Invensys: a 15-year IT veteran

'In New Zealand we must have world-class telecommunications, air services and shipping services plus an ongoing supply of well-educated people in order to continue to compete,' says Dr James Kennedy, chief executive of Christchurch-based power system manufacturer Invensys Energy Systems.

"In New Zealand we must have world-class telecommunications, air services and shipping services plus an ongoing supply of well-educated people in order to continue to compete," says Dr James Kennedy, chief executive of Christchurch-based power system manufacturer Invensys Energy Systems.

"Geographical isolation is not really an issue for our type of specialised product, as long as we can easily communicate with our markets, ship our products efficiently and continue to grow and innovate. If any of these factors are not right then we will get left behind."

Invensys Energy Systems, known as Switchtec before taking the name of its US parent company, says it was an early innovator in the knowledge economy.

"We have been exporting high technology products that are the results of the intellectual capital of this company for 15 years," says Kennedy. He points to the company's $100 million sales and the fact that more than 90% are exported.

Invensys was an early adopter of email and the web. The company has used the internet for email since 1994 and has had a web site since 1996. In addition to the public website, Invensys has password-controlled sites for sales people and service agents, and has begun development of an online configurator for its products. This will allow customers to design products on the fly, and will be incorporated into an e-commerce application being developed by its parent company.

"We will expand this in the future to include a special website for our suppliers where they can download information relevant to them," says Kennedy. "This will save time all round, as they won't have to telephone or fax our purchasing people for the information." The company is to use the internet for other functions, such as recruitment, and has put its corporate services manual on the company intranet. Invensys has been affected to some degree by a shortage of specialists in certain areas. "This has never been critical to our operations but it would always be easier if there was a bigger pool of talent to recruit from," says Kennedy. "We've addressed this issue to some extent by funding cadetships in relevant areas through the Christchurch Polytechnic and University of Canterbury and by recruiting some specialists overseas." The increasing number of high-tech industries in Christchurch has also helped to attract more electronics and software experts to the area - though that can bring its own problems, he says, if a new company sets up shop and starts recruiting aggressively.

The company relies upon the local communications and utility infrastructure. "The excellent communications infrastructure that has been built up in New Zealand is essential for increasing exports," says Kennedy.

In use of new technologies, one particularly successful initiative undertaken has been the use of electronic banking for payments. About 90% of all the payments the company makes are now electronic. This has increased efficiency and reduced paperwork.

Invensys, like all exporters, faces a number of challenges including the barriers created by import tariffs and exchange rate fluctuations. "We welcome the progress recent governments have made towards negotiating lower trade barriers from the countries we export to. Further work in this area will definitely help us," says Kennedy. However, serious currency fluctuations are always a concern, he says. The current low level of the New Zealand dollar is an advantage. "However, our products use a lot of imported high tech components that have to be bought with US dollars, so the higher prices we have to pay for those imported components counter-balance much of the benefit of a low NZ dollar. A high US dollar can also have a negative effect in some of our markets where a weak local currency makes imported telecommunications goods - usually paid for in US dollars - more expensive. This slows the expansion of telecommunications networks in those countries and therefore reduces the demand for the type of equipment we manufacture. However, low levels of inflation have helped us to remain competitive and we would not want to see any change to that."

The stable employment relations environment of recent years has helped Invensys to concentrate on its business without being distracted by employment disputes and disruptions to its suppliers. Government policy changes are raising some eyebrows, but the company is taking a wait-and-see attitude.

He says benefits from the success of the company flow directly to the staff through a profit share scheme. "But we're in a competitive global economy and we have to be flexible and sometime have to adjust quickly."

www.invensys-energy.co.nz

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