Wellington Drive Technologies is targeting smaller businesses in the US through a new distribution agreement with one of the largest manufacturers of electric motors in the US.
The listed company (NZX:WDT) – which designs, manufactures and sells energy efficient electric motors – has already made several key breakthroughs in the US by focusing on bigger clients such as Coca Cola and Wal Mart.
The new open-ended distribution deal with AO Smith, which will see the US firm sell Wellington motors co-branded with its own brand to its USs customers, will open up sales opportunities to thousands of new customers, according to chief executive Dr Ross Green.
Under the deal, AO Smith will sell new generation ECR One and ECR85/95 refrigeration motors into the US aftermarket mainly for use in supermarket display cases, bottle coolers and cold storage rooms.
Dr Green told NBR that tapping into AO Smith’s network of more than 650 salespeople would allow the New Zealand business to get its products in front of smaller businesses.
“Our own sales and marketing has been targeting those big customers who can order very large numbers and get a direct price right from the source. But there are literally thousands of smaller businesses who can’t take container loads of products and look to their distributor for access, which is where AO Smith come in.”
Wellington Drive recently saw its total full year loss worsen by 69%, although it did see its sales of commercial refrigeration motors grow by 105% and maintained it could make the leap into profitability without requiring any further capital injection.
While Dr Green could not put a dollar figure on the potential worth of the new deal, he said there was “ a lot of light above it”. More than half of the 600,000 motors produced by the company last year were sold in the American market.
Dr Green said the deal would not result in a sudden transformation of the business, but would have an effect this year.
“If you look at the size of AO Smith’s supply chain and footprint, it’s going to take a while for this to filter through. But we are expecting it to have a significant positive contribution in this financial year.”
He said the companies had been working on the agreement for some time, with Wellington Drive needing regulatory approval and AO Smith carrying out test marketing for the past six months.
He said Wellington Drive had also been busy developing the two new motors specifically for the needs of the smaller customers.
“The successful use of our motors by the larger companies have set the tone and shown that we can deliver the goods. It’s taken a long time to get the momentum going in the US market, but once you’re under way, it’s hard to stop it.”
Today's news had an immediate impact on Wellington Drive's stock, which was up 25% – or 2c – by midday.
Mon, 17 May 2010