Pandemic lift is key moment for component maker

Melrose Park Key Tubing & Electrical component maker aims to use a significant increase in revenue from the coronavirus pandemic to focus on developing more high-tech products.

The company says it is also seeing an increase in work for Australian companies looking to source components locally after being caught off guard by overseas supply issues during the pandemic.

Key Tubing & Electrical is a leading supplier of specialty copper tubing and cables and has more than doubled its production of heating cables for respirators used in hospitals around the world to treat patients with COVID-19 .

KTE supplies a multinational healthcare giant that uses the specialized heating cable to cover its breathing tubes and heat humidified air to prevent condensation.

Before the pandemic, it produced about 2.5 million meters of thin sheathed cable per month. A massive spike in demand pushed production to six million meters per month last year.

The breathing cable previously accounted for around 30-35% of business, but now accounts for around 60-65% of revenue and has resulted in a 10% increase in headcount and thousands of overtime for its 62 employees.

KTE’s commercial director, Henri Hugo, said the ramp-up of production would not have been possible without the company’s in-house engineering expertise, which enabled it to build 30 new machines to manufacture more than cables.

Henri Hugo Key Tubes & Electrical Sales Director. Photo: Simon Stanbury.

He said the company initially had 30 machines from Germany, but needed to double the number to meet increased demand.

“We would have bought the extra machines but we weren’t able to get them, so we had no choice but to build them ourselves, which we hadn’t done before, so it was a real swim or swim time, ”said Hugo.

“And we didn’t just have to do one, we had to do 30, so it was all on deck.

“Day zero was a year ago and we’re still building them. “

Each respirator tube contains three to six meters of copper heating cable and the tube should be changed every seven days and for each patient.

Hugo said that while orders have eased a bit in recent months, the large number of respirators will continue to be used for other treatments.

“We are seeing that it is going back a bit, but there are so many machines now that we expect the demand to continue and the coronavirus to be around for quite a while I think, especially in places like Asia. “, did he declare.

The increased momentum now has the company looking to evolve into more complex offerings.

Hugo said the respirator advantage has enabled the company to invest and evolve into producing more high-tech products.

“Right now we’re making fairly simple products, but we want to move to smarter components like highly specialized sensors, electronics, and cables,” he said.

“We have robotics engineers working for us now and that’s the kind of thing we’re going into, we don’t just do wiring, we want to design and develop a lot of different types of things. “

KTE started making copper tubing for the refrigeration industry over 70 years ago, but was forced to branch out when local producers such as Kelvinator and Westinghouse relocated their production overseas.

The respirator heating cable is the same cable the company previously supplied to heat the air in the butter conditioner compartment of household refrigerators.

It is also used in small heating mats to keep rescued native animals warm.

The company now manufactures niche components for a range of industries including caravans and camping, food and beverage, air conditioning, electrical, healthcare and mining.

KTE was bought out by current owners Gary Hugo and Ken Tregloan as part of the State Bank collapse in the early 1990s, when soaring interest rates brought the indebted company to a standstill.

Henri, Gary Hugo’s son, bought the company in 2012.

He said KTE’s ability to design solutions and build its own machines to manufacture custom components on a relatively small scale was increasingly attractive to Australian companies.

“We are a niche maker and we are filling niches that cannot be achieved on a large scale,” he said.

“People will ring the bell to try to make something and a lot of component manufacturers will say no, but our response is always ‘we will try’.

“By then building the machine to make a specific component, you have them as a customer for as long as they need that component and there are a lot of examples of that.”

Hugo, who received a $ 4,000 grant from the Industry Leaders Fund last year to take a course in business administrators, said a number of local manufacturers have encountered supply chain issues since. the start of the coronavirus pandemic, which led them to seek more products. locally.

“We are a very proud manufacturer and we don’t like to send things to China, we like to find a way to keep it here and satisfy the customer with the price,” he said.

“Everyone got bitter with China, they just got burned and this is a case of a once bitten twice shy and all of a sudden there is a risk premium on the import.

“Previously we had to get 10-15% closer to China in terms of cost, but now it’s more like 15-25% because there’s this risk premium and they don’t know what’s going to happen – your container might get stuck in some ports and that’s bad.

“We have heard horror stories, but it has been good for people like us.”

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