APV on the rise

SPECIALIST restraint manufacturer and independent engineering and safety testing services firm Australian Performance Vehicles (APV) has forecast ongoing growth this year and into next decade as it continues expand its Melbourne-based operations on the back of new domestic and export contracts that now extend well beyond traditional automotive.

Having just posted an 11 per cent increase in revenue for its 2019 financial year, which comes on top of 28 per cent growth in 2018, APV stands as a shining example of how a Tier 1 car component supplier can survive the downturn and eventual closure of the local car manufacturing industry by diversifying into new industries – most notably military, mining, aviation (ground support equipment) and industrial (forklifts, cranes, etc) – and providing relatively low-volume but high-value products and services to a broad customer base.   

Based in Campbellfield, just down the road from Ford Australia’s Asia-Pacific Product Development Centre (which worked with APV to help develop the T6 Ranger), the company took over the Australian operations of Swedish global vehicle safety supplier Autoliv in 2011 and remains a dominant OEM-level seatbelt supplier for the Australian truck, bus and coach, and motorhome sectors and the automotive aftermarket and motor racing industries both here and in New Zealand.

It helped engineer and now supplies the restraint systems for Walkinshaw Automotive Group’s burgeoning local right-hand-drive conversion operations – covering Ram pick-up trucks (on behalf of Ateco) and Chevrolet models – and also conducted the crash testing required for the vehicles’ Australian Design Rule (ADR) compliance at its internationally accredited test centre – one of only two facilities in Australia that also handles testing for the Australasian New Car Assessment Program (ANCAP).

But, as APV managing director Harry Hickling explains, the company’s automotive expertise has provided a necessary platform for it to expand into new industries and open up export markets – most recently in France and Mexico for specially tailored industrial restraints.

Over several years it has also built up a significant presence in the defence market where it not only develops and supplies restraints for military vehicles in the United States, but conducts durability tests on all manner of components.

“In 2004, we had three customers (car-makers) and no brand because as a Tier 1 supplier you provide directly to the car company. Now, we’re a diversified company with an international brand that’s recognised around the world and with a really premier customer list,” Mr Hickling said.

“We were a larger entity prior to the (car manufacturing) closure, but we’ve definitely come through that, and now we are in a very good position in terms of future growth.

“All of the companies, I believe, which have gone through the transition and survived, they’ve all got a strong future because the transportation industry in Australia will continue to grow. The challenge is: APV could not survive on only the Australian market.

“The capital base, the technical skills you need to do what we do, you need a bigger market. So that’s where export and international diversification is really important. For us, the focus on growth of the export markets was absolutely fundamental to our future. We’ve established that branding internationally, and now we can continue to build on that in terms of our future.”

Mr Hickling described the transition, which included the closure of its APV Automotive Components subsidiary in 2012, with the loss of 87 jobs, as “incredibly tough” and said that traditional automotive values – top quality, strong engineering capability, and so on – were prerequisites for being an exporter but not enough for a small Australian supplier to land sufficient overseas contracts.

“Their local supplier can do all of those things, plus they’ve got the advantage that they’re only down the road – they don’t have six weeks of shipping time – so you’ve got to provide something in addition to that, which in our case is basically supporting speed to market, engineering capabilities and relationships,” he said.

“That’s underpinned by the fact that we operate the test centre as well as manufacture the restraints, so we can work with a customer, do the design work and certify the restraints more quickly than our direct competitors can in the US. And we can certify restraints to all the international standards.”

While automotive seatbelts tend to have regional standards, industrial restraints have world standards, opening up export markets more easily for APV. The new French contract is supplying the agricultural market, while the Mexican deal involves US companies bringing a strong OH&S culture to new ventures.

In New Zealand, APV is developing unique restraints for prisoner transport, while the Kiwi auto aftermarket is also buoyant, helped by annual ‘warrant of fitness’ vehicle safety inspections and, Mr Hickling said, the need to replace poor-performing low-cost seatbelts in grey imports from Asia.

