Over a year ago now, before the real emergence of the current economic ‘global financial crisis’, I wrote a piece for Monocle on Røde, the Australian microphone manufacturer. I’d used their microphones at Monocle, and had been intrigued by this Scandi-sounding brand producing beautifully crafted mics that could only be German or Japanese … until I saw ‘Made in Australia’ on the box. The story appeared a couple of issues back in truncated form but I thought I’d post a longer cut here for a number of reasons.
I find Røde interesting as they exemplify the possibilities of manufacturing in the contemporary city, using advanced but increasingly affordable techniques like rapid prototyping via laser cutting, and so integrating design processes with manufacturing. As a result, they have many of the benefits of a pre-industrial craft economy (design and manufacturing aligned; mass customisation possibilities; stock levels managed flexibly, almost on-demand; reduced environmental externalities through aggregating all activities under one roof and with increasingly light industrial processes), with the potential global scalability of the industrial model.
They suggest that a modern diversified economy could – should – still have manufacturing at its core, alongside service industries. And that so-called knowledge-based work is present in both. They employ local people, and have global presence. Sure, it won't employ the thousands that, say, the Colonial Sugar Refinery in Pyrmont once did but they employ people nonetheless. It’s a design-led business, with the aspirations of a premium brand, but sells in high volume at affordable prices.
So in the context of previous writing about Sheffield and other cities largely (though not totally) stripped bare of their manufacturing heritage, this little story from the baking hot streets of Sydney’s western suburbs may have resonance elsewhere.
Although the proportion of manufacturing industry in Australia (10-12% of GDP) is even lower than the UK’s (13-16% of GDP), oddly it feels higher here. Despite Australia being a laissez-faire economist’s dream, there’s somehow still a strong debate about the importance of, say, the car industry to Victoria. There may be some deeper understanding that actually making things is important. As I noted earlier, I wrote this piece before the GFC – as you can tell from only the early portents of a “US-driven recession” – which continues to hammer economies structured as Australia’s is. While I personally won’t shed a tear for the devaluation of mining and shopping malls the speculation that, for instance, Melbourne is to be hit harder than Sydney due to its larger manufacturing base sends out the wrong message. The recession originates in the service sector (financial services, to be precise) and manufacturing need not be dragged down with it (though they are of course linked). Now is the time to innovate our way out of this with new models, and these examples of new, smart hybridised businesses that are both manufacturing- and knowledge-based may be all the more important right now.
Røde, Sydney, Australia
With the recent closure of Mitsubishi's automobile plant in Adelaide, Australia's industrial base seems determined to stick to the trajectory outlined by other developed nations. Though skewed by its once-prosperous commodities business with China, which analysts think may shield the country from a US-driven recession, the Australian economy is now largely post-industrial, centred around a highly-skilled, well-paid and well-educated workforce trying to take advantage of its strategic position at the base of the Pacific RIm. Manufacturing, for Australia as with other developed nations, is largely done elsewhere, while Australia does the 'knowledge work' around products. So the logic goes.
Yet one company bucking this trend is Sydney-based microphone manufacturer Røde, who may have developed a business model that encompasses both manufacturing and the intellectual property work, having vertically integrated almost all aspects of their business. As with some other companies swimming against the tide of outsourcing – see also American Apparel's proud boasts of "Vertically Integrated Manufacturing" – Røde have found that value lies in being able to orchestrate every part of their business directly.
As such, they're indicating that integrating hi-tech manufacturing with R&D, industrial design and marketing may indeed have a key role to play in developed economies, taking advantage of that smart labour force, and positioning themselves as a premium brand that can produce at a volume that enables a range of smartly-priced packages.
They're one of the top companies in the world within the field of recording equipment – in many categories, they're number one in sales volume – and renowned for producing microphones of extremely high build quality within affordable packages.
"Porsche Turbos at Holden prices", their MD Peter Freedman quips.
