ANCA: High-tech edge cuts a global reputation

A move forced by the recession
International expansion
Customers demand extremely specialised tooling machines
The company behind the big international names
Personal savings funded the exploratory stage / It was 1984 and the recession was still biting into the manufacturing sector. Pat Boland and his partner Pat McCluskey had been nine months without a new order for their ‘computer numeric control’ units for machine tools. The future looked grim for their fledgling company, ANCA.
“Cashflow was low, we had 15 staff to support and the bank was pressuring us to pull back,” recalls Boland.
It was a defining moment, but it was not so much a fear of failure after seven years of hard slog, but their undiminished belief, still, in the concepts they were pushing towards new technical frontiers. And their competitors, they reasoned, would be suffering too, so what better time to strive for a quantum leap forward?
It was a gamble and they took it – a strategic change in the nature of their equipment and a jump into the perilous export market. The move not only outflanked their global competitors but has today made ANCA the world's second largest manufacturer of precision grinding machines.
The company employs more than 400 staff on three continents and from 1994-95 to 1996-97 turnover jumped 60 per cent to more than $50 million. The figure is still climbing. Last year the two Pats celebrated their company's 21st birthday with a $6 million expansion, including factory extensions, new plant and equipment and an expanded customer service infrastructure in Australia, the US and Europe.
ANCA's customers are some of the world's largest and most demanding metal-based manufacturers including many with extremely specialised tooling needs – Boeing, Rolls-Royce Harley Davidson, Xerox, Ford, General Motors and Samsung, to name a few. Corporations like these require absolute perfection in their tooling, and this is the technological and competitive edge that ANCA has achieved.
On another level, which might put the company's activities into a more tangible perspective, most tradesmen would be
familiar with the international brand names behind the drill-bits, lathes, planer blades and other cutting tools on the shelves of industrial suppliers and hardware stores. What they probably don't know is that Melbourne-based ANCA is the company which supplies many of these international manufacturers with the cutting and grinding machines that they use to make these tools.
And it all started just 21 years ago in a spare room in Pat Boland's home where he and Pat McCluskey installed their first computer with which they developed their ideas for numerically (computer) controlled machines.
By today's standards the computer they spent their savings on was archaic; a paper-tape reader with a mere eight kilobytes of memory – less than a modern PC uses to generate a single page of text.

A conducive environment

Complementary skills
A revolutionary concept / Their ideas and their partnership sprang from working together at the Federal Government's ammunitions factory at Footscray. Pat Boland had accepted a cadetship with the Federal Department of Supply after completing an electrical engineering degree at Melbourne University and graduating with a masters degree in control systems theory.
His job at the munitions factory was to make clockwork mechanisms for artillery fuses. The factory's attraction for young engineers was that it always had the latest equipment.
“It was an excellent training ground, good equipment and a range of different departments and work experiences,” recalls Boland.
It's how he met McCluskey, who complemented Boland's theoretical strengths with a practical trades background.
“We bought the mini-computer in the early 1970s, almost as a hobby, but we both began to realise that even though we were working with the latest equipment at the factory, we felt we could do better, especially if we utilised the new computer technology that was becoming available,” says Boland.
Today you have a general purpose computer and the software determines the job it will do. But back then it was the other way around – special-purpose computers driven by general purpose software.
“Our idea was to reverse this – use a general purpose computer and write task-specific software. It was a revolutionary concept.”

Taking the plunge

Being first in the field was crucial
Enjoyable work / In 1977 the pair developed a test rig and demonstrated their first control unit at a technical night sponsored by the Institution of Engineers. They went home with their first order.
“On the strength of that we both resigned and entered the cold, hard world of business, making electronic control units for industrial machinery.”
Boland says it was like stepping onto a treadmill with no ‘off’ switch: “Once on, we had to keep running. We had made commitments and had to work extremely hard to meet those commitments.”
Looking back he says they were lucky because they were the first in their field: “There was no competition. It was only a very small field, but we had it to ourselves.”
“We were also hungry enough to take on anything. It would be control units for a lathe one day, a punch press another day and a laser cutting machine the next.”
“We became very busy because our technology was up-to-date with anything that could be bought from overseas.”
Boland says it was clear early in the partnership that one of the company's great strengths was the marriage of two sets of skills: "Pat McCluskey did the hardware design, I did the software design and we shared the selling.”
“We were enjoying ourselves and even keeping our heads above water.”

The trauma of the recession

Opportunity arises from difficult times
International competition requires more than leading edge technology / Five years after starting, ANCA had 20 staff, and then recession hit.
While traumatic at the time, Boland describes the period today as their big breakthrough. It imposed a new mindset; a smashing of their local-market comfort zone by the do-or-die need to enter the big world offshore.
“Business had dried up completely. We were surviving only on back orders and we realised we had to end our reliance on the domestic market. We had to expand overseas, and win. From that point on we really learned how tough life can be.”
ANCA had built up considerable product expertise but the partners realised that to compete internationally, their leading-edge technology wasn't enough: “We were now going against multi-nationals like Siemens. To our technology we had to add a global customer-support infrastructure – distribution, technical back-up, spare parts, and servicing.”

