Flying High

Mike McDonald didnt think he had the time to enter this years Ernst & Young Enterpreneur of the Year Awards. Running a company the size of Mactec Aerospace tends to keep one busy enough and it took a little persuasion from his colleagues to submit an entry.

Just as well he listens to his advisors, because McDonald took out the coveted Young Entrepreneur Award, and has a chance to be named overall winner (at the time of writing the Supreme Winner was still to be announced).

Mactec Aerospace was established in 2000 by McDonald and his father Ken, who had backgrounds in aircraft engineering and airline ramp management respectively.

McDonald left school without completing Sixth Form Certificate, however, in 1995 was selected for a five year apprenticeship with Ansett New Zealand, which he completed in just four years. He had the distinction of being the countrys youngest aircraft engineer with an Engine Type rating (signing approval) for gas turbine engines.

With the collapse of Ansett New Zealand  McDonald moved to Air New Zealand, and was still working for the company when Mactec Engineering was launched, a small engineering business where they largely worked in the evenings.

Ken had seen the potential for airport ground support equipment while working in the airline industry, and when the McDonalds pitched the idea of a ramp for the disabled to Eagle Air, they were pleasantly surprised to receive an order for five.

Mactec was now in the aerospace business, and between 2002 and 2005 the company experienced a remarkable 1000 percent growth in revenue. Last year it featured in the Deloitte Fast 50 as the countrys sixth fastest growing company and was the South Islands top performer. It has also been named Emerging Exporter of the Year on two occasions.

Today exports make up around 80 percent of the companys turnover  it has become the leading provider of ground support equipment in New Zealand and Australia, and has civil and military aviation customers as far afield as Bahrain.

From its second manufacturing plant in Jakarta, Indonesia, Mactec Aerospace produces a range of products from mobile belt loaders and baggage carts. It currently employs 65 fulltime staff over three countries.

McDonald admits that although they had a burning desire to succeed in the early days (because we had no other job and our houses and lives were on the line) they had not planned on the company becoming so big so fast. He believes the companys growth has piggy-backed on the recent rise of the low-cost carrier market, which has fuelled demand for ground service equipment. He also attributes their success to a single-market focus, having a game-plan in place, and some old fashioned guts and determination.

There are other factors for success too, according to McDonald  such as:

Their innovative approach to products  with an emphasis on technology, robustness, automation, and user-friendly operation.

The McDonalds background in aviation  they understood the safety factor, the need for functionality and the quick turn-around requirement for airlines.

Superior design and quality of manufacture.

Lessons in business

A fast-growing business has taught the McDonalds many lessons along the way. While they had to take on a number of management roles in the early days, Mike believes they made the mistake of leaving the decision to relinquish certain roles too late, which meant that they were often busy putting out fires. We also made the mistake of being too revenue based at one stage, rather than focused on manufacturing and production, he says. Thanks to managers in key roles that balance has now been sorted.

The company had also funded growth entirely out of cashflow  financial partners only became involved last year. Again McDonald thinks this is a decision that could perhaps have been made sooner.

Whether the company could have grown faster had certain steps been taken sooner is today of little consequence  the fact remains that its performance has been nothing short of spectacular.

McDonald believes that success in business is all about surrounding yourself with people who are smarter and brighter than yourself; and its about getting staff involved in the company so they stick with you through the highs and the lows.

His advice for other would-be exporters is to first define your market, and ensure that your product is finished properly and right for the market.

Use local people and local knowledge to get established in markets  they understand the market better than us Kiwis  particularly markets such as Asia and the US.

As for future prospects, rather than look to China for growth, as everybody else seems to be, Mactec Aerospace sees South East Asia as more lucrative  and Indonesia in particular. With 27 airlines, 23 airports, seven international airports, plus 25 million of its total population of 220 million flying, and English as the second language, McDonald reckons theyre onto a good thing. Like he said, its all about defining your market.   NZB