AW Bell is a family-owned manufacturer based in Melbourne, Victoria. A successful exporter, it won the Manufacturing and Advanced Materials category of the Australian Export Awards last year. I sat down (virtually) with Chief Executive Officer Sam Bell to talk about the company’s journey over the decades, including its history of exporting, diversification in the 2000s, its focus on innovation, the value of accreditation and lessons from COVID.
We started Bell Machinery in the late 1970s to manufacture equipment for our own need, improve productivity and reduce workplace safety issues.
After that, we had a couple of US foundry owners touring Australian foundries and they came through and saw some of the equipment we designed and developed for ourselves and asked us if we could manufacture equipment for them. They were our first export sales. That would have been about 1981-82.
Being in the game for a long time, you pick up tricks of the trade. You pick up things your customers are going to be concerned about, and how to overcome them before your customers bring them up as an issue. It's like anything, the longer you are doing it, the more it becomes a standard process for your business.
And now when we receive a new request for quote from an international customer, there's no concerns about who we’re going to freight with, how we’re going to get through customs agencies. It's just part of day-to-day business, because you've had those long-term learnings and challenges, and it makes life so much easier.
Growing up and being involved in the business as a kid, everything we did was based around automotive. That was the main sector the business had been focused on. In the late 70s, basically every automotive engine being built in Australia for the key automotive players was coming off our tooling. We were very dependent on that.
We foresaw in the early 2000s the closure, or the decline, of the Australian automotive market and knew that if we needed to exist long term, we needed to diversify. And whilst we had customers, most of our customers at that time were still the automotive industry.
So, we were looking at what was going to be a protected industry long term; what values innovation, high quality and is not just purely price driven. The key sectors there were aerospace, defence and biomedical.
We've had a real focus on that and since the early 2000s where 70 per cent of our business would have been automotive-focused, today in 2022 we are now about 85 per cent defence and aerospace-focused in the foundry and precision machining side of the business.
There are a number of challenges. The AS9100 is a pre-requisite to play in that marketplace. As a business, we had been ISO-certified for a long time but taking that big leap up into the AS was a requirement and was a real game changer for the business because it was a lot more focused on risk and risk mitigation.
You've got all of the requirements with cyber security that you've got to comply to in the US aerospace/defence market, which is a huge burden and cost for the business. But it's one of those things you have to have in place to compete in that market.
The business had the capability to produce the products for the industry. One of the big mindset changes was the fact that no longer did we just need to deliver a component, now we had to deliver a component with all of the certifications and the traceability to go along with that. I remember one of our first major export shipments to the US for a couple of first article inspections. The certification paperwork weighed more that the parts did.
That was a mindset change for the whole business. Right the way through the process we need to know who's working on the part, when they're working on it and making sure the parts comply at every stage.
We had done little bits and pieces for the Commonwealth Aircraft Corporation back in the day but no real major products.
We knew if we wanted to grow the business, the Australian market wasn't big enough for us to focus on. So, the focus did really move to the US and making sure that we had all our accreditations in line to comply with their requirements.
We were lucky along the way; we had a lot of support and a lot of guidance through the US Government and US Department of Defence to help break into those markets and open up those doors. But then we really had to prove ourselves and our capabilities to our customers once those doors were opened.
We went to Export Finance Australia with a large award we'd received from an US aerospace prime. At the time, we didn't have the cash flow to fund the working capital for that project. We're talking lead times of 48 weeks from order to delivery. And to be funding all of that working capital ourselves, over that period of time, would have put a lot of stress on the business.
Export Finance Australia helped us with that working capital financing it with a guarantee of the contract that we had in place. That allowed us to deliver to our customers on time, without putting the business under a lot of stress and impacting our other customers.
Since then, the success from that project has actually allowed the business to grow a lot of workshare with that customer. At the time when we went through the program with Export Finance Australia, we were about 40 per cent of their global workshare, and a few years later, we're now the single source for that product for the global fleet. It's then opened up more opportunities within that company on other programs because of how successful it's been.
I'd like to say it does, because it is something that is really important to our business. Our environmental footprint – as a company that uses a lot of electricity – is a concern to us. We make a real point of it internally to do what we can to reduce waste. To reduce our environmental footprint, we've put in a 284KW solar system that takes up the majority of our facility's roof and it produces about 20 per cent of our power consumption.
Our customers see it as a positive and so do our staff.
