Korean Brand Bites
Into Aussie Market
After only five years since Zeb Colic took the reins of TaeguTec Australia, the company is starting to bear its teeth into a hotly contested market that is dominated by companies that service the automotive and mining sectors – industries that the company believes they can become leaders.
Since operating in the Australian market since the early 1990s under a different name, TaeguTec changed to formally operate under its current brand almost a decade ago, first as a distributor before this developing Cinderella story grew to become a powerful subsidiary in the TaeguTec family.
“Being brand new, market penetration has been a challenge because of brand name recognition,” said Zeb Colic, managing director of TaeguTec Australia.
Most of TaeguTec’s competitors have been operating in Australia for over a quarter of a century with others being there for over three decades.
“The challenge for us is getting people to know who we are and that we do have something new and fresh to offer,” he said. “That has been the main drive for our success; a lot of products from TaeguTec have been innovative because of their fresh approach to old fashion ideas.”
Colic added that because of TaeguTec’s drive to innovate, customers in Australia have been starting to take a shine to the new player.
So far, TaeguTec’s focus is the general machining market because of its balance where products fly off the shelves at the same time as their core products enter into machines around the country.
Due to their relatively small size, TaeguTec Australia is not locally structured to provide extensive engineering support, design and special tools that larger companies would need daily.
For the next couple of years, Colic is keeping one eye on the general engineering industry with another eye on selling tools to the automotive sector, a segment of the market that is booming.
November new car sales were up almost 11 percent according to the Australian Federal Chamber of Automotive Industries. For the first 11 months of 2012, new car sales increased almost 10 percent with sales running into the 1.02 million mark compared to the same period the previous year.
While the industry is small compared to other car producing countries, the Australian automotive industry is responsible for the employment of over 64,000 jobs in the vehicle-manufacturing sector alone and impacts greatly upon employment in the wholesale and retail automotive industry sectors.
Colic described the general Australian market as well defined and extremely mature with no outside investments on the horizon making sales more competitive amongst the cutting tool companies.
Furthermore, the Australian dollar is continuing to head into a way that is less favorable for exports into the United States market, a once sure winning location.
“For us to move to the next level, it's about technical expertise within the organization, working more closely with our parent company to make sure that our people can provide a competitive edge on the application front to make the tools provide the best value they possibly can for the customers,” he said concerning the future.
With the repeat business being stable, Colic's next step is to hire new recruits, a sign that a company is moving in the right direction.
“It's an investment in brand like it'll be an investment in people both on the technical side and on the training side,” he said.
The biggest push for TaeguTec’s success in Australia came in its early days when they nailed a major supply contract ahead of the more well-known global brands in the business.
The customer is an international known mining and materials company and is the biggest single consuming site of carbide in the country.
“The competitors just didn't have anything to respond with, the guys in South Korea did such a good job building the right product for the customer and that sealed it for us, once this information went around the industry in some ways it sparked it for us and doors started opening for TaeguTec and before we knew it we had arrived,” he said.
“Getting such a big contract for a small company is not easy but when you are basing your proposed cost savings on pure product performance you need to have a great team behind you and we certainly had that.” he went on to say.
“We learnt a lot out of that deal because the volume of the product is massive so it tested our logistical mettle, it tested our organization structure.
“It was a real life test for us instead of just sitting around a board room saying that we are great at this and that, it propelled us into the real world. It was a scary time because the commitment we made with the customer was huge. It would have been quite easy to fall on our face which would have had the reverse affect and killed us in the industry.”
With the knowledge gained from this experience Taegutec has continued opening doors with other plants around the country who now utilize TaeguTec cutting tools as well as TaeguTec solid carbide rolls.
With the future set for TaeguTec Australia, Colic believes that the next step for the industry and the company rests with the machine tool builders who continuously set challenges for cutting tool companies.
“TaeguTec is always thinking outside of the box. I think the core portfolio is brilliant; it's as good as or better than anything else out there,” he said.