Scott on track in changed world

Scott Technology chief executive John Kippenberger with a loin deboning machine created in the...
Scott Technology chief executive John Kippenberger with a loin deboning machine created in the company’s Dunedin factory. PHOTO: GREGOR RICHARDSON
Dunedin-based Scott Technology was back in black when its half-year results were announced earlier this week. Chief executive John Kippenberger talks to Sally Rae about the company’s new strategy and operating a global business in a global pandemic.

Imagine an automated trussing system which can truss a chook in five seconds — that’s no paltry feat.

Scott Technology is behind some of the world’s leading automation and robotics technology, working with multinational companies ranging from Rio Tinto to Bosch.

In the United States, it has been working with Pilgrims, one of America’s largest bird processors, where there were initial plans around the roll-out of the new poultry trussing technology throughout its operations.

What Scott Technology does is extremely clever. At its helm since late 2019 is chief executive John Kippenberger, who describes the NZX-listed company as "one of those unsung New Zealand success stories".

Often there was a perception the company built parts for dishwashers, or "a meat machine", but the reality was it was a "truly global business in every sense of the word".

Since his appointment, Mr Kippenberger has led a "reset" the company, redefining what it does, how it operates and the sectors it is targeting.

Amid all that has been dealing with the reality of operating a global business amid the turmoil that has been Covid-19.

When the pandemic struck, the focus turned immediately to looking after people and preserving cash to protect the integrity of the company to get through it.

"We had to make sure we were financially strong enough to do that," he said.

Alongside that was the need to "try every now and then to smile", the affable chief executive said. Born and raised in Wellington, Mr Kippenberger spent the early years of his career in the banking industry — including foreign exchange trading — working in Wellington, London and Sydney.

Through those years, his father kept saying he had to do something with his life, encouraging him to make or build something — "he was a very wise man," he recalled.

In his mid-30s, the opportunity came up to run part of a large global company George Weston Foods, which recognised potential in him to lead people and develop businesses.

They gave him a series of bigger — and usually in worse condition as the size grew — companies within their stable which were business-to-business, but also consumer-branded businesses, generally across Australasia.

The largest business he ran was 1200 people and $400million revenue with six factories in Australia.

It was a huge development for him in his career, taking control and responsibility for bigger organisations with considerable complexity in the supply chain.

"It really taught me the fundamentals of how critical strategy is and the importance of building energy and passion in behind that so people get a sense of where we’re taking the business," he said.

In 2006, Mr Kippenberger had an opportunity to buy a company of his own with a couple of other investors — Beehive Bacon — "still one of my favourite products" — a smaller business which he went into as shareholder and managing director.

At that time, he had been living in Melbourne and the appeal was both of having ownership himself and coming back to New Zealand with his wife and family.

They settled in Auckland, while the Beehive factory was in Wairarapa. The latter part of his career had a strong regional New Zealand element which was something that he loved, he said.

After growing the business and its subsequent sale, he moved to a role as managing director and chief executive of a manuka honey business, which had been bought by some Australian private equity investors. Its main processing was in Te Awamutu and also had bee-keeping operations in Carterton.

That business grew substantially over three and a-half years before it was sold to a large conglomerate from Hong Kong and Malaysia.

When it came to manuka honey, many thought of the China daigou trade but there were other high-value markets, including Germany and Japan, Mr Kippenberger said.

He was chatting one day to Scott Technology chairman Stuart McLauchlan, when Mr McLauchlan started talking about the business.

While Mr Kippenberger had previously heard "interesting things about it", he did not, at that stage, really have a sense of who it was and what it was trying to do.

The more he learned about it, the more he became interested in it. It had a "sensational" pedigree — a more than 100-year history, based in Dunedin — but also a truly global business.

It had grown particularly over the last five to 10 years and, looking at it from the outside, he could see it was due a relook of its strategy, how the business fitted together and to "really chart the course for the next stage of the company’s life".

