The right weigh
Compac spends a whopping 20% of revenue on R&D. "We’ve got to be clever," says Flocchini
Monday, March 24 2003 || BY Fiona Rotherham
Two workers are so engrossed in assembling the machines (which at 87 metres long are the largest the company makes), they barely glance up as marketing manager James Flocchini and I walk past. The high-speed machine sorts up to 6000 apples a minute into 58 categories of size and colour.
This is the small Kiwi company’s biggest order to date but by no means a one-off. More than 25% of Washington State’s apple crop (equal to New Zealand’s total apple crop) is sorted by Compac’s clever technology.
The company designs and builds mechanical, electronic and software equipment that sorts fruit and vegetables, and US sales account for around half the company’s annual $18 million turnover. The US is the major growth market, with orders up 800% in five years. Small wonder the company last year set up a Californian subsidiary handling sales and after-service to reassure the somewhat xenophobic Americans it was there to stay.
Ten years ago, domestic sales accounted for 85% of turnover. Now exporting to 17 countries, 85% of its revenue is derived offshore.
Company founder Hamish Kennedy left university in 1984 with a masters degree in electrical engineering and designed a kiwifruit weighing machine under his parent’s house. Compac established its reputation in the US in 1999 when one of its sorting machines helped salvage a frost-ravaged Californian orange crop. Traditional sorting methods weren’t accurate enough for damage on this scale whereas Compac’s innovative technology could tell which oranges were damaged by weighing their density. Golden Valley Citrus initially thought the machine rejected too much of its crop but the discarded oranges proved to be damaged when cut open.
Compac’s biggest strength, Flocchini reckons, is the pool of talented technical people available in New Zealand at pay rates far cheaper than the rest of the world. And it’s not just the cost. People of that calibre in the US probably wouldn’t even work in the horticultural industry.
Compac spends a whopping 20% of revenue on research and development. “It’s what New Zealand needs to do. As a country we’re never going to go out there and dominate things in the world but we can get out there and be very clever and find opportunities in every market.”
And its sophisticated weighing technology is more accurate than anything else available. John Bosch of Te Puke kiwifruit packhouse Eleos uses only Compac sizers because the difference between inaccurate and accurate weighing can account for up to 5% of the crop value or up to 25c on a per-tray equivalent. “The lighter you can make the trays through more accurate weighing, the more cash you take out of the business.”
The company branched out into other fruit and vegetables and averaged 20% annual growth in the past decade. Though the pace slowed last year, Flocchini is confident growth will improve this year providing a higher exchange rate doesn’t wreck profitability.
The company’s had recent success with the Tastemark fruit grader, capable of labelling individual fruit according to taste. It uses near-infrared (NIR) technology to shoot a picture of the interior and chemical composition of the fruit while on the conveyor belt. The technology is produced from Compac’s factory but sold under a sister company, Taste Technologies, and a different trade name. So far, this has allowed the NIR technology to be installed on mechanical systems made by six of Compac’s major competitors without raising anyone’s hackles.
