ELGi determined to make impact on the industrial compressor market

Being a lesser known brand in a competitive industry can be an issue. But if there is a sure way to prove to an industry that you are serious about being a point of difference, while also trying to build your brand, then winning a prestigious award is a good start.

That is what happened to ELGi, the Indian-based manufacturer of high-quality industrial air compressors. When the biggest competitor is German engineering in the form of Kaeser, it can be a hard row to hoe when trying to convince potential clients about the comparitive benefits of your gear. However, winning the coveted Deming Prize for Total Quality Management – the first industrial compressor manufacturer outside of Japan to win the award – goes a long way to show how committed ELGi is to making a dent in the market, including in food and beverage manufacturing plants in Australia.

Having bought Pulford Air & Gas and its subsidiary Advanced Air Compressors in 2018, the company has an ambition to become the second biggest compressor company in Australia.

It concedes that number one, Atlas Copco, is almost unreachable, but the company is keen to get higher on the ladder. ELGi national sales manager, Greg Gillespie, and business development manager, Brian Vegh, both know that they have a hard job ahead of them going from sixth in the pecking order up to number two. However, they also have a belief and confidence that the product not only has the ability and technology to do the job, but the manufacturing process is second to none.

“Atlas Copco is the Empire State Building on the graph you see on a piece of paper,” said Vegh. “We are number six at the moment, but there is not much difference between number six and number three.”

And in order to get up the pecking order, ELGi’s strategy is to espouse the benefits of its products such as the standards they are manufactured to, and the importance of the total quality management measures it has in place when it manufactures the compressors.

“ELGi compressors meet every international standard that any other company meets,” said Gillespie. “They control 100 per cent of the manufacturing process, from the sand they collect for the castings right through to the final product.”

Both Gillespie and Vegh know that there is a perception that compressors not manufactured in the US and Europe are somehow not up to scratch. This is why the company introduced Total Quality Management processes, which culminated in winning the Deming Prize in 2019. Not only that, the company has so much faith in its compressors it offers a 10-year warranty, something most of its opposition don’t do. There is also the perception that their compressors are made to Indian standards, which can sometimes be at odds with Australian regulations.

“A domestic product in India will have a metal starting box on it, which is acceptable over there, but you can’t have a metal starter box here in Australia,” he said. “The ones that arrive on these shores are all up to Australian standards already.”

Two of the key attributes of the compressors are the aforementioned 10 year warranty and their operational efficiency. Gillespie said the efficiency is about 10 per cent better than most similar products that are on the market. There is a reason for this.

“ELGi manufactures all the main components themselves. They mainly use Siemens motors and contactors,” said Gillespie. “We manufacture our own air end, which is the most expensive part of the machine – from the sand to the finished product. The design work they put into the air end to make it more efficient is top notch.

“Then there is the efficiency. Over a five year period, the cost of compressed air is 85 per cent of the cost of electricity/power. If you get a machine you start talking about 200kW of installed compressed air, and they run 24/5 days a week or 24/7 – which is anywhere between 5,000 and 8,000 hours a year. We can supply customers with a machine that is going to be anywhere between 3 and 8 per cent more efficient than some other machines out there. That is a lot of money over five years.”

The most expensive part of compressor is the air-end, which is important when it comes to the 10-year warranty. This is the actual screw where the air gets compressed, and in the case of ELGi, it is one the company has designed itself. It is for this reason they are happy to offer such a long warranty period for their compressors.

“We have heard of situations where only a 12-month warranty on air-ends was offered,” said Gillespie. “The warranty ended on midnight of that day. If it failed the next day, you have got nothing. Absolutely nothing.”

And how suitable is the company’s range for the food and beverage industry? When you’re talking its oil-free range, they are perfect, said Gillespie.

“When it comes to working in food and beverage, our compressors are Class 0,” he said. “With the quality system we use, everything is 100 per cent trackable and traceable. If you open up a machine you will see every screw, nut and bolt hallmarked in yellow.”

“That means every part has been checked. Every single one,” said Vegh. “If you have been in the factory, everyone who works at the foundry is on a production line. They go through a comprehensive checklist when the machines are being manufactured.”

The company is also aware of the impact its manufacturing will have on the environment and have measures in place to make the least amount of impact as possible.

