Australian manufacturing doesn’t need to die: Tomcar
BY DANIEL GARDNER | 12th May 2014
Furthermore, by focusing on high-end design and engineering rather than traditional mass-production – Tomcar call its ATVs the world’s safest – the company says it can better play to the strengths of Australia’s high-cost but also high-quality supply chain.
Speaking last week at the local launch of its first diesel model, Tomcar said it had the potential to grow production at its Melbourne factory (owned by joint-venture partner MtM) to 1000 units in 2015 and up to 5000 units by 2018.
Tomcar, through joint-venture partner MtM, only started producing ATVs in Melbourne about 12 months ago, and so far have produced around 100 units.
But with significant interest from agriculture, mining and the military, the ATV-maker aims to increase production ten-fold by next year by using 'scalable' business models that give it the flexibility to thrive where bigger manufacturers have failed.
Tomcar CEO David Brim told GoAuto that with a different approach and culture, significant local manufacturing growth is possible.
“Some people are calling it the death of Australia's auto industry, but as you can see today with the launch of our Tomcar diesel, the industry is alive, innovative and growing,” said Mr Brim.
“But not off the back of government handouts, blind mass-production, overseas control and forcing unwanted product out on to the market.”In reference to government handouts, Tomcar partner MtM, which also provides car parts to Ford, Holden and Toyota locally, and General Motors globally, received $400,000 to boost its Tomcar operations under the federal Automotive New Markets Program in 2012.
“Mass-production in this country is unsustainable – we need to focus on highly-engineered, high quality products because that's what we are good at making in Australia,” said Mr Brim.
“We are also moving in to an era of managing the factors of production rather than owning them.
“It's strange that all we hear about is how the retail landscape is being disrupted, yet companies that sell big things like cars feel as though this disruption doesn't apply to them.
“I know that having millions of dollars of stock sitting on a car yard is not something that's future-proof. So here at Tomcar Australia we have decided to avoid it altogether.
“We sell our vehicles online and have removed the need for cumbersome dealer networks.
“Its all about demand pull rather than retail push.
“We have done the impossible and created a new automotive brand here in Australia at a time when all the others are closing down.
“We have done something everyone thought we couldn't do. We are building the world's best and safest all-terrain vehicle right here in Melbourne.”By keeping running costs at a fraction of a traditional business, Tomcar invests a majority of its capital in high-quality materials and labour, which it says guarantees the quality of its product without ballooning costs.
“We are starting a car company in 2014 right when we have all this technology available to us: cloud computing, internet, email, we don't have a legacy system,” said Mr Brim.
“The SAP system for a car company that we considered is around $400,000. Our IT expenditure each year is $2000.
“We don't have a server, we all work on laptops, we have hot-desks, we have a central cloud-based database system – it's all Google apps.
“Google did a case study on us and how we use Google apps. Our system is better than BMW's and it costs me $50 per person per year – and it's all scalable.
“I don't want to be in a position where we are stuck with a cumbersome legacy network.
“We don't have fancy offices, our IT costs nothing, our administration costs are tiny, there are six of us at Tomcar Australia, we do all the R&D and product development in-house and we farm out everything else.
“We don't add $2000 dealer-delivery, which is a rip-off. It's a joke.”It took nine years for Tomcar to develop its product range which will soon incorporate two and four-seat versions, a tilt-tray ute and a choice of both petrol and diesel engines, but at no point has the manufacturer relied on government funding.
“We have had no government assistance and we are quite proud of that. I think the industry needs to stand on its own to feet and I think that's one of the reasons it's taken so long to die. They were like drug-addicts with huge capital payments.”“We see ourselves as a technology company that happens to make cars. People think start-up business is about moving ones and zeros around – not true.”While Australian manufacturers are shifting production offshore, Tomcar says that its products simply cannot be built in booming industrial centers like China and India.
“There are two issues with the Tomcar that are key to its success.
“One is the quality of the welds – most of the car is hand-welded together and they need to be 100 per cent accurate.
“Second is the cocktail of metals used in the car - the chemical makeup of the steel has to be exact, and what we found in China is that we would have had to have a guy on the ground, living in the factory, chemically analysing every sheet of metal that came in.
“They (Chinese manufacturers) don't put priority on that level of chemical detail in metallurgy.
“The main mounting brackets are made of a special steel that's made by one company in the world. Without that steel the car doesn't work.
“It's expensive to make things here but it's expensive for a reason. You have high-quality labour and high-quality suppliers. Australia needs to concentrate on what it's good at because it can't compete with China.”Significant interest is coming from mining and armed forces sectors, but the company is targeting agriculture for a majority of sales, where quadbikes and four-wheel drives currently dominate.
“This is the first car that has really been suited for the Australian bush.
“What Toyota created in Australia is remarkable, but they are beginning to go away to the future with air conditioned seats and reverse cameras. When they break what do you do?”“It's like giving power back. The newest Mercedes doesn't have a dipstick – the last bastion of a man doing something – gone.
“You can change the wiring loom in a Tomcar in an hour and a half.”Tomcar Chief marketing officer Steve Sammartino highlighted the need to shift the way manufacturing businesses operate by adopting business development structures borrowed from the technology boom.
“There is an amazing start-up scene in Melbourne and its now moving in to engineering, hardware and manufacturing, said Mr Sammartino.
“People are now realising that if all the big companies are going to be stuck in the 1950s industrial world we are just going to reinvent the world our way.
“That's why Tesla is beating every US car manufacturer – it has 50 per cent of the market value of GM and Ford already – in four years.
“If you want to build something its the way you put the pieces together that really matters... which is why Holden and Ford make amazing cars but they can’t do business – because their business model is broken.
“It's called the maker-movement in startup land... and you’re going to see a whole lot of really highly specialised manufacturing companies bubble up and fill in the void of the old failing industrial companies.”Without direct competition, Mr Brim has high aspirations for developing the Tomcar range with a four-seater, CAMS approved off-the-shelf racer, electric variant and even a Google Glass dashboard in the pipeline. But for the time being, the company is concentrating on getting as many units in to the field and building a reputation.
“There are alternatives to a Tomcar but there are no competitors,” he said.
“I'd love another local all-terrain vehicle manufacturer to come to Australia – we need an ecosystem here.
“We share a lot of our IP for customers to develop their own accessories. We are not ruthlessly isolated and competitive – that's not the future of manufacturing we need to become a hub.
“I want people to look back in five years and think - I don't know how I did that job without a Tomcar.”
