By Andrew Patterson
Think of the world’s leading car audio and speaker brands such as Kenwood, Sony, Pioneer, Alpine and JVC and you probably didn’t realise that a NZ based company is also competing head to head with these consumer titans and has been responsible for some world first product development.
While its profile might not compare with some of its bigger competitors, Fusion Electronics has carved out its own following of raving fans.
Started 11 years ago, the business had its ups and downs before being acquired by leading technology entrepreneur Sir Peter Maire.
His vision was to create a Kiwi company that designed, developed and produced a range of superior audio products for both cars and boats that would have their owners falling in love with their systems.
Operating as two divisions, on the car side, the target market are young males for whom a fully kitted out car audio system is the ultimate status symbol, complete with banks of subwoofers and built in amplifiers where you’re hearing them long before they can be seen.
However, it’s the marine audio product range where the company is increasingly becoming more focused.
It’s this sector that can attract high margins as boat owners lavish their newly acquired toys with fit outs that can often be more extensive than those found in their own homes.
Chris Baird, CEO of Fusion Electronics, who joined the company in 2006 after his time with Navman, says the business learnt an early lesson about establishing its product in the market.
“It’s really all about the product and designing something that isn’t the same as everyone else’s. You’ve got to be different. You’ve got to break away from what everyone else is doing.”
“Me too products, as we call them, are not going to survive in the tough market that we’re in, up against some of the biggest players in the world such as Sony & JVC, if you don’t have a real point of difference.”
“We took over a car audio business, Fusion, and we tagged it straight away as Fusion Electronics. So that has allowed us to develop a much broader product range.
“But essentially our business is entertainment and we’ve specialised in providing that for both the car and marine installations but we’re already expanding into other potential niches such as spas, trucks, recreational vehicles (RVs), caravans and the future will be about getting into the home as well.”
Surprisingly, given current economic conditions, marine sector sales have rapidly outpaced those to vehicle owners.
“The split would be roughly 60/40 on a turnover basis, which is actually quite amazing when you think how many cars there are verses boats.
New niche market
Fusion Electronics focus on the marine audio sector came after discovering it was a niche that was not being treated seriously by its competitors.
“We saw a huge opening in this sector for us after we found our competitors in the space were car audio companies simply doing what I referred to earlier as painting their products white and calling it marine. They just weren’t taking the market seriously.”
“So six years ago when I joined, we totally changed the focus and we did everything about designing the products from the ground up for customers wanting a high quality audio system for installation in their boats.
“That presented a whole new set of challenges for us and to be brutally honest there was no one else in the market doing that. There were certainly lots of well-known brands such as Clarion, Alpine and Sony operating in the space, but they were really just car audio products pained white.”
Innovation
Owner Sir Peter Maire was a driving force in bringing new innovation to the table such as building the units to allow for iPhones and iPods to be plugged directly into them so everyone on board can have access to their favourite music – a world first.
“Peter’s a clever guy and he really thought it through and he knew what he wanted on his own boat. I call him the Steve Jobs of New Zealand. So we’ve always tried to bring that sort of smart thinking to the table because ultimately that’s what separates us from our competitors.”
Having the backing of a successful technology entrepreneur also has its advantages, particularly when you’re trying to grow the business.
“Peter doesn’t see any boundaries when it comes to building a successful global business from New Zealand.”
“What’s also important is that he doesn’t believe in having a company that looks for small parts of the market to dominate and that’s where I believe a lot of kiwi companies go wrong. If you end up only dominating small areas of the market you leave yourself totally exposed. If you’re very good in only one area it makes it very easy for someone to come along and knock you off.”
Customer Profile
Given the differing nature of the end user, is there a typical Fusion Electronics customer profile?
“On the car side, traditionally it’s always been your typical18-26 year old yahoo who would put amplifiers and sub woofers into their vehicles and it would be the car next to you at the lights going boom, boom, boom that would really give me the s***s to be brutally honest. Now I look at that car and I say there’s $1500 to $2000 worth of product there and now I like them!”
“That market is still around but increasingly the growth is in the emerging markets, places like Brazil and India. It’s actually growing much less in places like NZ, Australia and the U.S. because young people have a vastly increased number of spending options available to them including ipads, PlayStations, 40inch TVs, MacBook’s etc whereas previously the first thing you did was buy an old car and do it up.”
“On the marine side, its 35 year olds and above who are obviously successful in their careers and being prepared to splash out on themselves.”
Technology development
Fusion Electronics develops all its own technology here and has its manufacturing operations in China.
“We’ve won a couple of government grants and I have to say, as an Australian, I find the NZ government here has done an exceptionally good job with supporting companies like ourselves because without that support we would have really struggled.”
“I have to say our biggest problem right now is finding enough quality engineers and I imagine that’s a problem you are hearing from lots of other businesses like ours.”
Audio products have now been increasingly more popular as consumers carry their music with them at all times on iphones and tablets suggesting that Fusion Electronics has plenty more innovation to contemplate in the future.
KEY FACTS
| Established: | 2000 |
| Staff: | 42 |
| Turnover NZ$ | NZ$ 26 million |
| Annual growth rate: | 30% |
| Biggest export market: | USA |
| Emerging growth markets: | India and Brazil |
| Total product range: | 80 |
| Export / domestic sales split: | 90% : 10% |
| Profitable: | yes |
| Ownership: | Private (Sir Peter Maire and associated interests) |
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