AGM 2012 - (1) Appliance Production Lines
I would whole heartedly recommend the SCT AGM to fellow shareholders. Next year is the big one with the centennial of the business. The 29th and 30th of November 2013 has been set aside for a two day celebration in Dunedin culminating in the AGM. So if you ever thought about attending an SCT AGM, this would be the one to plan for.
I was impressed with the shareholder numbers who had driven up from Dunedin to attend this year's meeting in Christchurch. SCT make a habit of showing off a current production project. So much more can be gained from seeing it 'in the flesh' and talking to the switched on employees that make it happen, rather than just seeing the finished object on a printed page as in the annual report.
This year we got to see a cooktop manufacturing plant destined for the USA. This was ordered in April designed by October. And the plan is to ship it before the end of the year. The factory was on double shift to meet the tight deadline. If everything goes according to plan this will be one production line out of two for the same customer.
No specific mention was made of China in the AGM market releases. A supplementary question asked about this, and in particular how the Haier takeover of Fisher and Paykel Appliances might affect future work with Haier. For those who do not know FPA has a subsidiary PML which produces in house production lines and there was some concern that with Haier now owning this, they may choose to 'go it alone' in the future. Chairman Mclaughlan answered that sub contracting work on lathe tooling was going well and that he saw increased opportunities for SCT to work in partnership with PML on future projects.
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AGM 2012 - (3) Milking Technology
Milking shed technology is already significantly automated. I am taking here about rotary milking sheds, and the automatic release of the udder suction devices at the end of the milking session.
What SCT are doing is putting the udder sucker attachments on the cows by purely robotic means. Management now have a promotional video that was being continuously shown at the AGM. The Rangatata dairy farm, where this system is in final trials, has achieved a 95% deployment success rate to date (success being defined as hooking up with four teats per cow). The mechanism is to first use visualization technology to 'eye up' the udder. Then move in your six degrees of freedom industrial robot connector to make the mechanical-biological link, before the pumping starts. Currently hooking up one cow takes 14-20 seconds. The target time for production units is 12 seconds per cow.
I was at the AGM two years ago where is was announced that 'everything going according to plan' commercialization would begin within six months. Obviously everything didn't go according to plan. But now it does seem we are here. Payback time it is suggested will be three years for farmers who want to shell out the cash to get this system retrofitted to their existing milking sheds. The aim of the technology is to allow farmers to spend their time more productively on other farm management jobs. That doesn't include sleeping in, in the mornings!
Unlike other SCT projects -normally direct company to company sales-, SCT envisages hooking up with an existing industry player to promote automated milking. I do see this as an execution risk for shareholders, as SCT will not have full control of their marketing channel. And presumably there will be a cut to the merchant. Ultimately that will come from shareholders pockets. Nevertheless although sales are forecast for calendar year 2013, this is very much the new income stream for the year. Shareholders should not expect any 'bottom line' return from this division soon.
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AGM 2012 - (4) Mining Industry Support
My fears that the inevitable downturn in mining would see what has become the 'golden goose' for Scotts slow down have proved unwarranted. Some 80% of sales of sample reference material (as an aside SCT has some 85% of this market in Russia, courtesy of an on the ball Russian agent!) are sold to gold explorers. While the price of gold remains high, this is set to continue!
The annual report noted that some of the increased workload from the Rocklabs mining division had been farmed out to other Scott business units around the country. At the AGM we saw two automated sample analysis units that had been built in Christchurch. I had visions of these things requiring a truck to take them away. In practice you could fit a unit inside a large van. So perhaps all profits would not evaporate if you had to ship these things around the country after all! Also on display was one of the new liquid oxygen manufacturing machines, complete with the cryogenic unit from the Wellington superconductor division. Similar technology can be used to produce liquid nitrogen on a reliable industrial scale.
The meeting clarified for me how the Scott Technology relationship with XRF Scientific in Australia works. Scotts (Rocklabs) were supplying the sample analysis equipment. That spews out heaps of data that must be interpreted. Who better to do that than the university boffins at XRF scientific? So with Rocklabs and XRF Scientific working together, what SCT have is a turnkey package solution for the mining industry. Clever!
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