ANCA: the Australian manufacturer fighting COVID-19 and beating the odds
The Melbourne-based ANCA Group is best known as a global manufacturer of precision tool-grinding machines, equipment and software. But now the global spotlight is on ANCA after it became the latest Australian company to join the fight against COVID-19.
ANCA Co-Founder and Joint Managing Director Pat Boland, along with Manufacturing Operations Manager Mark Patman, both know the past and present difficulties of local manufacturing in Australia, but more importantly, the opportunities that lie within it.
A well-oiled machine
Founded in 1974 by Pat Boland and Pat McCluskey when the pair purchased a $4,000 mini computer, ANCA has grown and evolved into one of the world’s most sophisticated manufacturers of grinding machines, motion controls and sheet metal manufacturing.The ANCA Group now comprises of three key businesses: CNC Machines which designs and manufactures tool and cutter grinders, ANCA Motion which manufacture the control systems and software that are used in CNC Machines, and Sheet Metal Solutions that create sheet metal products.
Of the three companies, CNC Machines and the tools that are produced represent the bulk of ANCA’s business.
“We make machine tools, but we also make the components that go into those machine tools, which keeps us fairly busy,” says ANCA’s Manufacturing Operations Manager, Mark Patman.
“Essentially what our machines do is make cutting tools. These tools are used in a very wide range of applications: the obvious ones being aerospace, automotive, defense, woodworking and medical. The cutting tools then get put in machines that are made to produce all kinds of products, from iPhones to automotive parts or complex gears.”
Though the quality and precision of the tools that are created by ANCA is critical to its value, the software is what separates ANCA from the pack and has allowed the company to expand around the world.
“Rather than the type of piece or the size of the tool needed, the most vital part of the machine is often the software. For example, making software that will go into a surgical drill that will be used for a hip operation, is very different than a woodworking drill, even though the actual tool is about 99% common,” says Mr Boland.
This level of sophistication and innovation has allowed ANCA to expand to international markets over its 50-year history.
“Though we have a few great customers in Australia, the vast majority of our production is exported to all of the manufacturing bases in Europe, Asia and the US. Wherever there is major manufacturing happening in the world, you will probably find an ANCA machine in there somewhere,” says Mr Patman.
According to an Ai Group report released in 2019, manufacturing revenue in Australia has declined by $46.1 billion over the past 10 years with more than 100,000 jobs being lost across the sector. Meanwhile, Victorian Opposition Leader, Michael O’Brien, has proposed a $1 billion fund to “bring manufacturing home” to Victoria.
Though the statistics are grim for Victoria’s manufacturing industry and the ambitions are high for the politicians, ANCA has intimate knowledge of why local manufacturing is so difficult.
“Manufacturing in Australia really suffered from the mining boom. It’s a world of difference competing with a current currency level as opposed to when it was $US1.11. I mean, there were reasons the government allowed the currency to float that high, which was to prevent inflation during the mining boom. This had some collateral damage with the manufacturing industry,” says Mr Boland
Despite this tempestuous industry, ANCA have managed to not only continue their world-class manufacturing of machine tools, they have continued to thrive and expand their global presence.
"ANCA is very geographically diverse, that coupled with our diverse skillset, it means we are usually pretty safe. Our business model means that if the US is up and China is down, or vice versa, means we will always have a strong business somewhere. But with all of that, it has really been tested with COVID-19 impacting all industries across the world all at once.”
So how have the ANCA Group managed to achieve this success? According to Pat Boland, the answer lies is one word: innovation.
“People will only buy from you if they have a good reason to. We sell in Japan against the Japanese competition, we sell in Germany against German competition, we even sell in China against Chinese competition. It’s simple. We just have to offer a better mousetrap. Innovation is the key to our success.”
Rise of the machines
It is without doubt that past few decades have signposted a grim future for Victoria’s manufacturing industry. That is, unless the nature of the manufacturing industry is to change the way it does business.