“The sand they use to do their casting will only come from a reputable source and they recycle over 90 per cent of it because of the environmental issues,” said Gillespie. “It is also cost-effective. They’ve built the plant around that supply so they only have to use the minimal amount of sand they need.”

Finally, there is the back-up service that is available. Both Gillespie and Vegh point out that while the product is very good, if there are not people on the ground to help customers, then that can cause a whole range of problems.

“One of the hardest issues with industrial compressors in Australia is retaining and getting good service personal,” said Gillespie. “Most of them started out as fitter and turners. That is what I started out as and there are not of lot of us that stay on the tools their whole career.”

He believes one of the reasons it is hard to employ service technicians are the specifications of the job.

“Being a service technician means you are on the road a lot,” said Gillespie. “You have to like that. Some guys get sick of the travelling and driving. You have to be very autonomous.
“You do routine maintenance of products but then you have to walk into a business where everybody is looking at you. There’s 30 people standing out on the street like there is a fire drill waiting for you to fix it for them. When that machine is down, the down time is so costly to a company they want it fixed now. And some tradies are just not interested.”
Vegh reiterates that you can’t underestimate the back-up service.

“Some of the bigger air compressor manufacturers, for want of a better description, are just selling boxes. That is all they do,” he said. “Once that is done, they are onto the next customer and that’s it. One of our biggest selling points is our after sales service. We have the Advanced Air and ELGi distribution network. We have 52 service technicians nationally, as well as New Zealand.

“If you need help at 11.59pm just before the whole country is waiting for the fireworks to go off on New Year’s Eve or 9.32am on Christmas Day, we will be there to help you. It’s the 24/7, 365 days a year help and support that we pride ourselves on. Selling a compressor is not the hard thing, it’s what you do for the customer in three years’ time that makes a difference.

“Each person who works in the plant prides themselves on the quality of the product.
“We have a rigorous checking process here in Australia when it comes to the ELGi gear we bring into the country. If it is not up to scratch we send it back.”

Less mess with oil-free compressors

Cleanliness is a line in the sand that can’t be crossed when it comes to food and beverage processing plants. Regulations and by-laws that govern the manufacture of edible consumables are there to protect the public.

By their very nature, factories are not the cleanest of environments. This is why traceability of foodstuffs is becoming more prevalent, not only so consumers can see where their sustenance is being processed, but also if there is a recall, authorities can trace the cause of any food poisoning outbreak. Therefore it is incumbent on those that create food and beverage products to make sure the produce is prepared in the cleanest, most sterile environment possible.

One aspect of ensuring cleanliness is to make sure the equipment that is being used is up to scratch. Air compressors are an important piece of equipment that are used extensively on production lines in many food and beverage factories throughout Australia.

ELGi has been in the air compressor business for more than 50 years, and been in Australia for the past eight years. Aimed at the higher end of the compressor market, the company offers a series of machines including it oil-free range, which is suitable for the food and beverage market.

Tom Fyfe, president of ELGi in Australia, is bullish about the company’s place within the industry and is excited about the potential it has going forward. This includes buying out a major distributor.

“We are determined to become one of the top three compressor companies,” Fyfe said. “And we are definitely up there, which is why we offer a lifetime warranty on the oil-injected units. We started to look at how we could expand in the Australian market, so in August 2018 we acquired Pulford Air and Gas and Advanced Air Compressors, which was basically one company with two entities. This gave us a bigger footprint in the market so we now have offices in Brisbane, Sydney and Melbourne. It’s helped cement our position as a major player.”

He also sees food and beverage as not only an important market for the company but a growing one, too. He said ELGi is pushing more into the food and beverage and pharmaceutical arenas because they don’t see as much of a downturn in these sectors as much as some other manufacturing sectors.

ELGi has two ranges of oil-free compressors that are suitable for these types of manufacturing environments.

“They’re traditional oil-free units that are dry screw, and come in 75kW to 450kW configurations,” he said. “We also have a new range of water-injected units that was released in Hannover in 2019, which go from 11kW up to 110kW. The dry-screw versions are both air and water cooled. The 11kW and 110W versions are water-injected, air-cooled only.”

Planned maintenance
Fyfe knows that planned maintenance is an important part of any production manager’s schedule. With that in mind, he said that ELGi has developed air compressors that not only work hard, but have extensive back-up service, which is just as important. The buying of the Pulford Air and Gas and the Advanced Air Compressors businesses means they now have more technicians on the ground.

