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Introduction:

Ventilation & Air-conditioning/heating Product Industry gain a major market in New Zealand.

As weather of New Zealand is quite cool in most months and a lot humid throughout the year

this industry gains a major look among other industry across New Zealand. We will today sneak

a look inside one of the company named µSmooth Air Products¶ who is one of the major players

in this industry. It has its manufacturing branch and showroom in Auckland with the head office

in Christchurch. Its net profit is $ 5 million Nz. Dollar per year for the Auckland branch. Almost

90% of the manufacturing operation is operated in Auckland manufacturing unit. Smooth Air

Products was started by its Managing Director named Mr. Allan Doak in 1989 for the production

of Bell Mouth Spigot.

To start of with he was the only man operating in a small room, which has now changed in a big

manufacturing unit in Penrose Auckland and the company has grown from one single man to

around 25 employees at present.

http://www.smooth-air.co.nz/aboutus.htm

The company operates as a licensed agent for Ventilation Systems, Fans Direct, Air Change,

Gale Cooke Ltd as well as presenting a full variety of Grills/Adaptors, various kinds of ducts and

fittings. And they have also started manufacturing of various plenums and branches made up of

Sheet Metal.

Future Inclination & Strategic Prospects:

Smooth Air Products currently deals in various products such as; various sorts of Ducts, Cowls

and fittings, Fans domestic and Commercial, Domestic Ventilation Kit sets ( Drymatic, heat

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hamper, etc), Duct Hardware, Sheet metal Products, Adaptors, Spigot, Dampers, Motors, Y

Branches & various other branches, etc.

Among all this wide range of products there have been two major movers for this company. One

is Flexible Ducts, Insulated Ducts & Sheet metal Plenums. They cover company¶s 72% of the

total revenue. Now the envisage intensification movement is termed to be constructive for both

long term as well as short term for this products. Also in this credit crunch situation around the

world and the money depression capturing the economy of various countries, this market in New

Zealand is meekly affected and particularly for this company they are always eager in some or

other experiments and innovation in the market. That¶s why we assume that the future trend is

going to be positive.

Future Vision:

The Future of this product looks very bright. According to the sources from the company the

forecast of the next 4 months till 31st March they are looking their sale to go up 5 to 7% for the

products like Plenums and Ducts. They are thinking this because of the rise of government

investment in strengthening the Infrastructure. They are thinking that if government is going to

invest more money in Infrastructure development, the building rate is going to go up and the

building organizations are going to create some opportunities for their current ongoing business.

Hence for them the demand is going to be created and that¶s why they are planning for the

expansion in some part of the business for increase supply that meets the rising demand.

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Description of Planned Expansion:

Smooth Air Product as we know is dealing in the Air Conditioning Products. They are importing

100% of their plastic products either from Malaysia or from China. The other important thing

that they import is Rigi Flex from Ukraine and Flexible Ducts from Australia¶s Polyaire vents

limited. All this imports ends up with the cost of NZ $ 1 million a year for the Auckland branch.

(Company Sources)

According to me, they need to think on their import costs which eat up quite a healthy part of

their yearly turnover. They need to think on the issue of starting their own manufacturing stream

in Plastic Products and for Flexible Ducting. There is no organization or company currently

operating in New Zealand or in Australia that are producing PLAD, Reducers or other Air-

conditioning products inspite of the fact that there is good resource (plastic) available in their

country. Adding to that there is also there is one company named Polyaire in Australia that

produces Vents.

(Production statistics: http://www.plastics.org.nz/page.asp?id=500) According to the above mentioned charts and graphs we can clearly indicate the strength of the

Plastic Industry of New Zealand. New Zealand is heaving healthy Plastic Industry operating

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especially they got good packaging Industry. So they can use the easy available resources of the

Plastic Industry to start their own manufacturing unit in the product made up of plastic for the

future prospect of the revenue saving.

Product Analysis:

We will use the concept of BCG Matrix for the categorizing the existing products of Smooth Air

Products.

http://cfs.tistory.com/attach/6031/1080898401.gif

As we know there are four different part in the BCG Matrix to categorize the existing products.

The existing products of the Smooth Air Products are categorized as follow:

y Star: Plenums, Sheet metal Products such as Spigot, Cowls, Madona, Fans, Dampers,

Joiners are Star Products. They are the products that are having Monopoly in the market

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for this company. Smooth Air Product has maintained high level of quality assurance and

is taking very minute amount of care in the production technology.

y Cash Cows: Ducts, Plastic Adaptors & Flexes¶ with Reducers, Y Branches are counted

to be the Cash Cow for the company. They are going on generating revenue. They act as

supportive products for the Star Products of this company. There Product Life Cycle is

the straight line. The revenue earnings of the company never decline in this kind of

products.

y Question Mark: There are certain Plastic products like Grills, Hinge Filter, Floor Boots,

etc which are some important supporting products which are included in this category as

there prices are quite high so people can¶t afford that. So they are going in choice of the

options of these products.

y Dog: There are certain small products that are included in this category. They are like

small bolts, Plastic tapes, Flexible adjustable vents, Fans, Thermo Break, Roof

Ventilator, Simple fix and other small products. They are rarely moved from the show

room.

One more thing that is common in the products is the usage of Plastic in more or less amount in

mostly 80% of the product that they sell. Hence, for me this is the area of the concentration as in

the category of Question mark and Cash cow there are products included which are made of up

by using plastic as the major material. Production Expansion of the plastic material will certainly

decrease the cost of Production and give more revenue saving in compare to the present time.

Hence, if they are saving more revenue they can also decrease the selling cost of products that

are in question mark category and pour some profit in this category from Cash cow or from star

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product. They can also stop selling the dog product which is consisted of hardly 2% of the total

revenue earned.

We will further look into the supplier of the Plastic.

Supplier Analysis (Plastic Industry) for future Perspective:

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