Enztec growth slowing something of a relief
Enztec is a hi-tech, fast-growing manufacturer and is exactly the type of company Christchurch wants more of.Turnover growth at Enztec is starting to slow down a bit, but management seems almost relieved after experiencing three years of growth in excess of 80 per cent.
Enztec general manager Stephen O'Neill says he is expecting a 35 per cent increase in turnover this year, which is still pretty good considering the definition of a high-growth company is around 25 per cent.
The bigger the company gets the more challenging it is to grow and to manage that growth, O'Neill says, but he seems excited by the prospects.
"It's challenging, but bring it on. We're not here for a boring life."
A public listing is on the horizon but the timeline is dependent on the market conditions, O'Neill says.
The firm was named large exporter of the year at the Air New Zealand Cargo Canterbury export awards this week.
It designs and manufactures surgical instruments used in hip and knee replacement operations.
Enztec was created in 1993 by Paul Morrison, who is the company's business development manager, and James Burn, an orthopaedic surgeon, who still owns shares in the firm.
It is owned by Orthopaedic Synergy, which was formed late last year as a holding company for joint-venture partners Enztec and United States-based Omni Life Science, which designs and distributes hip and knee implants.
Orthopaedic Synergy is 73 per cent owned by New Zealand shareholders including Auckland investment firm Birnie Capital Partners (FR Partners), whose managing director is Bill Birnie, a former executive at 1990s' high-flying investment bank Fay Richwhite.
New Zealand venture capital investment fund Pioneer Capital Partners invested US$4.8m in Orthopaedic Synergy earlier this year.
Some of the US investors include surgeons who use Enztec's instruments, which O'Neill says is a good endorsement of its products.
A full set of knee instruments, which includes 200 pieces, would be worth around US$45,000 (NZ$71,000) and would last for about five years depending on how much they were used.
Some 96 per cent of Enztec's multi-million turnover is gained from exports, with the US making up 45 per cent and Europe, Japan and Britain the rest.
The potential for growth in those markets is big, as the number of hip and knee replacements being done is predicted to grow internationally by eight to 10 per cent each year for the next 10 years. The baby-boomer bubble and increasing levels of obesity are to blame. "Orthopaedics is a huge growing hungry market," O'Neill says.
Enztec plans to capitalise on the boost in demand by constantly developing new products and refining existing ones. It has a big emphasis on research and development and is looking to expand into manufacturing implants.
Expansion at Enztec has been so rapid it has outgrown its Sockburn base and has put staff into another building across the road. It now employs 45 staff when 18 months ago it had 32.
Staff include highly skilled and highly paid biomedical, mechanical and design engineers, and it also employs unskilled people, who it trains to work on its state-of-the-art machines. The company also outsources about 50 per cent of its production to 15 businesses, most of them in Canterbury.
Canterbury Employers' Chamber of Commerce chief executive Peter Townsend said Enztec was a good example of a company making an increased contribution to Canterbury.
"They've got all the right ingredients. They're really smart operators. They've got this laid- back, relaxed approach to business but a professional approach," Townsend said.
O'Neill did not want to disclose Enztec's exact turnover but he says it is higher than $5m and lower than $15m.
The health sector is fairly resilient to the recession, because people still need new hips and knees regardless of the economy.
Unlike other exporters, Enztec was not largely impacted by movements in the dollar, because its margins are not that small, O'Neill says.
"We've got the right recipe but there's no guarantee of success. We have all the right ingredients there but Jamie Oliver could put them together and I could put them together and we'd get a different result," O'Neill says.
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