APV’s international reach is extending as it ships to TVH in Belgium – one of the world’s largest suppliers of spare parts for material-handling, industrial and agricultural equipment – while the mining sector in Australia and abroad is opening up new opportunities as existing mines are refurbished and ever-increasing corporate safety standards require electronic buckles with ignition isolation, three-inch wide webbing on seatbelts, and so on.

Its biggest market, North America, is expanding with new contracts for industrial restraints at port facilities, particularly in Florida, as well as airport ground service operations, including with Hawaiian Airlines – a deal that was clearly helped by APV’s supply of restraints for Qantas ground handling.

There is a specialist restraint for a top-secret motor racing car program underway in the US, while its defence business in North America – where its biggest suppliers are BAE Systems and ArmorWorks – is forging ahead and opening up new opportunities with other companies.

“The year ahead for us is going to be quite exciting because we’re increasing our production volumes into US defence with military systems which have come online, and are in production, in the land and amphibious vehicle space,” Mr Hickling said.

“On the test centre side, there’s a huge bow wave of defence programs in Australia, which has a demand for testing services for a mechanical and environmental lab. So part of what we’re doing is diversifying the test centre into the defence marketplace – and subsequently aviation, as well.

“In Australia, across those industrial markets, there’s a lot of innovative SMEs which are involved within the defence sector. None of them are large enough to be able to build and support the test environments that we have here within APV, so our vision is to provide a state-of-the-art, world-class test facility to support product development, validation and certification of product.”

APV is the only company in the southern hemisphere certified by the FIA to test data recording boxes, which not only sees it provide services for motor racing categories throughout the region, but has led to testing of ‘black boxes’ and other electronic equipment in defence vehicles, which are required to withstand the effects of landmines, improved explosive devices (IEDs) and other extreme conditions.

“Again, it’s a part of the market that we traditionally haven’t thought about in automotive, but if you look at the automotive strengths we’ve got as an organisation, and we primarily are an automotive company – we always will be – it’s about how to apply those strengths across the other industries, and defence is the immediate one that we’re tackling,” Mr Hickling said.

He emphasised that the company was not out to compete with the likes of Autoliv or TRW, which are the high-volume suppliers of restraints for new passenger vehicles worldwide, or the aviation seatbelt giant AmSafe.

Instead, APV remains focused on being a specialist provider across other the lower-volume markets.

The company currently has 55 people on the payroll, from skilled production workers to graduate and highly experienced engineers, and as a medium-sized enterprise has an annual turnover of about $15 million.

It uses Australian and overseas suppliers for parts that go into the restraint systems that are fully assembled in Melbourne – the local sources include Rian Industries, Sneddon and Kingston, and Dolphin Products, while overseas sources reach as far as Europe, Malaysia and India, typically backed by APV engineering and tooling – and the company also acts as a supplier of components (such as retractors) to restraint manufacturers overseas, including China.

The US-China trade war is having a negative impact on APV with the higher tariffs affecting the Chinese-built seatbelt business, but the lower Australian dollar is helping with export competitiveness from home.

That said, Mr Hickling noted that many of APV’s contracts are based on higher exchange rates, with its own overseas suppliers typically paid in US dollars and its capital equipment expenditure – including a $2 million test centre upgrade last year – typically done in US dollars, which “really hurts”.

He also said the company has weathered storms before, holding its position in North America when the exchange rate was $1.10 to the US dollar, to keep its customer base and footprint while not making any money.

Today, APV produces 250,000 seatbelts per annum for clients such as Walkinshaw, Kenworth, Isuzu, Iveco, KAB Seating, Isringhausen, Apollo Motor Homes and many more, while its test centre is increasingly used to help develop and certify products developed by Australian and overseas aftermarket and ancillary suppliers, from bullbars, seat covers and child restraints to fast-curing adhesives developed for mobile windscreen repairers.

“Anything to do with safety associated with aftermarket products going into motor vehicles, that’s a key market for the services the test centre provides,” Mr Hickling said.

“Those regulations are getting more complex, and the autonomous systems are getting more complex, and so the test centre’s job is to be able to work with a customer and take responsibility for navigating through all of the standards, as a service, and getting their products certified, whether it’s a car or a child seat or a bus seat.”