Production Innovation: Hugh McDougall
Hugh McDougall spotted an opportunity to manufacture prefabricated poultry buildings and supply equipment for the specific climatic conditions in the Philippines. Now the CEO of Australia Farm Innovations is replicating this model as the company expands in South-East Asia.
Hugh McDougall was operating a cellulose insulation manufacturing business in a special economic zone in the Philippines, selling his wares to chicken farmers, when the farmers complained the buildings and equipment available to them was not adapted to their needs. He realized that manufacturers from other regions didn’t understand the country’s climate.
"That’s what I decided to focus on: a company that purely built, designed and developed a product for the Philippines market, that is very high quality," McDougall recalls in an interview with The CEO Magazine.
As CEO of Australia Farm Innovations (AFI), McDougall has transformed poultry production in the Philippines, introducing prefabricated agricultural building and equipment for raising chickens across the island archipelago.
Further expansions
Now, the firm has its sights set on further expansion, not only in the Philippines, but also across South-East Asia, where producers require similar customization and could benefit from AFI’s turnkey solutions. Its potential expansion is also meeting a need for food security in the region, where populations are expanding.
The next step is actually basically replicating what we’re doing in the Philippines but doing this in other countries across South–East Asia.
"As our customers are expanding, our business is expanding as well," McDougall says. "The next step is actually basically replicating what we’re doing in the Philippines but doing this in other countries across South-East Asia."
At first glance, McDougall seems an unlikely pioneer in the Philippines’ chicken production – although he did grow up on a farm in South Gippsland, Australia. He studied entrepreneurship, worked in accounting and was employed for a period in product development and finance for Ford Motor Company.
But he wanted to strike out on his own and founded a logistics company in Australia. He later invested in a company manufacturing cellulose insulation. The company established a manufacturing plant in the special economic zone in Subic Bay, Philippines.
It was trips to China that piqued McDougall’s interest in the poultry business, however. A customer was building chicken houses there and needed cellulose insulation.
Whatever you’re telling the client, you need to be able to deliver on that.
"I came back to the Philippines and I started meeting chicken farmers in the Philippines and saw this need for higher quality houses," McDougall recalls.
"I was already manufacturing a product called cellulose insulation, which is used inside chicken houses. And then I decided to take another step further by designing a prefabricated building."
From his conversations with farmers, McDougall realized they were demanding more than just a prefabricated building; they wanted equipment as well. He sought out the best suppliers globally and tracked down a fan that used one-third the electricity of anything else on the market – saving farmers significant money in a country with high power prices.
"It costs a little bit more per unit, but you use less units and then they’re more efficient," he explains.
From A to Z
Word of mouth spread slowly at first, but business became brisk toward the end of the 2010s – necessitating the building of a bigger factory. A large part of AFI’s success has come from its ability to provide chicken farmers with a turnkey operation "from A to Z", McDougall says.
"We actually do the civil works, we do the prefabricated buildings, equipment and electrical. We train them how to operate it and then provide the after-sales and the warranty," he explains.
"Once we have built a project for someone and they start with, say, one building, every time they expand, they want another building. It’s very simple because they already know our equipment, they already know the company. We can just build another one and help them continue to expand their business."
With the turnkey operations comes strong customer service and developing close business relationships.
A lot of customers say to me: ‘You’re the only one that will explain A to Z how to do everything and advise us what would be the best situation for us to get our return on investment’.
"A lot of customers say to me: ‘You’re the only one that will explain A to Z how to do everything and advise us what would be the best situation for us to get our return on investment’," McDougall says. "It’s like the one-stop shop."
Relationships are so close that customers call with issues pertaining to equipment not manufactured by AFI, but which the company can fix.
"Whatever you’re telling the client, you need to be able to deliver on that. Then you can foster those customer relationships," McDougall says. "Even if there is something that is not 100 percent, you can easily talk to the customer and work through that. And then the customer at the end of the day is going to be very satisfied."