Hydraulics company eyes Thai, Chinese opportunities
27 August 2015
Delta Hydraulics, the country's biggest independent maker of hydraulics, is celebrating its 40th anniversary this year. Brent Balinski spoke to founder John White about the company's balance of its local and international operations.
When Caterpillar was building its Rayong, Thailand factory - where it will shift its Tasmanian Underground Mining manufacturing operations - Delta Hydraulics founder John White went and bought the block of land next door to the half-finished factory.
Delta's Thai subsidiary opened a factory - located between Cat's Underground Mining and Tractor factories - in 2013. This has proved to be one of many astute business decisions Devonport's White has made.
"From a strategic point of view, if we hadn't hve gone to Thailand, Caterpillar wouldn't still be our customer" White told Manufacturers' Monthly. Cat makes up about a fifth of Delta's business.
"Pursuing that investment and keeping Caterpillar as a customer has helped us dramatically here."
Delta this year celebrates its 40th anniversary. It employs 110 in Devonport and 17 at the Rayong site.
The business sells into sectors ranging from power generation to defence, and exports to over 2,000 customers in 30 countries, manufacturing multi-stage telescopic cylinders, industrial single rod hydraulic cylinders, constant velocity telescopic cylinders, long stroke mast cylinders, annular ported double acting telescopic feed cylinders and hydraulic manifolds.
About all it doesn't make are aerospace and agricultural cylinders.
"We basically sit in the middle, in niche-type markets" said White, whose company also develops, manufactures and tests hydraulics for the Collins Class submarine fleet.
Bulk material handling plays a large part of its business, such as tipping cylinders for dump trucks.
White, a fitter and turner by training and who describes himself as a "self-taught engineer", has kept Delta globally competitive through constant reinvestment in the business and in product and process innovations.
One in-house invention that has brought value to customers in demanding environments such as underground mining is the Delta-C surface treatment for chrome.
The ceramic densification process fills micro-cracks and fissures on chrome, greatly extending cylinder life.
"Chrome is very hard, but it actually shrinks when it electroplates on then solidifies, for want of a better term - it actually cracks" said White.
"The naked eye can't see them, but if you magnify 10,000 times it looks like the Grand Canyon.
During the visit, Delta was in the middle of purchasing a new $2 million skiving and burnishing machine, the largest such machine in the world.
The factory's current skiving and burnishing machine - the largest in the southern hemisphere, White said - will be shipped to Thailand, with the new one kept at Devonport for niche applications.
The factory's production engineer currently spends two weeks in four at the Rayong plant, and White himself spends one in four there.
He has plenty back at home to tend to, such as a group of companies bearing his name and the multi-purpose White Sands Estate resort on the east coast. There are also beverage interests: he owns Iron House Brewery and the White Sands Estate winery, which has recently bottled its second vintage of chardonnay and sauvignon blanc.
"[And] we have just commissioned our own distillery: Iron House Whiskey, Iron House Gin, Iron House Vodka and Iron House Brandy," he continued.
At his main business, White sees great potential for growth supplying Caterpillar Tractors in Thailand, where it is ramping up production of its D5, D6 and D8 vehicles.
Delta's Thai factory deals with high-volume, repetitious orders, with the niche, custom jobs staying in Australia.
White gave the example of a well-known mining equipment supplier in Newcastle, wanting a custom solution for a header machine in a hard rock application.
"The cutter is about one-and-a-half metres in diameter and it has to have about 500 kilowatts driving it" he explained.
"And these are the cylinders that control it on the face. Because we've been around for a fair while, people trust us. And these are the sorts of design and build jobs that they come to us for, because we've got the know-how and the equipment to do it."
Aside from the growth opportunities offered by Caterpillar as it moves more and more of its manufacturing from other parts of the world to Thailand, there are possibilities to increase Chinese exports.
The company has earned work in Yantai, Shandong province, in a pilot on waste treatment using wet pyrolysis. Delta's engineering solutions and the ability of its chrome-treated cylinders to withstand wet, corrosive environments is beginning to earn it attention in there.
See this video at 4:50s for an explanation.
That market also presents scale opportunities that are unheard of back home.
"Shandong is the second-most populated province in China after Guangzhou," said White.
"100 million people in a space a quarter of Tasmania, so plenty of garbage there."
