Unsexy unit racks up the sales

They're hardly high-tech glamorous, are vaguely reminiscent of a mechano set and are ubiquitous in the country's computer rooms. They're the venerable 19in rack, and for Auckland company Enclosure Technology they've proved a multimillion-dollar winner.

They’re hardly high-tech glamorous, are vaguely reminiscent of a mechano set and are ubiquitous in the country’s computer rooms. They’re the venerable 19in rack, and for Auckland company Enclosure Technology they’ve proved a multimillion-dollar winner.

The 19in rack, describing the width of the front panel, was adopted in World War II by the UK and the US. After the war all the major nations standardised on the format, along with its 1.75in unit depth.

In 1995 Guy Loughead was working for PDL Industries as production engineering manager of its electrical unit, having joined the company some years previously as a production engineering cadet. He saw an opportunity because imported racks weren’t always available when they were needed.

So was born a backyard business.

At first he imported racks from Germany, for customers such as Nokia and NZ Police’s IT department, but he soon began manufacturing to customer demand.

“I’d be drilling holes in the morning and calling on potential customers in the afternoon,” he recalls.

“The advantages of manufacturing in New Zealand meant we could be much more flexible for local requirements.”

Today’s customers include heavyweights such as Vodafone, Logical CSI, Radio New Zealand, TVNZ and TV3. Enclosure Technology has around 25 base customers, who provide a lot of repeat business, and around 200 customers overall. It employs 18 fulltime staff at its Albany plant, along with contractors as required. Loughead claims a multimillion-dollar turnover.

On average the New Zealand-made racks cost two-thirds the price of imported racks.

Loughead says the market is typically lumpy and that inventory is an issue if a company is importing. Sometimes the products are shipped made-up, sometimes in components.

“By manufacturing locally, we can be flexible and service most orders ex-stock.”

The use of racks is growing because every new or refurbished building comes with communications gear in the basement.

Loughead says the company is growing 30% year on year. Around 10% of business is export, to Samoa and Fiji and, through Ericsson, to Jamaica. Stratek is also a second-tier exporter. Loughead prefers to leave that part of the business to others because of the costs of establishing sales operations overseas.

Most of the components are New Zealand-made. McKechnie Metals, in New Plymouth, provides all the aluminium, and the steel work is subcontracted out.

Fashion plays a surprising part in the business. The standard colour is cream, but silver and black are also options. “I tell our staff that when the boss visits that part of his company to see the fancy new computers; what he’s really seeing is the attractive set-up, and they’d better get the colour powdering as perfect as possible. We even had one order for pink racks –- from an advertising company,” Loughead says.

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