Firm wins exclusive deal with big player
Wedgelock, the Upper Hutt company which designs and manufactures parts fitted to excavators, has won an exclusive global contract to provide attachments for industrial giant Caterpillar.
Following two years of rigorous field testing, Wedgelock's United States business will provide quick couplers – which improve the safety and efficiency of changing excavator buckets – for a range of Caterpillar excavators.
Chief executive Matthew Calvert, whose father founded the business in 1994, said confidentiality agreements meant he could not reveal how many of the attachments it expected to sell to Caterpillar, but the size of the deal was "significant" and represented the biggest milestone in its history.
"It's an exclusive arrangement for that range of machines, so Caterpillar, being global, it's a significant volume for Wedgelock".
Mr Calvert said to secure the deal the company was required to provide prototypes for field testing which was "well and truly above what we'd ever imagined", but the volume of work had seen it win the contract ahead of international competition.
Under the contract Wedgelock will supply quick couplers for about four Caterpillar models, and Mr Calvert said he believed it was possible the agreement could be expanded to cover several more models in the future.
Quick couplers allow operators of diggers and excavators to switch the tool being used by the operators, with the bucket locked in place as soon as it touches the coupler. Most excavator injuries occur when tools are being changed.
Wedgelock was founded in 1994 and signed licensing agreements in Australia in 1998, and Britain in 2002.
It now has distributors selling its products into about 12 countries, and established a US business as part of a joint venture with private equity group Stone Arch Capital at the end of 2009.
The parts which will be used in the Caterpillar deal were designed in the company's base in Upper Hutt but will be produced at its North American manufacturing facility in Mexico.
Mr Calvert said the company expected to generate export receipts over the next 12 months worth more than $10 million, which did not include its licensing revenue or the revenue it generates from New Zealand customers, which he declined to disclose.
Wedgelock is attempting to raise up to $5m from private equity investors, a process which has been under way for about 18 months.
Mr Calvert said the company had secured a "significant portion" of this already and was in talks about securing more.
The cash has been earmarked to commercialise its intellectual property by expanding into new markets.
While about 95 per cent of excavators in New Zealand use quick couplers, similar to the rest of the Western world, the rate is much lower in developing nations.
"We believe there's a huge global opportunity to take our technology to new markets."
Mr Calvert declined to name its initial targets but said Brazil, Russia, India and China – the BRIC group of large, quickly industrialising countries – were "places we want to explore".