SEATING: McConnell acquisition

By: Amie Hickland

Victorian seating supplier McConnell Seats Australia will continue to service the local market

SEATING: McConnell acquisition
McConnell general manager James Lowe at the factory

If it ain't broke, don't fix it.

That’s the philosophy Malaysian-based automotive parts manufacturer APM appears to have taken with the recent acquisition of renowned seating supplier McConnell Seats Australia.

The company was originally started by the McConnell family in 1952 and was sold to Malaysian-based APM in August 2014.

APM is an international supplier with interests in OEM supply to car manufacturing.
Until the acquisition the company was 100 per cent Australian owned — a factor many operators consider when commissioning new buses.

McConnell general manager James Lowe says despite the acquisition, the supplier is still providing the same — if not better — benefits to the Australian economy.

"People say ‘how’s the transition?" Lowe says.

"If you walk through those doors and speak to anyone in the factory, they would say there’s been no change.

"It’s been a seamless process.

"The APM group have been very, very good to work with and now we work for them."

McConnell has seen steady growth in the months since APM’s acquisition, including the addition of an extra engineer and more administration staff.

Lowe says these are positions which there was previously no need for.

"We’ve actually added to our company post-acquisition which is good," he says.

Lowe, who has been with the supplier for nearly five years, has worked hard to ensure the transition of ownership has been as smooth as possible for all involved.

He speaks highly of former owner Denis McConnell and former CEO Alan Smith who have since retired, although Smith does engage with the company on an as needs basis.

The business was started by Denis McConnell’s father James McConnell and specialises in bus seating but also undertakes some rail and light rail work.

McConnell supplies seating to all states around Australia and holds large supply contracts in several states.

Some of the major contracts include Brisbane City Council (Queensland), Perth Transit Authority (Western Australia), and ACTION (Australian Capital Territory) which were won through a tender process.

"The process is that we’ll be asked to tender for the seats and we sit under the primary contractor — whether that’s the chassis supplier or the body builder — whoever is the main contractor," says Lowe, who added local businesses are preferred for use if possible.

"The tenders take a long time to come to fruition — we might work on it for a number of months. But once that tender’s won we’ve got a plenty of work."

McConnell commercial manager Les Holden is also spending more time in New Zealand to help the supplier expand to this market.

"We’re basically supplying to every state and territory," Lowe says.

"If bus is a little bit flat, we’ve got rail to fall back on."

Room for expansion

Although APM have allowed McConnell Seats to continue running as per usual, the company will continue to improve its services in the near future.

Lowe says APM’s position on the global market puts McConnell in a great position to diversify.

"It puts us in a pretty significant position," he says.

McConnell has already started supplying truck system parts through APM and is currently reviewing the rest of the range to see what is relevant.

"They’re so diversified that there’s a lot of opportunity to grow our business outside of the traditional public transport industry that we’ve been doing, which is good," he says.

"Our core business — and we won’t divert from it — is public transport seating for the bus and rail industry.

"We won’t lose sight on that because they’re our most important market segments, and most important customers.

"Even though we’ve been bought out, it’s business as usual."

APM are taking an active interest in the supplier with representatives regularly travelling to Australia.

"They’re still learning about the Australian market," he says.

A number of new players entering the seating industry has done little to decrease McConnell’s overall market share, Lowe says.

"When I started five years ago there were only two other local seating manufacturers and very few seating importers," he says.

"Now look at the number of seating companies that are competing in the market.
"I think if they were going to make a real impact they would have done it by now.

"We’re the number one seating manufacturer in Australia."

McConnell has continued to stay competitive by keeping costs steady as suppliers continue to increase the cost of raw materials.

"Their costs have gone up and we’ve been able to drive a lot of efficiencies through our business to keep our prices competitive," he says.

McConnell currently has a patent on the Educator 2/3 — a seatbelted model which can fit two adults or three small children.

Lowe expects this design to be popular with New South Wales operators particularly, as there has been some discrepancy between the federal and state legislation.

"There’s been a lot of conjecture in NSW about the legality of the seat," he says.

"Operators particularly in NSW can now make a choice on the seating type they want to spec on school buses and the Educator 2/3 is now available."

"It can seat two adults under ADR68 and it can seat three small children.

"It really fills in that gap for school bus operators to cover extra numbers in the school run, then gives them the flexibility to do day charter and have their customers sit in a comfortable ADR68 compliant bus seats."

Years to come

As the industry continues to tighten its belts, Lowe says quality seating will continue to be in demand particularly as Australia’s population is forecast to see a massive increase.

"With population growth there’s a need for public transport," he says.

"Whether that equates to more buses or trains or trams — that’s really for the state governments to decide.

"I think bus is probably the most economical and efficient way to deliver people around in connection to linking it — particularly in Melbourne — with the rail network, both tram and train.

"I’m very positive about the future. I think all our capital cities are crying out for more public transport."

Lowe says the company’s success is also thanks to the dedication of the employees.

The company entered into enterprise bargaining agreement (EBA) with staff two years ago allowing employees to work four 10-hours days as opposed to the traditional five days per week.

Overtime is available on fridays for those who want it.

Lowe says this has increased productivity as well as keeping everybody happier in general.

"The guys that don’t want to work overtime get a three-day weekend — every week. The upshot of that is their cars are off the road a day less a week and they’ve got more time with their families.

"We’ve found it’s been a very positive experience for the business … but we give a lot back to the guys in terms of flexibility.

"We’re a lot more efficient doing it this way."

Lowe says the company is a "family environment" which he attributes to the culture implemented over decades by the original McConnell’s and Smith.

"The culture they’ve developed is underpinned by family values," he says.

Many combinations of families work at the factory from brothers and cousins to fathers and sons.

"It’s a really good environment and we’ve got a number of long-term employees which I think is a testament of a culture of people who enjoy coming to work and enjoy what they do," Lowe says.

McConnell will continue to supply seating to industry under the guidance of APM, and Lowe plans to continue ongoing relationships with customers supplying high quality product.
He says the bus industry is very relationship focused.

"If we provide quality products, good service and the pricing is fair, we will get good support," he says.

"We enjoy great support from the industry but we work very hard to get that as well.
"We’ve got to be on our toes to make sure we’re producing quality products.

"The business can proudly state that we’re still trading with our first customer and that goes back 60 odd years."

Lowe likes to think of seating as "a critical part of the supply chain".

He says the first aspects most people look at on the bus are the seats.

"It’s critical to us to remain local to provide product support to our customer base," he says.

"We’re definitely still an Australian focused and operated business."

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