From Hurlcon to AstralPool: the evolution of Australia's largest manufacturer and equipment supplier

AstralPool

By Peter Wallace
Monday, 13 March, 2017


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In November 2016, I finished up as Managing Director of AstralPool Australia, more than 26 years after the company was founded as Hurlcon. During this time the company transformed from a small importer into one of the leading pool equipment manufacturers and suppliers in Australia, if not the world. The following are some key lessons we experienced through that journey.

I was sitting on the back patio in early December in 2001. Hurlcon was 18 months old and we had just had our biggest month ever, with sales of more than $300,000. Yet I was intensely unhappy — for all the work (often 20 hours a day, six and seven days a week), we had made a measly $16,000 profit for the month. (Like most companies in the pool industry the real annual profits were generated over summer and November was supposed to be the biggest.)

What was I doing wrong? Why were margins low, expenses high and why was the company struggling with cash flow?

From importers to manufacturers

The company was conceived and founded by my wife Helen and me in late 1989. Our idea was to import gas pool and spa heaters from Purex in the USA and sell them primarily to Melbourne and Sydney pool and spa builders and retailers.

We had prepared a reasonably detailed business plan with forecast sales, profit and losses and expansion plans from year one to year 10. One of the big mistakes I made was not understanding the business’s capital or cash requirements. Despite working out the sales and profit forecasts, I never really understood how much money would be tied up in stock and debtors — our customers who owed us money. And what was worse was that I hated asking for money from our customers and hated suppliers asking us for money.

After explaining my woes to Helen, she quit her job and joined Hurlcon running the accounts. She applied some wise advice from her mother, a successful small business owner: “Get your invoices out and your money in.” Within a short space of time, Helen had collected all the overdue debts, we had paid our suppliers and the business started to lift again.

Importing and/or manufacturing combined with distribution can be capital-intensive and absorb a lot of cash. From the time we paid a supplier for products to the time we collected the proceeds of the sale, typically more than 5 months would pass. Transit time on the water, customs clearance, stocking, sale, delivery, invoicing and then waiting for payment all added up and depleted cash reserves. And as the business grew there were always several container loads of heaters on the water, hundreds of heaters in stock around the country and hundreds of sold heaters unpaid for at any one time.

In 1993, Purex made some gas heater models obsolete, so we decided to build our own spa heater — and the HX 120 pool and spa heater was born. Most of the components were sourced from third-party manufacturers and we assembled the product in-house. It wasn’t until around 1996 that we purchased second-hand sheet metal and manufacturing equipment to manufacture the heaters ourselves.

However, this first design and manufacturing experience taught us a few things:

  1. We could design products with some unique innovations that the market wanted and liked.
  2. Manufacturing was probably less capital-intensive than importing (especially in Australia where lead times from overseas were a minimum of six to eight weeks).
  3. We had a real appetite for manufacturing and product development, which became a core reason for our future growth.

Over the next 19 years we developed hundreds of new products, lodged more than 30 patent applications, continually invested in new manufacturing technologies and moved factories more times than I care to remember.

In 2006, we had five offers to buy the business and although we hadn’t planned on selling, we eventually sold to Fluidra and rebranded ourselves as AstralPool Australia, Fluidra’s major pool equipment brand.

Although I was contracted to stay on for five years, I stayed just over 10 as CEO of the Australian business.

Fluidra, led by executive chairman Eloi Planes, is a remarkable company. The freedom and trust they gave me and our team allowed us to retain our Australian style while continuing to grow aggressively in the market. Since the sale, the business in Australia has grown more than 400%.

In fact, over the 26 years since the foundation of Hurlcon, the business has never had a backward year and has averaged more than a 20% compound growth.

Core values

Some of the things I personally learnt and hold as core business and personal values include:

Continually engage and mentor staff

Staff are our most important asset and with ongoing training, direction and trust in their decision-making, they will implement all the decisions that make a business successful.

Surround yourself with mentors

I always had great mentors over the years who could advise me in many aspects of business. These mentors had all run larger (at the time), successful and similar-style businesses. In particular, I remember people like Paul Parson from BioLab in Canada, Peter Roberts from Clearwater Chlorinators, Graham Myers from Quipmaster Filtrite and David Cleland from Davey products.

Never stop learning

I continually attended business, sales and manufacturing courses. Most of these were short courses from a few days to a few months.

Never stop listening and observing

Customers, suppliers and competitors are all brilliant sources of industry information.

Get rid of negative people

Most people have dead weights to carry in their lives; however, business is hard enough without colleagues and associates continually telling you your plans will never materialise.

Never forget your suppliers

If your suppliers feel they have a vested interest in your business succeeding they will go to extraordinary lengths to help you.

Partnerships

Hurlcon started with just four shareholders/partners. Only Brad Weir survived with me until we sold the business. Partnerships are difficult — and while they can minimise financial burden and risks, it is really important to share business and personal goals and have defined areas of responsibility.

Succession planning

I was never clever enough to step back from the business and let it run under management. Even though AstralPool has more than 250 staff, I firmly believe it needs an active, hands-on management style to be successful.

However, I did spend the last six years of my leadership preparing key staff to take over the business and I have high confidence this handover period has put AstralPool Australia in an excellent position.

The 26 years were never easy, always interesting, often stressful but ultimately very rewarding. To have had an idea in 1999 to start a small importing business and grow into a manufacturer producing more than 400,000 appliances each year sometimes defies my own belief. More importantly, I believe AstralPool has only achieved a fraction of its future potential.

I am excited to be staying on with AstralPool in a limited capacity, concentrating on product development and export markets.

Image credit: ©iStockphoto.com/violetkaipa

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