KEY POINTS:
It's a busy day on the motorway, but you won't hear North Shore bathroom baron Derek Englefield complain about the commute. For most of the past three years, the 50-year-old entrepreneur has been flying economy class to California every second week, launching his range of luxury showers.
A
glass of red wine helps him sleep nine of the 12 hours on board, then he gets off the plane and goes straight to work. It's a long way to go for a meeting but Englefield says face-to-face contact is the only way to sell in North America. "They'll only buy your product if you go and talk to them, or visit them at a trade show," he says. "If you try to do it from here, you're not going to do it."
Englefield had been in the bathroom business almost three decades when he decided to take on the United States. He started the family bathroomware firm Englefield with his father, Roger, in 1980, building it up from an empty factory to a market leader with more than 240 staff. Englefield took the family brand to Australia, Singapore, Malaysia and Thailand before selling the business to US company Kohler in 2000. Being retired at 42 might sound nice to some, but after a year, Englefield was bored and looking for a challenge.
A restraint of trade agreement banned him from selling to his old trading partners but the US market was open to him as long as he didn't sell acrylic products. And so began three years of long-distance commuting.
Now, his new brand, Oben, is selling its frameless glass showers through 80 distributors across 15 states. Along the way, the company has picked up three US glass industry awards for innovation, as well as forming alliances with well-known brands Jacuzzi and Grohe.
But Englefield is the first to admit it hasn't been easy. Launching his new brand to the North Americans has taken all of his patience and a good chunk of capital. "The financial and the time commitment required to get into the US market is horrendous," he says.
He took time to research his new market, even taking Spanish and computer classes, but nothing prepared him for what the US would be like. "When we got there it was a lot harder than we ever anticipated. It's taken us three years to get our heads around that market and how it works, and why."
Now that he is established in the US, Englefield is launching his products back in New Zealand. His restraint of trade is finished and the credit crisis spooking the US means the North American market is growing tougher. He plans to spend the next year or two building up a New Zealand business, while keeping an eye out for a US-based equity partner for his North American enterprise.
Despite his success, the bathroomware veteran says it will be another two years before he feels comfortable the US business can pay for itself. Ironically, he says, it's when a company becomes successful that the cost really skyrockets. "Put it this way - if I hadn't had funding from when I sold my other business, it would have been a near-on impossible task."
His new business is a much slimmer beast than the old family plant. While the family firm made plastic and acrylic products for plumbing wholesale, Oben sells its glass and tile showers direct to consumers, designers and architects. Unlike New Zealand, Englefield says the US has no middle market for bathroomware. Products are either cheap and mass-produced or customised for high-end luxury homes. Englefield decided it was too risky in the lower end of the market ("If they dump you, you've got nothing") so he designed a range of glass and tile showers for the luxury market.
The first product he tried to sell in North America taught him a lot. "We found how the contractors and building industry works. You can't change those guys, so we had to develop a product that fits the way they use their products."
Englefield and his team spent a year effectively re-writing sections of the US plumbing code to cover Oben's Hydro-massage shower range - not an experience he is keen to repeat. "Now we virtually won't go outside the standards code. It's just too hard."
Englefield says the hardest thing about North America is the sheer vastness of the market. Without the bulk-selling Home Depot stores to sell through, he had to find a way of marketing products to thousands of smaller glass and bathroomware shops across the US. He says getting alongside well-known brands Grohe and Jacuzzi was vital to give him the credibility he needed. Oben specialises in curved glass, something fairly new to the US. "It's easy to underestimate the cultural differences between New Zealand and the US," he says. "They're not fast adapters to new technology or innovation."
Englefield says North Americans' wariness of new things can include language differences. "You can talk with an accent, that's not a problem, but if you don't know the language that's when they really dislike you." His advice is to get on top of the lingo - using "gas" instead of "petrol" and "trunk" instead of "boot" can really make a difference.
Englefield is showing no signs of giving up the challenge he took instead of retirement. He is proud that he is looking to hire staff when his old company is laying people off. He employs five staff at his Glenfield base and hopes to have another 10 by the end of the year. His old plant, now owned by US company Kohler, shifted manufacturing to Shanghai this year, making 72 workers redundant.
Englefield says it's no longer possible to survive solely as a manufacturer in New Zealand. Now that the product design is largely done, he says Oben is "really a marketing company". Its glass shower doors are manufactured in China, then customised to fit with made-to-measure side panels added by the local glass dealer.
Oben launched in New Zealand last month and Englefield will spend the next year or two getting the New Zealand enterprise up and running. Then he plans to move to San Francisco to live for five or six years. But he says he won't step up the US operation without a US-based equity partner to help with funding. He knows a lot about the North American market but it's come with a hefty price tag. "Experience is a great teacher but it's hell of an expensive," he says.
Derek Englefield's top tips for entering the North American market:
* Be prepared to spend a lot of time in the US.
* Learn the lingo. North Americans respond better to people who use terms they know.
* Try your hand at Spanish. The language is widely spoken in the US, particularly in California.
* Make sure you have strong financial backing. Having a US-based equity partner helps.
* Adapt your product to suit the market. Watch how tradesmen and distributors work and adapt your product to slot easily into their existing systems.
* Gain credibility by forming alliances with well-known brands.