“In Sydney, we have 16 technicians on the road plus two internal technical people,” he said. “In Melbourne and Brisbane, we have five in each. And we work closely with regional distributors. We have very good distributors in WA and SA, and each of those guys has four to six technicians. There’s a huge amount of support for the product. I would say far more than some of our major competitors. I have colleagues who use some of our competitor’s products and they say the support is poor and they charge like wounded bulls.

“Support is a huge thing, and that is why it’s not only important to get assistance from the distributor but the manufacturer, too. As a distributor, you want support from the manufacturers as well. And we’ve experienced pretty poor service from certain suppliers Pulford have been with before. Because of that, we are very mindful of the service we provide to our customers.”

Fyfe is also aware quality is a key driver in the food and beverage market. He said ELGi’s offerings are now up there with the best compressor manufacturers due to a couple of reasons. First, it has undertaken quality improvement measures. For example, one of the biggest factors with the water-injected ranges of compressors is that the company produces its own air-ends, which will need servicing after 4,000 hours. This gives it a longer pre-maintenance working life than most other models on the market.

Second, ELGi also builds its own water separator in the unit, which is a proprietary piece of technology. It allows the company to have more control over the success or failure of the parts. This is why it has its own foundry. It doesn’t outsource the manufacturing of its critical components to third parties.

“We have control over the foundry,” he said. “The foundry is unbelievable – you can eat off the floor it is that clean. And by doing that, we’re controlling the quality right at the start of the process.

Take the air-end for example, which is the most expensive part of the machine. ELGi took over complete control of that component because it wanted to get the quality right and the right cost, too.

The company casts the exterior of the air-end housing and the rotors themselves. The new water-injected range has an aluminium housing, with stainless-steel rotors in it.

The oil-free range has a cast iron housing with steel rotors that have a proprietary coating on them. Fyfe believes that ELGi offers an affordable option to a lot of small- to medium-sized manufacturers, not just the big players in the market.

“I think we are offering a machine at a better price point and a much better lower cost of service over the life of the machine than some of the other options out there,” he said. “With most of the oil-free units available from other companies, you’re required to change air ends after a really small amount of hours.

“For a food processer, you have to build that into your maintenance plan, which can be expensive.”

Into the future
How does Fyfe see the next few years? He said there has been a little slow-down in some of the smaller manufacturing industries – especially for the 5kW to 30kW air compressors. But he is seeing some really good things happening in the larger markets – like the 55kW to 250kW market in both the resources sector and manufacturing. Then there is the foray into the food and beverage space.

“At the moment we have about 20 per cent market share in the oil-injected range. Over the next five years, our goal is to be either number two or three in that oil-free range. We have an incredibly good oil-free range that is low cost of ownership and reliable, which we hope can penetrate the market with good sales and good reference customers that see a benefit of switching over. Things are still going good for us but we have a long way to go.”

Compressor manufacturer wins Deming prize

ELGi Equipments, the global air compressor manufacturer, is the first business of its kind to win the Deming Prize in 60 years.

The prize, which recognises excellence in total quality management (TQM), is awarded annually by the Japanese Union of Scientists and Engineers (JUSE) since 1951.

ELGi has been on its TQM journey since 2008, and through this business practice aims to be the second largest manufacturer of air compressors by 2027. Activities pursued under the strategy include production improvement activities and human resource development initiatives.

Accepting the award, Jairam Varadaraj, managing director of ELGi Equipments, noted that the trajectory is not always as smooth as it may appear.

“On paper, the path to success is pretty straight forward. But realising it requires a secret sauce. An envelope that rigorously enables, executes and continuously improves the organisation through a process orientation. TQM has been our secret sauce. We have a long way to go but TQM has helped us become a better company for all of our stakeholders.”

Initiatives included in the TQM drive include 400 hours of employee training per person for those on the shop floor, implementing in house and external quality education, and the creation of ELGi’s own vocational training school. Standardisation in sales processes has also been part of the program.

“At ELGi, we endeavour to accomplish ordinary tasks in an extraordinary manner, and turn extraordinary ambitions into ordinary tasks; TQM has significantly enabled the same,” said Varadaraj.