Hofman s build accidental dynasty
Hofman's build accidental dynasty

Johann and Erich Hofmann shouldn't even be in WA.

The Munich-born brothers had left Germany in pursuit of change and adventure, embarking on the MV Aurelia with 1300 other assisted migrants bound for Sydney and the Bonegilla migrant centre when the vessel stopped over in Fremantle in 1959.

Johann, who goes by John nowadays, recalls that a superintendent from the now-defunct Chamberlain tractor factory in Welshpool came aboard seeking toolmakers. The Hofmanns and one other disembarked.

"We never intended to stay. We were going to wait two years, learn a lot, see a lot, have a lot of fun and go back (to Germany)," the 73-year-old says. Apart from short interludes back in Europe, he and his younger brother have been in WA since, building a visible legacy in one of the State's biggest family businesses.

Bassendean-based Hofmann Engineering has about 600 employees in WA, Victoria, Canada, Chile and India and turns over more than $130 million a year. More than half the revenue is drawn from export markets, including Germany. Forward orders for the next 18 months stand at $120 million.

The award-winning firm uses computer design technology to turn out products, including high-tech precision tools, valves and pumps, bearings, food packaging and aerospace parts, but its growth of late has been built on producing and refurbishing high-precision gearing for mining and mineral processing plants and wind turbines. Some of the gears are the biggest made in the southern hemisphere, measuring up to 15m in diameter and weighing more than 100 tonnes.

Three generations of the Hofmanns now work in the business, including both of John's sons, Erich J Hofmann, who succeeded his father as managing director eight years ago, and Mark, a metallurgical technician, as well as Erich Sr's daughter, Monika, an accountant who works with Hofmann's finance team.

Prime Minister Julia Gillard visited Hofmann's headquarters during CHOGM in October, holding the company up as an example for Australian industry. "Other sections of manufacturing would do well to look at the track record of this place, how it has stayed at the forefront of research and development, how it has met its customers' needs and how it has been investing in skills and training every step of the way," she said.

John stayed six months at Chamberlain before heading north to BHP's iron ore mine at Cockatoo Island, off the Kimberley coast. He stayed four years all up, in between marrying his fiancee Karin on her arrival from Germany. Cookatoo Island enabled him to accumulate a nest egg and gain an insight into mining but its isolation also meant that he quickly learnt to "improvise and compromise" to ensure equipment was returned to service.

By then, he and his brother were laying the groundwork to build a precision engineering business in WA. As part of the learning curve, they returned to Germany for two years in the late 1960s.

"We changed jobs (with German toolmakers) every six months and bought and overhauled second-hand machinery to take back to Australia," John says.

"We had a plan and we knew precisely what machinery we wanted, in fact we still have that machinery."

J & E Hofmann Pty Ltd began in Erich's backyard in Dianella in 1969, picking up its first work from Chamberlain. It moved to its Alice Street premises in Bassendean soon after, taking up three acres. It now has 13ha, having progressively bought neighbouring land.

Among its first employees was current technical director Leighton White, who joined the business 40 years ago.

Hofmann Engineering's growth has been particularly sharp over the past decade, with Erich J significantly ramping up the company's gearing business and establishing manufacturing beachheads on the east coast and overseas.

With Australian labour rates significantly higher than offshore, the company says it has had to be innovative to remain competitive. For example, it was able to develop a price-competitive process to use forged steel to make gearing, producing stronger, longer-life products than those made by conventional cast-steel methods.

Two years ago, Hofmann Engineering bought the Melbourne-based Metaltec Precision International, a preferred supplier of production tooling for the rear fuselage, tailplane and twin vertical stabilisers for the Joint Strike Fighter. The following year, it established itself in Bendigo, resuming production at the old Commonwealth ordnance and heavy engineering plant. The offshore presence has followed more recently.

While his father is more cautious, Erich J sees the opportunity for the company to use its strength to keep on expanding, following its mining clients into new markets and perhaps snapping up distressed engineering businesses on the way.

"At the moment, particularly for manufacturing, it's the toughest it has ever been in Australia," he says. "We're lucky we've got that size, we have a good reputation, we have exports. But if you are purely a single-line manufacturer, you're struggling.

"We're very fortunate. In the good times you get work and in the bad times the mining companies don't want to buy, they repair. We do that also. We're now totally vertically integrated. Apart from the raw steel, we do everything in-house."

Wherever the company goes next, both father and son insist debt will play no part in its growth. Hofmann Engineering is debt free, the founding brothers having eschewed dividends over the past 40 years in favour of reinvesting their profits into capital equipment.

There also appears little prospect of the business making its way on to the Australian Securities Exchange any time soon, though Erich J says it gets "constant" inquiries.

Some uncertainty, however, surrounds succession, which has proved a thorny and decisive issue in many family companies. Hofmann Engineering is jointly owned by John and Erich, 71, who remain executive directors of the group. John says he expects common sense to prevail when the time comes to pass the business onto the next generation.

GEARING UP 1.2m Diameter of gears Hofmann made for the Parkes telescope, replacing 1950s ones in 2006 Source: CSIRO

The West Australian

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