That aspect was an attraction for him and he joined the company in late 2019. It was always going to be busy with a restructure as part of a new five-year Scott 2025 strategy, which included a reset of its global footprint.

Right-sizing the business involved consolidating some plants into other operations or either closing or divesting businesses where they were not deemed to be core to the main strategy.

And then there was Covid-19. As the pandemic hit, the company’s immediate priority was "getting people back to their home bases" — a major logistical exercise given there were employees places as far away as Norway.

Then there was a team that was planning a scenario of whether design-and-build activities could be moved among the company’s different sites if different countries shut down.

But it was all unfolding so rapidly, as soon as one model scenario was planned, the global situation of the pandemic had "unravelled another degree".

It was an "extraordinarily" stressful time but what the company had confidence in was the great people across the business, and the intelligence and information it was gathering across its global group was very fast and very effective.

There was also good support from Mr McLauchlan, who sat on various other boards, and saw how other companies were reacting and that was an "invaluable avenue" to see what others were doing.

It then became a case how to "come out to a fast start" — "knowing we would come out the other side at some point" — and pursuing its strategy which was about focusing strongly on the technology that the company was best at.

In July 2020, Scott Technology announced it had to let go of 20% of its global workforce, including 15 jobs in Dunedin, as a result of Covid-19 impacts. A restructure cut about 150 jobs from the business as it moved to a recovery phase.

Fast forward to now and while there were still disruptions, what had been seen was most markets starting to open up again as companies made positive investment decisions around automation technology, coupled with an easing of travel restrictions.

Mr Kippenberger, a self-described "people person" — one of the things he liked most in business was the people and listening, working together and getting excited about the future — he was looking forward to being with people again.

He was based in Auckland with the company’s chief financial officer and executive assistant. That was because "in normal times" it was easier to get in and out of New Zealand.

Dunedin continued to be the head office of Scott Technology and he had at least one or two trips south every month.

Part of the new strategy was the creation of "centres of excellence’.

Dunedin was the centre of excellence for meat , Christchurch for appliances, and Auckland for mining equipment, giving each place its own sense of identity.

Meat had always been a core part of Scott Technology’s business and, in New Zealand, it worked with the likes of Silver Fern Farms and Alliance Group.

Now its real point of difference on the global stage was the ability to use X-ray and vision technology to get more accurate cuts.

It was very niche technology the company had built on the back of its IP and now it was about playing to its strengths as it looked at how to continue to realise the value from that IP and sell more of that technology.

The meat industry had the drivers of people safety — often it had densely populated plants operating in cold conditions — often there were regional issues with labour availability, and then there were drivers of quality and the need to drive efficiency. Scott was "right at the epicentre of some huge global forces" driving demand for automation.

Mining was also an important part of Scott Technology’s business and the sector was benefiting from record global precious metal prices.

It was about forging long-term relationships with the leaders in those individual sectors, "so we’re not looking at one-off system applications", he said.

Mr Kippenberger was keen to continue to engage with the likes of University of Otago and be seen as a company that offered career opportunities not just in Dunedin, or Christchurch or Auckland, but globally.

The company was recruiting in several areas of its business and, as its strategy took hold, it would continue to build its team in New Zealand and in other parts of the global group.

While excited about the future, Mr Kippenberger also said he was "not getting too far ahead of ourselves", and he remained very focused on the execution of the strategy.

It was still "very early days", but some of the benefits had already played out in the first-half results.

The outlook was certainly looking a lot better than six months ago and the company was positive and confident on the strategy to realise the opportunities in front of it, where it had specific strengths and proven experience.

Scott Technology was a fascinating story.

It started out of Dunedin in the early 1900s engineering parts for the motor vehicle industry then merged into broader engineering support for those struggling to get equipment to during wars.

Fast forward a century later to a company with global operations and a true leader in some very specific areas of technology, Mr Kippenberger said.

"Every now and then we should say we’re proud of what we’re doing, and it’s coming out of Dunedin."

sally.rae@odt.co.nz

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