The Porsche line is apt, as Røde microphones are beautifully made, elegantly shaped pieces of kit. Their NTG-1 shotgun mic is used by the Monocle.com team, sitting atop our Panasonic AG-HVX200s. It's a slender, gun-metal tube of machine-tooled precision, with a stripped-back aesthetic that whispers a Nordic, Mittel-European or Japanese design heritage. And of course, the presence of that 'ø' in Røde might lead the unwitting consumer to believe that these mics come from Copenhagen rather than Sydney.
There is a dash of Scandinavia in the Røde DNA, in that the company emanated from Freedman Electronics, a pioneering Australian audio business set up by Henry and Astrid Freedman in 1967, after they'd emigrated from Sweden. And indeed Peter Freedman was born in Stockholm. Yet he's every inch the energetic Aussie entrepreneur, and the name Røde was chosen for its punning potential – Freedman grins as he recalls how the first mic was called the RØDE-NT – as well as a vague attempt to cash in on European heritage. Damien Wilson, Røde's marketing and sales director, reveals their quick surveys suggested that hardly any customers knew they were an Australian company. But despite this shifting sense of provenance, Røde is certainly 100% Australian.
I visited their primary plant and headquarters at Silverwater, out near Parramatta in the sprawling Sydney suburbs (Røde also have another dedicated metalwork facility out in Mudgee, 250 km north).
Demographically and geographically, this is actually the centre of Sydney, and is as far away from the glittering charm of Circular Quay or the beachside eastern suburbs as you can get. Sydney’s industry slowly drifted from Pyrmont, Waterloo and Alexandria throughout the 20th century and what’s left of it resides here in the western suburbs. It's the real Sydney; scorching hot, unsheltered plains with long straight streets of low-rise quarter-acre blocks, industrial buildings and warehouses, sliced and diced by the relentless M4 motorway and choked Parramatta Road. It’s endlessly flat, in stark contrast to the hills around the harbour, and there’s no respite from the sun beating down on the gargantuan chunk of ancient stone that is the Cumberland Plain.
Around nearby Auburn train station, the Sydneysiders here are far more likely to be SE Asian, Chinese, African, or from the Indian sub-continent or Middle East, reinforcing the sense that contemporary Australia has far more in common with its Asian neighbours than Europe or America.
Freedman knows this, and fans his hand across a world map on the wall of Wilson's office. The map has Australia placed centrally, and indicates the large sweep of "four billion consumers" around them. China in particular has been central to Røde's success story. The company originally started by outsourcing the production of microphone capsules to China's vast low-cost manufacturing base. Yet Freedman noticed that the high level of returns due to poor construction was beginning to accumulate significant costs for Røde. Rather than continue to offset the cost of handling the rejects with the low original production costs, Freedman decided to address the problem at source. Investing heavily in high-technology manufacturing in Sydney was a brave, AUS$15m decision, but it has meant that the reject rate has dropped to close to zero and allowed Røde to pull manufacturing back closer to R&D. This automated production environment means that Røde can produce consistently high quality products at high volume, leading to that combination of Porsche-for-Holden. Freedman reckons their $300 mics outperform other hand-made mics that cost $4000. That Røde are shifting 10,000 microphones a month indicates the market might well agree.
In looking for machinery and the expertise to drive it, Freedman often struggled within Australia. Attempting to source particular kit for, say, polishing components, he'd be told there wasn't a market for that kind of thing here. "Well, there never would be with that attitude" laughed Freedman. With sheer persistence, Røde have now built up an array of manufacturing equipment that is probably unparalleled within Australia. Several of their machine tools are sub-micron precise, such that they can't actually be exported to some countries under international law.
Freedman takes us down to the factory floor, which features an international all-star cast of hefty plant, with Japan's Yamaha and Star Micronics rubbing shoulders with those of Swiss companies Essemtec and Schleuniger, and the USA's Bridgeport. These hefty machine tools work 24/7, baking the printed circuit boards, stripping cables, milling components and sculpting mic bodies from metal via laser cutters controlled by CAD.