A quantum leap in thinking

From making custom-designed tooling machines to making own brand of tools / It required a quantum leap in thinking and operational scale, but it was only part of the change being planned. The pair also decided to advance from being a manufacturer of control units for other people’s tooling machines to a manufacturer of their own ANCA tooling machines, with built-in control systems.
For a small suburban firm it was an audacious vision, but Boland says the stand-alone machines then on the market were an under-developed technology. They felt confident that by transferring their expertise in control systems to the complete machines they could have an immediate technical impact on the market.
The plan required a massive capital investment including a larger factory, specialised machinery and an expanded and highly skilled workforce.
Almost predictably, their bold vision was brought to earth with a thud: “We thought we would simply send the machines to overseas distributors and that would be it. Life, we quickly learned, was not that simple.”

The bumpy road to the international market

The first steps to exporting
Solving a technical glitch
Logistical and management strains in operating in different continents
Third-party distributor vs. a company-run distribution system / “The need to acquire international accounting skills, currency and exchange rate expertise and language translators was only the start.”
Their first overseas contract was an embarrassing failure. After displaying their first machine at an international machine-tool show they received an order from an Indianapolis company for a tool and cutter grinder – a machine that would sharpen the company’s specialised cutting tools.
“Basically our machine didn't work,” says Boland bluntly. “Mechanically it was okay, but the software failed. We had a cutting tool, but what numbers did you program in to tell it what to do? The tool to be ground had to first be measured. This took longer than the actual grinding, which defeated the machine’s purpose. So we had to develop from scratch the capacity for the machine to take its own measurements.”
The result, after that first discouraging failure, was a triumph. When the re-invented ANCA machine hit the market it was a world-first and a fundamental breakthrough in machine-tooling technology. It enabled the automated sharpening and shaping of tools with even the most complex geometric profiles.
"We had developed a machine that measured and ground simultaneously.”
Buoyed by this technical breakthrough, the two Pats were momentarily lulled into feeling the toughest hurdle was now behind them. But they had yet to experience the logistical and management strains of trying to distribute in the northern hemisphere a product being manufactured in Australia.
The obvious solution, hire a local distributor, exacerbated, rather than resolved the problem: “Our first US distributor put his own name-plate on the machine, unaware he was drilling right through the computer control cables.”
The experience also exposed other weaknesses in having a third party between the customer and the head-office’s technical expertise.
The only answer was to establish their own distribution subsidiary – now based at Farrington Hills near Detroit.

Developing an international profile

Establishing an ability to service any machine anywhere in the world
Easy-to-operate machines that perform complex task / An American base quickly gave the company an international profile and when it exhibited machines at a Paris engineering exhibition in 1991, manufacturers world-wide were exposed to new technological bench marks – both in machine tools and in technical support.
To overcome customers’ concerns about obtaining timely technical backup from a company so far away, every ANCA machine is linked to an ANCA technical support centre, allowing its technicians to examine any machine anywhere in the world, in real-time."
ANCA marketing manager, Jan Langfelder tells of a machine operator at the Samsung factory in Korea who phoned the Melbourne base to complain about a fault.
ANCA technicians dialled up the machine and found an incorrectly set switch. They re-set the machine and phoned the operator back, only moments after his own call, and told him the machine was now working properly. The startled operator was virtually looking over his shoulder for phantoms.
It’s a nice anecdote, but also a good example of the technical and practical that is inherent in the Boland - McCluskey partnership. Their machines are designed to perform the most complex tasks, yet with ANCA’s own Windows-style software are relatively simple to operate.

A sustained R&D effort

5% of turnover spent on R&D
The need for a long-term R&D program / Both founders are still actively involved in research and development, having made the big decision to relinquish day-to-day management to a general manager in 1988 when their international expansion was beginning to show results.
“Our business philosophy has always been ‘continuous innovation’. We spend at least five per cent of turn-over on R&D and 14 of our staff have PhD qualifications.”
The company is now growing strongly with sales offices in Atlanta, Chicago, Hartford Connecticut, Los Angeles, Michigan, and Detroit in the US, Coventry in the UK and Mannheim in Germany. An office will open in Nagoya, Japan in October and in Grenoble, France, in December.
“Basically the challenge now is to maintain research and development to keep our competitive edge.”
“Fortunately we've come to the point where companies are starting to come to us saying they need a machine to make ‘x’, so we sit down and design and manufacture the machine tool for them.”
“There's not much difference in the hardware – a machine that makes aircraft parts looks much the same as that which makes orthopaedic surgeon's tools but the software that controls the machines is the difference.”
Boland says the company’s intention from here on is to have the appropriate R&D program in place for the next decade to ensure it maintains its growth and industry standing.

Vertical integration

From concept and design to production
Maintaining the passion for technology / “Achieving this means taking responsibility for the whole manufacturing process – from concept and design through to end product. Apart from the use of specialist components such as computer parts, there are virtually no third-party manufacturers involved. The advantage for our customers is that it creates a dedicated link between them and the manufacturer – us.”
“We can respond effectively and rapidly to queries or problems because no one else is involved in the product. We are vertically integrated through 11 manufacturing stages: Machine design, machine manufacture, Computer Numeric Control (CNC) design, CNC manufacture, electronics manufacture, CNC software development, applications software development, training, service, installation, and commissioning.”
“The level of expertise we have among our research staff means we often find ourselves working with leading manufacturers on finding innovative solutions to their needs.”
Boland says technology is still the passion that keeps him interested personally, and he feels this also nurtures a keen environment for the company’s professional staff.
“There’s a high level of academic acumen combined with technical expertise which creates a dynamic problem-solving environment.”
“For Pat and myself it means we’re still on that original treadmill, but claiming technological leadership is like an athlete winning gold at an elite level. That's the pride and motivation we still seek.”

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