Rode’s $500m investment proof that manufacturing can be done in Australia

Richlister Peter Freedman’s Rode microphones is an unlikely global success born from failure, and a new $500m cash splash in outer Sydney is proof manufacturing can be done here.

Peter Freedman has spent $500m on his Rode factory, including the world's biggest metal plating finishing line. Picture: Britta Campion

Peter Freedman calls it his $500m “fantastic barrier to entry”.

In the backstreets of Sydney’s industrial Silverwater, 15km west of the city’s CBD, in a complex of four understated factory buildings lie the stuff of billionaire Freedman’s dreams.

His Rode microphones is an unlikely smart manufacturing success story in Australia, a country that wasn’t meant to build things much these days but instead is the home of a company Freedman says others would be “insane” to try to replicate.

What was once a small firm making microphones for home recording is now a global success story that employs 500 mostly highly-skilled workers.

Amateur – and professional – podcasters use Rode mics and recording equipment, as do TikTok and Instagram content creators and influencers. Gamers use Rode headphones and some of the biggest radio stars and singers have custom made Rode mics.

Such is the popularity, and affordability, of equipment used recording video and audio for online accounts, social media accounts, radio and streaming sites that Freedman predicts his products will be so ubiquitous that one day “they’ll be a content creator aisle in petrol stations, next to the lollies”.

Freedman, who placed 121st in this year’s The Richest 250 with is $1.10bn worth, even recently spotted a picture of US House of Representatives speaker Kevin McCarthy talking at a function with a lightweight Rode Wireless Go compact mic affixed to his lapel.

It shows, he says, how far an Australian manufacturer has gone – and could go.

“It blew my mind. That’s where we are at (and) I’m amazed,” a ebullient Freedman tells The Weekend Australian.

“(But) we’re just scratching the surface here. We’re a rock band about to break.”

Freedman’s business sells more than $300m worth of mics and associated equipment annually made in Silverwater and warehoused in nearby Pemulwuy, and its profit margins are enviable.

About 95 per cent of Rode’s revenue is from sales overseas, and it thrived during Covid lockdowns when users at home bought their products to try their hand at podcasting, making social media videos and other content that only needed a mic and something to record on.

Net profit surged to $70m in 2021 from $337m revenue, more than enough to pay Freedman a $77m dividend, and while freight bottlenecks caused profit to drop last year, Rode’s parent company Freedman Electronics – wholly owned by Freedman – has more than $425m assets on its balance sheet.

Freedman admits the economic downturn will have an effect on revenue and profit this year but says he still has big goals and intends to invest in more equipment and marketing to keep gaining market share.

Peter Freedman, owner of Rode, pictured at the company's manufacturing facility in Silverwater in Sydney's Western suburbs. Picture: Britta Campion / The Australian

When asked if $500m is a reasonable revenue goal to aim for in the coming years, Freedman quickly retorts: “A billion (dollars)”.

“It is going to come from the gaming side, the content creation side, the mass market. We’re going heavily into (exporting to) India soon and there’s a huge population there. China is huge for us. It is one of our biggest markets.

“We’ve got the machinery, we’ve got the incredible technology but the big one is you’ve got to have the development pipeline. And that is what we have got to keep working on.”

Freeman says his company’s growth during Covid meant there was a whole new group of people exposed to Rode’s products for the first time who “are now saying ‘well, what else have they got’.”

“And when times are tough you put on more salesmen, right? You’ve got to go for it. So we’ve released four new really killer products in the last couple of months. And we’ve got the same number coming in about the next six months as well. So that’s where the revenue (growth) will come from.”

Those killer new products include Rode’s Wireless ME, a wireless mic used by influencers to make content for TikTok, Instagram, Snapchat and YouTube, its Streamer X video and audio control equipment used by streamers, and a compact version of its RodeCaster podcasting console.

Freedman says Rode has sold about 2 million of its Wireless Go product, which it claims is the world‘s smallest, wireless microphone system, adding to solid sales of its best-known lines like its studio mics.