Selling internationally, especially into the USA, we need to have a real point of difference. Otherwise, our US customers are going to buy from foundries locally. For us, being innovative in our processes and products is critical to continue being a respected supplier in the US.
Every time I'm in the US we're talking about the new innovations, the improvements we're making to their products, the changes in business direction and where we're going. That keeps our customers engaged with the business and makes them want to come on our journey with us. And they really see us as a partner rather than just a supplier.
We take huge compliment in customers coming to us with their designs and asking us for advice. We work with them on the design, best method of production and overall service solution for improving that product and then manufacture it to a complete finished product, which having such a range of capability in-house allows us to do.
International freight has been extremely challenging for the past two years. Our real focus was to make sure the business kept up our customer service and we kept delivering on our commitments. We worked closely with our customers to try and consolidate orders, to try and reduce those increases in freight cost. We also saw increased delays in airfreight, things that ordinarily take a week were taking three weeks to get there.
So, our customers were receptive of those issues we were facing. Because we communicated with them early, they didn't penalise us for that. The pure impact on financial performance was a challenge for our business.
What have you learned over the years that you wish someone had told you at the start of your exporting journey?
I guess the biggest thing for me is, in our industry breaking into international markets takes a lot longer than expected.
When we first started on the path of really focusing on the defence and aerospace industry, we developed IP that would open the doors. We knew our international customers needed it; it was a point of difference. Because locally it's maybe 12 months, we thought let’s give ourselves a little bit of a buffer and allow three to four years to make it successful. It ended up taking us seven years to secure our first major order.
There was a lot of pain and heartache during years four, five and six to get through and to try and understand why our customers weren't taking us on our word, understanding that we can do this.
To now be well established in the international marketplace in that aerospace and defence sector has been an amazing ride for us and the future for our business now looks so bright because we lasted the journey.
One is once you get that opportunity, to absolutely nail it. Being in Australia, we are a long, long way away from them. They do see us as a real friend and ally being Australian, but we are so far away that they have concerns with dealing with us. If you do that, that first taste that they have will allow a lot more opportunities to open up. Put all your time and effort into making sure that first one is successful.
The other thing is – we try to be seen as a local supplier to our international customers. I want them to feel that we see them and communicate to them better than their supplier down the road does. That's why my team and I are consistently in the US and Europe seeing all of our customers face-to-face, so that they feel that we are a real part of their team and that we're as easy – or easier – to deal with than the bloke down the road is.
Communication is key. We can't just rely on emails to communicate. Picking up the phone, talking to these people and getting to them face-to-face is critical.
One of the best tools we have in Australia is that Australia is a great place to visit, and if you can get your customers to come out and see your facility, you've got a real opportunity to take advantage of that and make that trip extremely memorable. It makes them want to come back and deal with us again, and the more they deal with us, the more justification they have to come back out here again and see us.
It was unexpected, and we were extremely grateful to win the award.
We applied for the Victorian Governor's export awards in 2016 and won that, and then went into the national phase and weren't successful. Some of the feedback we got at the time was that there were areas that we should be focusing on with the business's growth and export. We took those recommendations and developed a business plan to help strengthen those areas of the company. It took us five years to do it, but we really did improve our export capabilities and innovation side of the business with support from all our staff.
To reapply and be recognised for having achieved what we had set out to do five years prior, was a clear indication that the business is on the right path. For me, it's fantastic, but to be able to go and share that award with the staff – and they know that they're the ones that made this possible – it's great validation for their hard work, because it hasn't been an easy five years since 2016. So, to get that recognition – not just from myself or from the customers – but from the government for their performance was real validation for them.
There's a lot of support out there, so don't be afraid to use it. Our business wouldn't have had the success it had without support from local and federal government, organisations like Export Finance Australia, our banks and also from the local industry here.
Export Finance Australia is the Government’s export credit agency, providing finance solutions to Australian businesses that export goods/services or are part of an export-related supply chain. Export Finance Australia has expanded the eligibility for its Small Business Export Loan, which means you can access support for more of your export-related finance needs.
In addition to finance for your purchase orders, you could also get support for export market development costs, plant and equipment finance and working capital for any other export-related activities.
If you need finance to access new opportunities in the global market, get in touch with the team today on 1800 093 724 or visit www.exportfinance.gov.au/sbel
Molly Knox joined the Ai Group Industry Development and Policy team in 2018. She has previously been editor for the Ai Group Exporters Guide, is heavily involved with circular economy and waste issues, and also acts as an Advisor in the Product Stewardship Centre of Excellence.
