in Innovation and Business Excellence the following year.

Despite the strong growth and export performance shown by the company it could not avoid external pressures presented by the global financial crisis. Pieter explains how the company responded to the market conditions:

“The banking crisis gave rise to a situation where distributors were falling short of finance leading to a reduction in available facilities which would in turn affect capacity. This created the opportunity for us to go directly to the retailers without working through distributors or middle men.”

This method of working directly with leading retail groups led the company to make a number of strategic changes to ensure the company could be responsive to demand whilst also extending the number of retail clients it could serve effectively.

“We established a new and state of the art manufacturing facility which increased our production capacity from 1600 to up to 5000 units per day and employed 7 regional commercial managers to directly work with our 87 retail clients worldwide. Although we had extended our client base we knew this was still the tip of the iceberg due to the nature of how relationships with retailers develop. First the retailer will typically begin with a trial of the product limited to a particular store or online, followed by a gradual rollout over a number of seasons. This type of phased and gradual growth gives us a good opportunity to develop our capacity and supply chain capability as the relationship develops.”

Econo-Heat adopted a high volume, low margin approach to ensure cost effectiveness of producing a high quality product whilst enhancing manufacturing processes to optimise efficiency.

“Critical to us developing our capacity and efficiency to such an extent is the successful implementation of Lean Manufacturing practices with the core driver being to optimise productivity and eliminate waste. We operate a training programme with all of our factory staff focused on the principles and practices of Lean Manufacturing to ensure these values are adopted at all levels.”

The company gained further recognition by achieving a clean sweep at the 2012 South African Industrial Development Corporation Business Partners Awards by winning first prize in all three main categories for Innovation, Sustainability

Established in 1990, South African born and bred company ECONO-HEAT is the inventor and manufacturer of the original wall panel heater. Over the past 22 years this trusted and celebrated energy-saver heater has provided warmth and winter comfort to countless South Africans. The lean manufacturer has produced an innovative and economical wall panel heater and low voltage electric blanket, and will launch further energy efficient heating appliances in world markets.

ECONO-HEAT is an IDC-funded business that has contributed to commercially sustainable industrial development and sustainable economic growth in South Africa.

The power behind renewable energy

The IDC is the biggest supporter of tenders awarded in the

Department of Energy’s Renewable Energy Independent Power

Producers (REIPP) programme.

In the first round of REIPP tenders, the IDC participated in twelve

successful bids, and seven more in the second round. The green

energy bids include wind power, concentrated solar power,

photovoltaic and small hydro projects.

Over the next five years, the IDC will make available R25 billion

to fund projects related to green industries.

The IDC is identifying and providing funding for many projects

that will contribute to building South Africa’s industrial capacity

and creating jobs. Visit www.idc.co.za to find out more.

Chillibush8359IDC

To apply online for funding of R1 million or more go to www.idc.co.za

Telephone: 086 069 3888Email: callcentre@idc.co.za

Econo-Heat

Almost every hour of the day we take our connection with power entirely for granted.

Behind the smooth functioning of hundreds of types of household, commercial, business, computer, industrial, medical and mining machines, appliances and applications, is the Apex CORDSETS. Producing up to 20 million moulded plugs, sockets, leads and cord sets a year, exporting to 5 continents.

Econo-Heat

and Job Creation. The awards were established to recognise and celebrate IDC partners who have made the greatest achievements in contributing towards effective growth in South African industry and highlight the best success stories from within the IDC investment programme.

The case put forward for Econo-Heat in the innovation category not only focused on the features of the products but also demonstrated innovation in business development.

This involved looking at strategies employed by the company to develop export growth such as volume manufacturing to achieve economies of scale, successful implementation of Lean Manufacturing and development of a dual product strategy designed to build the Econo-Heat brand, but also the sale of previous generation products as own brands through distributors and volume retailers.

Achievements in sustainability were evidenced through the company’s comprehensive eco development initiative, which was designed to meet European market access requirements. This involved the elimination of hazardous materials commonly used in the manufacturing process and optimising use of recyclable materials in both the product and packaging. This is in addition to the product itself being an energy efficient technology as Pieter explains:

“Su s t a i nabi l i ty has always been a core value to the business. Aside from offering what is a green product we continue to drive the importance of sustainability all the way down to the materials used in our packaging.”

Growth within the company also goes beyond an increasing headcount by also increasing the number of hours worked, extending the scope of roles within the business and ongoing skills development for all employees.

“What started out as a factory employing 38 people in 2004, today has a workforce of 191 and this is despite our high levels of automation. We recognise that it is the quality

“The banking crisis gave rise to a situation where distributors were falling short of finance leading to a reduction in available facilities which would in turn affect capacity. This created the opportunity for us to go directly to the retailers without working through distributors or middle men.” Pieter Bräsler, Econo-Heat CEO

Econo-Heat

and excellence of our staff that allow us to grow and marks our commitment to job creation and job development.”

The achievements represented by these awards demonstrate the comprehensive and extremely thorough approach to business development, which is adopted throughout the company. Pieter summarises how this is not only a strategic objective but also an important part of the culture of the business:

“The company philosophy is to do things right first time and stay in front of the pack which is represented by our corporate credo ‘Out Front - and Moving Ahead’”.

Notwithstanding the company’s impressive growth record so far, Econo-Heat does not intend to rest on its laurels in terms of forming plans for future development. Despite the success the company has enjoyed in developing more direct links with its retail clients, Pieter is nonetheless aware of the importance of maintaining effective relationships with distributors in other countries worldwide:

“Whilst working directly with retailers has been an important factor in growth of the company it is still very important that we recognise the significant role distributors play when exporting to 38 countries worldwide. For this reason we are still very much focused on developing relationships with our distributors.”

The company also intends to continue development of its product range to ensure competitiveness in an ever-widening market, whilst also remaining true to the company’s original

values of developing highly practical, safe and cost efficient technologies:

“Product development is very important for future growth of the company. We have recently introduced a new low voltage electric blanket, which is completely shockproof and machine washable. It also eliminates harmful electromagnetic radiation associated with other high voltage electric blankets, hence this new product is being marketed as ‘The Ultimate in Health and Safety’. With quilted cotton exterior, it means the product is safe, soft and comfortable to sleep on. This eliminates the problems and dangers associated with conventional high voltage electric blankets whilst also being comfortable and practical to use every day.”

“In the very near future we are also due to release a number of exciting and highly innovative new heating products which will herald a further step in our ongoing business development.”

Econo-Heat represents a great story of growth and achievement attributed to having an excellent product backed up by a comprehensive and well-targeted marketing programme. The company also demonstrates how to succeed in challenging market conditions by ensuring optimum manufacturing efficiency and high volume backed up by supporting brand awareness at every opportunity. This shows how business efficiency and ambitious export drive supported by the right partners in logistics, distribution and finance can offer the key to success in world markets.

OUT FRONT – AND MOVING AHEAD

Econo-Heatwww.econo-heat.com+27 21 762 6500

Written by Martin White

www.littlegatepublishing.com