Covid-19 coronavirus: Kiwi manufacturer buoyed by overseas demand as NZ re-opens

22 May 2020 10:37 AM | Mike Hearn (Administrator)

If overseas inquiries to industrial engineering company NDA Group are any yardstick, the perception that New Zealand is back in business after Covid-19 is already working in Kiwi manufacturers' favour.

Australasia's largest stainless steel and specialty alloy fabricator is getting "significant" inquiry from the US for processing equipment for the food and beverage industries, says chief executive Mark Eglinton.

"This is a result of US food and dairy companies being concerned about the risk around the supply chain in the US and trying to de-risk it.

"We do see a real advantage for New Zealand manufacturers if New Zealand is seen as coming out of this quite quickly and is seen as being open for business."

Hamilton-headquartered NDA has six companies in New Zealand, Australia and North America, providing technology, engineering and stainless steel and specialty alloys for use in a range of industries including dairy, food, wine and beverage. Much of its work is in processed water and it supplies engineering and services to the chemical and gas industries, and is also a world leader in heat exchangers for industry.

The company traces its history back to 1894 in Hawera, Taranaki, as a co-operative for the primary sector, supplying everything from gumboots to tea leaves. By the 1950s it was focusing on manufacturing stainless steel for the dairy industry.

Today NDA employs 700 staff, including 200 in the US and 60 in Australia.

Revenue in the 2019 financial year was $200 million.

The business is 59 per cent owned by Pemba Capital Partners Fund, Sydney. Chairman and former managing director Gary Mollard holds 10 per cent, and management owns 10 per cent. Mollard led a management buyout of NDA in 1998 and Pemba Capital became a new investor in 2007.

Eglinton, who has been chief executive for 11 years, says the business operated at an average of about 15 per cent of capacity during Covid-19 level 4 lockdown, recovering to about 80 per cent in level 3.

No staff have been laid off.

NDA claimed a Covid-19 wage subsidy of around $1.5 million for the impact of level 4 on its engineering and sheetmetal businesses and all salaried staff took a 20 per cent cut in base salary for that period.

"The wage subsidy has been very effective because it's given companies like us an opportunity to pause, not to make any decisions on the go. We can make very considered decisions once we see what clients are doing," Eglinton says.

The business has responded to the Covid-19 crisis by shifting more sales and business development resources into overseas markets, encouraged by the offshore inquiry for engineering services and processing equipment.

Its US operations in Alabama, Oklahoma and Texas have continued to operate as essential services, as has its South Australia operation.

While buoyed by the overseas interest, Eglinton says the Covid-19 recovery challenge is just beginning.

New Zealand industries that NDA serves, such as food processing, dairy, wine and beer production are in a healthy economic state but they could delay scheduled projects so timing issues have to be worked through.

But the bigger challenge is with NDA's overseas projects, he says.

"We were commissioning a major cheese plant in Ireland and we had to bring the commissioning team home before the project was commissioned.

"We have a major industrial project in the Pacific islands and had to bring 25 people back from that project.

"So it's a matter of how we get those people back to complete those projects.

"Our biggest challenge is how to access those overseas markets and make some sensible decisions as to how much we can do on the ground and how much we can produce in New Zealand and get local companies to do installations under our guidance.

"How do you complete projects remotely if you can't travel? We're spending a lot of time on that issue in New Zealand and offshore."

Eglinton says future staffing is part of this focus.

NDA will keep all staff on through the initial 12-week subsidy period to the end of June.

"We are reviewing our capacity needs for the second half of the year, which presently has a lot of variables relating to customer activity levels and commitment timing of projects.

"Once we understand that we will be in a position to determine if we need to reduce capacity in the second half of the year," he says.

"Obviously we will be doing everything we can to avoid that, however if we do need to go down that path we will conduct an extensive consultation process."

By: Andrea Fox
Herald business writer based in the Waikato
Source: New Zealand Herald