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Atto
Abrasives Ltd
2. Company Background
åtto Abrasives, established in 1994, is engaged
in the development, manufacture and distribution of
specialised abrasives. The specialised abrasives include
precision cutting wheels and rubber bonded polishing
and grinding wheels. The abrasives are used in the automotive,
aerospace and medical device sectors, in applications
where precision and surface finishes are essential characteristics
of the end product.
Major customers include Rolls Royce Aerospace, Victorinox
(Swiss Army knife), TFX Medical and Allied Signal. åtto
have developed a very attractive niche market by focusing
on developing bespoke solutions for specific customer
problems. The eBusiness project has given them the opportunity
to complement their specialist offering with a range
of consumables that can be assessed and ordered via
the extranet facility.
A large proportion of turnover is derived from export
sales (circa 80%). The main export markets are Germany,
Switzerland, the U.K., and France. In addition the company
also exports to India, Singapore and the USA.
The company has achieved consistent and sustained growth
since it was established in 1994. During the initial
years (1994-1999) the company operated from leased premises
in New Ross, Co. Wexford. In 1999 the company purchased
a 3 acre site outside New Ross and constructed a purpose
built facility of 10,000 sq. ft.
The actual relocated to the new facility occurred in
January 2000. The new factory and offices were designed
and equipped to facilitate the anticipated growth in
eBusiness transactions. The site is sufficiently large
to permit further expansion of manufacturing, warehousing
and office areas as the need arises.
In 1999 åtto entered into an exclusive agreement
with an American abrasives company. This agreement,
which will continue for future years, contributed £200,000
to turnover in 1999. Stripping out the contribution
from this agreement the underlying increase in turnover
was 100%.
The key promoters of the project were the following:
Michael Prendergast, M.A., M.Sc.,
PhD. Managing Director
 Dr.
Prendergast is a graduate of Trinity College Dublin
and University College Cork. Prior to establishing åtto
Abrasives he worked in a technical and managerial capacity
with a number of companies including Quest International,
Plant BioTechnology (UCC) Limited and Medentech Limited,
Wexford. In addition he has lectured, in a full-time
and part-time capacity, at Waterford Institute of Technology.
Dr. Prendergast is computer literate and has participated
in a number of computer training and related courses.
Mr. Thomas A. Prendergast, B.A.
(Mod), M.A. Marketing Director
Mr. Prendergast is a graduate of Trinity College Dublin
and for 10 years worked as International Marketing Manager
for the abrasives division of the American Optical Corporation.
As International Marketing Manager, Mr. Prendergast
was responsible for establishing and overseeing a worldwide
distribution and sales network. He has extensive experience
of direct selling, distribution and marketing of abrasives
in 32 countries. He has participated in numerous trade
missions and successfully presented submissions to government
agencies.
During his career in the abrasives industry he has established
a close working relationship with abrasive machinery
manufacturers. He has extensive experience of applied
engineering and is fully conversant with the challenges
encountered by end users. Mr. Prendergast designed and
launched the first åtto Web site in 1994 and has
overseen the various up-dates
2.1 The Abrasives Market
åtto Abrasives Limited develops, manufactures
and supplies ‘bonded’ abrasives. The total
market for bonded abrasives, in Western Europe, in 1998
was 810 million. The East European market was estimated
at about €200 Million in 1998.
In light of the technical nature of the product and
the diversity of industries into which the åtto
products are sold, business to business selling is the
key means of promotion.
The UK market – case study of a changing market
place The three key sectors of the UK abrasives market
are classified as 'coated', 'bonded' and 'super abrasives'.
Super abrasives and coated are considered to account
for the larger shares by value at 38% and 36% respectively,
whilst bonded is estimated to have a 26% share.
3M, Unicorn, Hermes and S.I.A, achieved the largest
market shares of coated products. The principal suppliers
to the bonded market are Unicorn and Carborundum, whilst
in the super abrasives field Unicorn (including Nimbus)
and Tyrolit are the major players. As mentioned below,
Unicorn and British Nimbus are owned by Saint-Gobain.
In overall terms, major players include 3M, Hermes,
Marcrist, Diamant Boart/Wendt, Tyrolit, Arrow, and Klingspor.
Historically, there is a trend towards greater supplier
concentration in the abrasives industry. For example,
between 1996 and 1998, Carbo Plc acquired a number of
abrasives manufacturers, suppliers and distributors,
whilst Unicorn was acquired by Saint Gobain in 1997,
and Flexovit the following year. Cora Abrasives are
also owned by Saint Gobain.
Distribution of abrasive products is served by a wide
range of dealers and trade outlets reflecting the fragmented
end uses of abrasives. For example, outlets for sandpaper
include the DIY multiples, independent retailers and
builder’s merchants, whilst grinding wheels for
manufacturing purposes are catered for by the Engineers
Merchants, and abrasives specialists.
Plant and Tool hire outlets represent a major distribution
channel for abrasive products. Throughout the UK there
are an estimated 2500 to 3000 Plant Hire outlets, and
2000 Tool Hire outlets, growing at the estimated yearly
rates of approximately 3-4%, with market leaders such
as Hewden Stuart/Finning, A-Plant and HSS.
Major distribution channels include Abrasives specialists,
Engineers Merchants/Factory Supply Stockists, DIY Multiples,
Builders Merchants, Automotive.
This description of the UK market gives an insight into
the complexity that åtto has to come to terms
with in developing its marketing and sales strategies
and this is just one of their markets.
The Sales & Marketing strategy of the company is
principally based around direct selling to the end user,
through trade shows and magazines. Combined with this
the company uses its customer base to evaluate applications
for its products and then targets similar producers
in other markets worldwide.
| Existing
Products |
Product
Name |
%
of Total Sales |
| 1 |
Precision
Cutting Wheels |
35% |
| 2 |
Precision
Grinding Wheels |
35% |
| 3
|
Cutlery
Grinding Wheels |
20% |
| Other |
Cotton
Bonded Products |
15% |
| Market
Territories |
Product
Name |
%
of Total Sales |
| Ireland
|
|
15% |
| Germany
|
Abrasives |
30% |
| U.K. |
Abrasives |
25% |
| Switzerland |
Abrasives
|
20% |
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