Reports have shown that some Asian countries are able to host an entire operation off the same cost that of one employee in Australia. So, how do other expensive countries such as Germany and Switzerland manage to have such thriving manufacturing industries? Pat Boland believes the answer lies in automation.
“We have customers in very high-cost countries such as Switzerland, and Japan, but they manage to thrive by looking at their productivity costs.”
“Using automation to keep you competitive is definitely something that we have done in our own business which keeps us competitive against the cheaper countries.”
Some businesses around the world are faced with the ultimatum of either adopting automation, or closing altogether, like a Swiss company that invested in ANCA machines which then allowed it to avoid closure.
The Swiss company was able to maintain their manned dayshift, while using the specialized ANCA machines in an automated night shift as well as unmanned weekend shifts. More and more businesses are now finding that investments in automation today can be more profitable for their business in the future.
“Our machines vary from around $200,000 for an entry-level machine, then anywhere up to $2 million for a more complex machine. More and more of our machines are highly customized as each customer is now looking for automation.”
The NOTUS Program
In early April, the Federal Government put out the call for 2000 medical ventilators to be made in order to keep up with the demand created by COVID-19.
Medical device manufacturer ResMed increased their production in Western Sydney and a consortium of Australian manufacturers banded together to start making ventilators through the 'NOTUS Emergency Invasive Ventilator Program', known as the NOTUS Program.
The NOTUS Program, led by tech firm Grey Innovation and supported by the Victorian Government and Advanced Manufacturing Growth Centre (AMGC), secured $31 million in Federal Government funding to achieve the target.
It was during this national call-to-arms that ANCA’s infrastructure along with industry connections became pivotal to their involvement, using existing relations with the team at Grey Innovation to get involved.
“AMGC were also looking for help, so we put in a submission to them saying we had capability and capacity to help contribute to the fight against COVID-19, but it just so happened that both AMGC and Grey Innovation were working towards the same project,” says Mr Patman.
ANCA’s involvement in the NOTUS Program has demonstrated the benefits that come with collaboration – particularly for government contracts.
“Our staff were really excited to get involved in this project and make a contribution, so really it’s been our whole organization who’s happy to be included… we can definitely say the project has brought our business relationships together, creating a big consortium of some very big business which will potentially foster some ongoing relationships,” says Mr Boland.
Along with the financial security of the project and future potential contracts, working on such a high-profile project has also provided ANCA with public acclaim.
“It’s quite remarkable how interested everyone is into how we’ve adapted and how our industry can help tackle the virus.”
Like so many other businesses, ANCA have faced their own challenges in dealing with the COVID-19 pandemic.
“The virus is having a severe impact on ANCA at present… it’s not just our demand, but our supplies have had issues, shipment times have risen, it’s been difficult at time to even get air freight for components,” says Mr Boland.
While the NOTUS Program has been a welcome addition to ANCA’s portfolio, Mark Patman acknowledges the factory floor has had to evolve and adapt quickly to the new world order, bringing some unique challenges.
“The whole online environment during COVID-19 has been really interesting. I mean, every business is going online these days, but running a factory online has proven to be quite the challenge. After the coronavirus hit, things definitely started to slow down and we were definitely feeling the impact.”
“For the past few months, about half of our staff are now working from home. But for the shop floor we’ve introduced area zoning and shift zoning… all of it has been effective so far and our staff are all really supportive of it.”
To combat the slow of business and the sluggish transport of materials, ANCA has been able to not only take advantage of Federal and State Government grants (such as JobKeeper), but also international help for their foreign outfits.
“Government support has been quite significant. For our Australian operations, the JobKeeper scheme has been quite helpful. But also, in our US base, we’ve had the Paycheck Protection Program, in China we are getting rent support in our office. Throughout the world, governments are desperate to keep business going so we can all contribute to the resurgence post-COVID-19.”
Though these support structures have kept the business steadfast, it is still unclear what the post-COVID-19 market will look like, both for manufacturers and their clients.
“One of the changes we are unsure about is the changes to the selling process. With the surge of video conferencing, I think there will be a lot more electronic webinars and so on rather than site visits.”