Christopher Adams

Christopher Adams is the Markets and Banking reporter for the New Zealand Herald

Whiteware maker's R&D buzzing

Chinese owner showing it's serious about F&P Appliances research with expansion in Auckland and Dunedin.

F&P Appliances is spending $5.5 million to fit out a new research and development hub in East Tamaki, Auckland. Photo / Bloomberg
F&P Appliances is spending $5.5 million to fit out a new research and development hub in East Tamaki, Auckland. Photo / Bloomberg

It's been exactly 16 months since Fisher & Paykel Appliances was acquired by Chinese home goods giant Haier.

The company's now unlisted status means the whiteware maker has a lot less contact with the media than it used to. Gone are the six-monthly financial results, annual shareholder meetings and trading updates.

But on Monday I drove down the Southern Motorway and paid my first visit to the manufacturer's East Tamaki headquarters since the 2012 acquisition.

F&P Appliances chief executive Stuart Broadhurst had some big news he wanted to share.

The company is spending $5.5 million to fit out a brand new, sprawling research and development hub at the Auckland site. The new facility has room for 400 engineers, 160 more than are currently employed at East Tamaki.

And last week it announced a more than $2 million expansion of its Dunedin R&D site, which will increase its capacity to 190 staff from the current 130.

The whiteware maker has taken on 80 new engineers in Auckland and Dunedin over the past year.

Haier foreshadowed all of this R&D investment during its takeover of formerly NZX-listed F&P Appliances.

At that time Haier director Liang Haishan said if the takeover was successful the Chinese company would invest in F&P Appliances' research & development capabilities, creating a New Zealand-based "centre of excellence".

Haier's move on the nearly 80-year-old Kiwi company stirred up a reasonable amount of nationalistic fervour in New Zealand and the Chinese company's promises were taken with a grain of salt.

However, the R&D investment that's going on right now makes complete sense.

Haier acquired F&P Appliances largely to secure its unique technology such as DishDrawer dishwashers and direct drive washing machine motors, as well the R&D expertise it has honed over nearly eight decades in the whiteware trade.

The acquisition also allowed Haier to add a more premium brand (F&P) into its portfolio and the Chinese firm wants that brand to become much, much bigger.

Senior executives from F&P Appliances recently travelled to Haier's headquarters in Qingdao, on the shores of the Yellow Sea, to meet their masters. A five-year strategic plan for the New Zealand company was signed off during the visit.

Broadhurst said part of that plan was a "shared goal" that F&P Appliances would become "the world's leading premium appliance maker".

Growing sales in new markets like China and India are part of the strategy, as is the development of new products - hence the heavy investment into New Zealand-based R&D staff.

F&P Appliances is targeting a four-fold rise in sales, taking annual revenue to about $4 billion, over the next 10 years.

Being released from the responsibilities of a listed firm seems to be benefiting the company, which can now take a more long-term view rather than worrying about the financial results it previously had to report to its NZX shareholders every six months.

Broadhurst said the company had a culture of innovation that existed well before the Haier takeover, but if the firm was still listed there would be tighter constraints on R&D investment.

"Today ... we are getting hit with some short-term issues around the translation of results back from Australia into New Zealand," he said. "I think if we were listed we would be having to respond to short-term pressures. At the moment we're investing a lot more in the long-term and riding through those short-term blips."

There is a flip side to the company's R&D investment. F&P Appliances' increased focus on premium products means production at the firm's East Tamaki factory - which makes lower-end products such as bar fridges and cheap chest freezers - is expected to decrease.

Broadhurst said it would be closed "at some point".

F&P Appliances axed hundreds of jobs in Auckland and Dunedin several years ago as it shifted manufacturing to lower-cost factories in Thailand and Mexico.

The East Tamaki factory, which employs close to 200 staff, is the company's last remaining manufacturing operation in New Zealand.

The R&D roles being created at F&P Appliances are great - these are the kind of well-paid jobs we'd all like our kids to have. But becoming an engineer is not an option open to everyone.

- NZ Herald

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