AOR outlines survival strategy – by Michael Browning
Premium Queensland manufacturer fights back against rising threat of imports
It may surprise some people that many Australian RV manufacturers don’t know the real cost of what they are building or how to read the warning signs that they are in financial trouble.
Keeping a tight control on inventory, costs and quality are more important tools for survivors in the industry than annual model updates and big advertising budgets, according to Russell Evans, General Manager of Caloundra, Qld-based Australian Off Road, who says strict procedures are essential to ride market fluctuations.
“We can tell you to the day, six months ahead, when your Super Camper will be built and we know to the dollar what it will cost us,” he says. ”So we know our cashflow very precisely and if there’s a problem, we’ll have plenty of warning to make adjustments”.
Queensland’s AOR closely monitors the market to predict future trends
He said red and green arrows on a spreadsheet show at a glance whether a task is on, under, or over budget.
“We have a rule that says we won’t sell another trailer if our cash flow projections tell us we can’t pay our bills in six months’ time,” Evans told caravancampingsales during a recent factory visit.
“This is in direct contrast to many in the industry who keep chasing new customers long after the writing is on the wall.”
Evans says quality is a key area where local manufacturers can distinguish themselves from imported products.
Keeping a close eye on costs is helping AOR stay afloat in the turbulent RV industry
“However, an important thing is to understand the difference between Quality Assurance and Quality Control,” he qualifies. “One is about ensuring that there is a common quality philosophy in the company, but the other ensures that it is practised at every stage of the build process.
“Some companies chase this by rectifying any production issues before delivery, but we aim to minimise rework by applying quality management at every stage of manufacturing, which we believe is more efficient and more cost effective.”
To achieve this, each workstation is armed with a tablet on which the task-time and any issues are logged, with the time included in the build cost.
State-of-the-art water flow management is a point of difference for AOR
Component costs have been pegged by AOR now dealing directly (wherever possible) with suppliers, rather than through middle agents. The necessary volume to command a lower purchase price is achieved at AOR through a new online warehouse that allows wholesale access by service agents and retail access to owners, which drives volume.
Then there’s the obsession that AOR has with engaging its owners and seeking their advice, which stems from practices established since the company’s founding in 2000 by owner and Managing Director, Steve Budden.
The company’s online Forum has since grown to around 1000 members, who AOR consult regularly.
“We went out to the Forum recently and asked them to tell us what areas we could criticism that everyone else could see,” explains Evans. “But, our owners are passionate about their trailers and relate closely to them, so their feedback is genuine and very helpful. We feel confident in shaping future products on things they tell us.”
Steve Budden and Russell Evans are determined to keep AOR on track despite the threat of imports
This information flow has extended to the naming of new models, with the tandem axle Aurora luxury off-road caravan introduced five years ago given its moniker based on Forum suggestions. The name of AOR’s new Hardtop model to be unveiled later this month was also shaped by Forum feedback.
“Six months ago, the full-height Matrix and Aurora were selling strongly, but forward demand for our Pop Top models had slowed. So we could see a shift toward Hardtops,” Evans says.
“We have anticipated market changes before, when AOR transitioned from being a manufacturer of soft floor to hard floor camper trailers, then later to Hybrids – all of which happened ahead of general market trends.
“You can’t make brave moves like this unless you really know the market and your customers.”
Accounting is just as important as marketing for business survival, says AOR
Another area that Evans says is important for a specialist manufacturer like AOR, is to stay ahead of the game by embracing proven new technology.
“Our customers trust us to give them things that work,” he says. “They don’t want to be part of an experiment and risk being stranded!”
Product innovation is another area that AOR relies on to keep them ahead of the market. While rivals can copy an existing product, they can’t copy the future, Evans explains, a philosophy that rival Victorian off-road manufacturer Track Trailer also embraces.
So, a new tandem axle model to bridge the gap between the Matrix and Aurora is in the pipeline, with the AOR Forum again pointing the way for Budden, who designs all the company’s models.
The quest for perfection is evident during all stages of the production process
The company founder is a perfectionist who obsesses over details, such as the shape of the custom-built fresh, grey and black water tanks that slot precisely in between the main rails and cross members in AOR’s Supagal chassis, or the flow of water between them through tubes that pass through the chassis rails.
“He’s a visionary,” says Evans proudly. ”Our customers look to him for guidance on where they should go next.”
So what is that direction? Well, the signposts point to more battery storage, more connectivity and improved lightweight construction techniques.
AOR sells a third of its 150-odd annual production to existing customers
Other products gather at Caloundra from the USA, China, Japan and Indonesia, but are all built to AOR’s specification. ‘Made in Australia’ is an increasingly important statement as imported products take a greater share of the RV market and AOR says the majority of its components are still sourced locally and come together in-house.
Both Budden and Evans say that despite its control systems and tight management practices, AOR will never aspire to become a major player in the Australian caravan industry.
Output remains at about 150 trailers a year, or one every one and half days, with 30 per cent being sold to current customers.
AOR’s ability to foresee and meet market demand with niche-filling models has kept the order books full, so despite the current tougher RV times, just 15 production slots were left for 2019 when we visited.
”We plan to be a survivor in this industry by doing things properly and giving customers what they want,” says Evans. “Not everyone in the Australian caravan industry can promise or deliver that.”