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BCS Group is a consistent player in the airport baggage handling systems and freight sorting industries. The 20-year-old company has played to its strengths and steadily grown its reputation and sales around the world. And their best is yet to come.

Andre Berge, who founded BCS, then known as Berrill Control Systems, in 1993, summed up the philosophy of the company with the following words: “What makes a company successful is honesty and integrity and a focus on doing things right. We consider our customers as part of our business, and we must serve their needs in the most professional and efficient way.”
Twenty years and one management buyout later, those words still ring true for BCS Group. Today it is a truly internationalised business with a $100 million-plus turnover, a presence in six countries, and 300-plus staff including 55 software engineers and designers.
I’m sitting in the Group’s global headquarters on Auckland’s North Shore with CFO Steve Fullerton and GM services and solutions, Marc Michel, soaking up the history and the vision of the company and coming to the realisation that, with BCS and a few other players, New Zealand has become a major supplier to the international airport baggage handling market.
And if you want proof of a Kiwi firm punching weight above its weight – BCS is it.
Named Auckland’s Exporter of the Year in 2010 and a finalist in the International Business Awards last year, it would be fair to say that BCS has maintained a low profile here over the years – although that’s now changing, says Michel.
“A materials handling, plant automation provider that plays into major vertical markets of airport baggage handling systems and parcel handling systems for freight handlers,” – that’s how Steve Fullerton sums up what BCS is all about. You could say they carry a lot of baggage.
Turnkey baggage handling systems became a major focus for the company in 2000, centred on it’s work for Sydney’s international airport in the lead-up to the Sydney Olympics.
“In the past eight years especially, BCS has become the dominant turnkey provider for Australia’s baggage handling industry,” says Fullerton. “Both providing the systems and operating/maintaining them.” BCS operates and maintains the baggage handling systems in every major Australian airport, except Adelaide and Sydney International, and Fullerton says this dominance is the result of listening to their customers, providing high level service, and consistently being easy and flexible to deal with.
With Australia as an export launching pad BCS has, since 2007, turned its sights on more distant markets – primarily Southeast Asia, North America and Latin America. This strategy reflects the desire not to be exposed to one geographical market and one vertical market (airports).
The US market, with its incumbent players and different standard of hardware has required a different strategy in order to succeed. The continent has an ageing airport infrastructure and high wear and tear factor (some 270 million people travel over the summer period). In the US the focus is on the provision of control and automation system intelligence, or ‘smarts’ as BCS likes to call them. This is the company’s forté.
“What differentiates us in many of these baggage handling projects is not the mechanical hardware, which has largely become a commodity, but our expertise around software, automation and controls,” explains Michel. “We have very advanced simulation software which we use for design and testing; it gives clients great insight into how a system will perform and is a fantastic tool for risk mitigation.”
The airports are recognising that they must be smarter with their use of baggage handling systems, says Fullerton. “They want more information, more control, and they want to de-risk – and BCS is seen as a leader in this intelligence delivery.”
Such is the company’s experience, it has been known to come up with an alternative design to the one originally tendered by a consultant, which has benefits for the airport and more often than not, swings the project in their favour.
BCS has gained a substantial foothold in the lucrative Southeast Asian market with a number of smaller projects completed across the region. Easily the largest is the new Kuala Lumpur airport terminal in the Malaysian capital. BCS won that project, and the others, against strong global competition and has since established regional headquarters in Kuala Lumpur.
Having people and partners on the ground is critical to their success in markets, says Fullerton – this is their clear global restructuring strategy.
BCS achieved MSC (Multimedia Super Corridor) status with the Malaysian government – an initiative to encourage hi-tech companies into the country.  It recognises the ‘smarts’ BCS brings to market.
Three projects have been completed in Mexico and BCS now has a Mexican subsidiary. All manufacturing is outsourced in Mexico, Malaysia and China – although BCS retains ownership of design IP.

Airport growth
While BCS also has a strong domestic business (it was the brains behind Courier Post’s Highbrook distribution centre and a number of other airport and logistics projects), 96 percent of the company’s business is currently offshore. The automated ‘bag drop’ solution, which BCS implemented for
Air New Zealand, is in big demand globally too.
“Airports around the world just cannot grow fast enough to meet demand,” explains Michel. “So the answer is to increase efficiency and capacity within existing footprints and that’s where our baggage handling solutions and front-of-house check-in and bag-drop solutions make sense.” The main airport at the Portugese capital of Lisbon is one such BCS project.
There has been assistance too, in the form of what Fullerton calls a “three-legged stool”: R&D support from the Callaghan Institute, in-market development support from NZTE and bonding support from the Export Credit Office, which has provided significant bank guarantees (ranging from 40 percent of the project value in Mexico to 100 percent in the US).
“Without support from the Export Credit Office, such projects can become prohibitive for Kiwi exporters,” says Fullerton. “It makes a huge difference to businesses like us.”
“The time to tackle Asia is now,” stresses Michel. “It’s right on our doorstep and the economic crisis in Europe is encouraging our primary European competitors to look there also – even to Australia. They have much more size and clout than us, and they’re aggressive. We’re in a real fight now for market share.”
Despite this, both Michel and Fullerton believe they can win, because they focus on building relationships. They also have agility, flexibility and the ability to add real value around the intelligence of their systems. “We’re very easy to do business with – whereas many of our large European competitors are extremely bureaucratic and therefore frustrating for clients,” says Fullerton, who adds that the somewhat arrogant approach of these big competitors works to BCS’s advantage.

Challenges
Scaling up the business through regional offices is probably the number one challenge for BCS right now – and coupled with that is the challenge of transplanting the company culture to those offices. “It’s our culture that makes us successful so it’s important we don’t develop subsidiaries that don’t reflect it,” says Michel.
Flexibility and agility comes to the fore in regard to managing their approach to the exchange rate too.
The key, says Fullerton is to hedge as much as you can and buy locally.
“Be patient and don’t panic. Buy on the dips.”
“Many Kiwi exporters are somewhat unsophisticated when it comes to their FX approach,” adds Michel. “But there’s no excuse really, you don’t have to be an expert with all the advice that’s now available out there.”
Does New Zealand’s geographical position put BCS at a disadvantage? While their competitors will try and use this against them, both Michel and Fullerton are adamant that it doesn’t – but only because their senior team spends a lot of time in market – “at least 50 percent of their time,
if not more,” says Fullerton. “Frankly, you have to be where your market is, and clients need to know that if you’re wanted, you’ll be on a plane the next day.”
Again this is where their regional platforms, such as Kuala Lumpur, willbe an advantage.

Kiwis can do it
BCS is a classic example of how Kiwi firms can be incredibly innovative and succeed on the global stage against some powerful competitors.
“Kiwis can do it,” says Fullerton, “but we need to understand our strengths and play to them, and we need to spend time in market. I know that can be tough for smaller businesses.”
Few Kiwi firms scale up successfully, Michel points outs, and BCS won’t ease up until they are a $500 million-plus company and a true global player.
He says a lot of firms struggle to reach the $100 million mark, and those that do exit soon after, leaving large amounts of value on the table. With a longer-term vision and plan to get over those inevitable setbacks, he wonders how many more could become global forces.

Glenn Baker is editor of Exporter.

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