“We’re constantly thinking of product. But the reason we’re able to do it is because we’re in the game. We’re audio people and we love it. We make things that we want to buy. So we sit around thinking wow it would cool if we had this, why don’t we make it,” he says.

“But if you’re sitting there all the time wondering what people want, then you’re going nowhere. You have to know. The technical side of it; that‘s the easy part. The hard part is what are you going to do that the customer really wants to make their life easy? It is solving a problem. That is what we do.”

While he plays down that technical side, those factory floors in Sydney’s west house a dazzling array of machinery that Freedman estimates has cost him a good $500m to assemble over the past three decades.

A tour of Rode’s facilities reveals state-of-the-art machine after machine, turning pieces of brass, aluminium and plastic into circuit boards, chips into microphones, headphones and other video and audio recording equipment.

Peter Freedman with one of the world's biggest metal plating finishing lines. Picture: Britta Campion

There’s a huge plating line that alone cost $30m to build, where mic bodies are finished and get coated in colours and materials like gold, black and nickel – or just about any other colour.

Rode has a team of specialist apprentices, though Freedman says it‘s getting harder to find specialist staff and that he is starting to employ more in overseas offices like Germany, and the factory has its own tool making machine, injection moulding machinery and testing and research facilities.

In a way, Australia’s isolation has helped. While Freedman’s competitors in Asia and Europe can easily outsource some parts of their supply chain to nearby suppliers, Freedman can’t.

So Rode has become a rare local company to do all seven steps of manufacturing – R & D, design, logistics, assembly, distribution, sales and services – itself.

Its vertically integrated manufacturing model also helps speed up production and shorten the time between design and getting a new or tweaked product into the market.

Freedman jokes if he ever hits trouble he could use the machinery “to make just about anything, like a toothbrush – though I’m not going to because I can’t see this (mics) dropping off, but there’s a comfort there for me that I could turn my hand to just about anything.”

While he admits that the sheer amount of capital expenditure Rode has undertaken over the years may have been questioned by accountants at times, persevering shows that manufacturing can be done right in Australia.

“You just keep adding and adding and eventually we were able to make way better quality technology at a lower price – which is the crazy thing.

“People say you can‘t make things in Australia but you can. We have a lot of people and yet they don’t touch the product much. There’s a lot of automation. And that is how things should be made in Australia.

“We have a fantastic barrier to entry to take us on now. Because you‘ve seen hundreds of millions of dollars of gear there built up over 30 years. This is our competitive advantage now. This is our fortress, this is our strength.”

It hasn’t always been this way for Freedman, who also readily admits that “the greatest thing to ever happen” to him was business failure.

Freedman moved to Australia with his parents from Sweden aged eight, taking over the family professional audio products business that designed, made and installed loudspeakers, amplifiers and mics, at 16 after his late father Henry fell ill.

Heady days would follow, including a stint running the Bunnies nightclub at South Sydney Juniors, but the stock market would crash in 1987 and the commercial property sector soon after. Interest rates skyrocketed and Freedman had borrowed too heavily, legal battles ensued and Freedman came close to losing the family business.

“I realised then that I wasn’t as clever as I thought it was. The minute you think you’re a genius you’re dead. We’re clever, but we’re not infallible,” he says.

A turnaround would come with a cheap $10 mic he had bought in China in 1981 that Freedman found while cleaning out a room full of samples ten years later.

A few adjustments were made and they would be dubbed the RODE NT 1 – named for a belief they would “sell as fast as a rat goes up a drainpipe” in the famous words of

Freedman’s salesman Colin Hill.

Freedman says he would have been thrilled to sell 500 mics annually. By 2016 he was selling 1 million of them.

They’re all made in Australia, though Freedman says it isn’t necessarily an advantage or disadvantage to manufacture locally and it also isn’t important to be known as an Aussie brand.

But being extremely competitive sure helps, Freedman says.

“You have to be humble … and no-one here can say the opposition is an idiot. I don’t wish anybody harm, but I remember my Dad saying ‘oh there’s plenty of room for everybody in this game’.

“And I think, there’s no room for anybody but me. Get out of my way. I won’t kill them, but they may have to go become farmers rather than be in audio technology.”