They're augmented by workers, all locals, who still construct some elements of the bodies by hand. Across the floor, long lines of fresh microphones are being 'soak tested' (left with the power running through them for 24 hours). Freedman explains that if a microphone is going to fail, it'll do it in that first day. After that, you should have them for life. That level of reliability is fundamental to Røde's reputation within the professional environment, and the banks of sealed clean-rooms lining the factory floor, with masked personnel noiselessly assembling capsules, are testament to an ever-more demanding market.
Upstairs, the atmosphere is quieter, in an R&D space dotted with CAD workstations and cast-off shells of prototypes mics and booms.
Røde links up with the best of Australia's universities to snag engineering talent as it emerges, and Freedman is clearly proud of his firm's ability to innovate, with a track record of spotting new opportunities just as they emerge. Their 'Broadcaster' mic, a staple of many studios around the world, is now joined by the 'Podcaster', which is a high quality USB-based mic and winner of last year's Australian Design Awards. See also the VideoMic with integral shockmount, designed to fit on top of DV camcorders and which takes advantage of the fact that camera manufacturers often focus on improving image quality over sound quality. "Long may that continue", smiles Freedman, as his replacement mic has sold incredibly well.
All these growing markets are underpinned by a solid business for the three primary professional arena of studio, broadcast and 'installed' (convention centres, public buildings, churches and so on.).
Røde's innovation doesn't stop at design and manufacturing though. Their website is a particularly smart approach to both luring potential customers and looking after the ones they've already got. As you'd expect, there are video and audio clips of the mics in action – including how the NTG-1 performed covering the Chilean dock workers revolt of 2005 – but you'll also find the 'Røde University' online classroom environment that teaches users the basics of recording, such as mic-ing up a drum-kit. Having hired a couple of full-time web producers, Røde build and operate the entire operation. This isn't just after-sales service, but part of a holistic approach to their business that suggests Røde know that the product's life starts at its sale, rather than ending when it leaves their factory.
Another room at the HQ is set up for internet video-based training sessions and product launches. In fact, there's a long term strategy to stop touring the trade shows such as Frankfurt's MusikMesse or NAMM in Anaheim, instead announcing new kit from their base, broadcasting live over the internet.
Lest their relationship with China is characterised by that withdrawal from manufacturing there, Freedman is quick to point out that it's a key market for them, and how he's been doing business there since 1981. Like many Australian businesses now, they have in-depth knowledge of how to do business in China, and a detailed understanding of the differences across other Asian markets.
Their Chinese business is often in that 'installed' category and increasingly broadcast, rather than recording studios. In India it's the enormous community radio broadcast arena that is significant for them. The US, Europe and Australia has eaten up the 'prosumer' music kit – equipping the archetypal garage bands. In Japan, there is less of a culture of home recording, perhaps due to the general lack of garages, thus Røde concentrates on installed and professional broadcast.
Acquiring a US-based studio monitor business and with a dedicated US office (plus R&D facility up in Seattle), Røde's market is global, ignoring the so-called ‘tyranny of distance’ that beleaguers less ebullient Australian companies. But Freedman is also aware that China is shifting, and Røde is already being challenged by higher-quality manufacturing from the north. He talks of 50 more players in the market since they started, primarily Chinese. This incipient threat may also be underpinning his company's drive for innovation and speed to market. And for all its apparent altruism, their approach to web-based learning may well actually be about "educating the market about brands", as Wilson put it, attempting to future-proof Røde's business in the face of this new competition.
Freedman and Wilson mention the "Apple factor" several times, looking to another company producing high quality, smartly-branded kit that has a broad consumer appeal whilst catering to a Pro market. Car manufacturers also provide inspiration, offering up the holy grail of the "mass-produced premium brand".
Freedman believes Australia's future is in high-tech design and manufacturing, and their decision to integrate all they can might almost be a precursor for the next industrial wave of rapid prototyping and 3D printing, where the line between design and production begins to dissolve altogether. Something tells us that Røde are likely to be in that game very quickly.
The microphone market top 5
- Røde (Australia)
- Audio Technica (Japan)
- Shure (USA)
- Sennheiser (Germany)
- Harman (USA, but a multi-brand conglomerate that includes AKG (Austria), JBL and Harman Kardon (both USA))
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