Shrewd talent behind BGH

By Graham Skellern

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Over the past 20 years the BGH Group has saturated the New Zealand market with its industrial supplies.

Now the family-owned Tauranga business, with a turnover of $50 million, is looking to grow its operations overseas, especially in Australia.

BGH Group, based in Hull Rd at Mount Maunganui, is named after its business units, Bay Engineers Supplies (B), General Machinery Company (G) and Hose Supplies NZ (H). It also owns Maud Kirk, which supplies power transmission and conveyor components, which has its head office in Auckland.

General Machinery dates back to the 1920s and Maud Kirk and Bay Engineers to the mid-1940s.

"We are the last of the old engineers' merchants," said BGH owner Warwick Talbut. He is one shrewd but amiable businessman who doesn't look back.

Mr Talbut, BGH managing director, is eyeing the Australian market - and later the Californian dairying sector. BGH has established Hose Supplies Pacific in Melbourne and is targeting the food, chemicals, and oil and gas sectors.

BGH believes it can make an impact across the Tasman with its innovative testing and certification system, its fabrication and assembly of specialists hoses and fittings, and its mobile on-site repairs and maintenance service.

"We can develop a niche market and go after work multi-nationals don't want to do," said Mr Talbut.

The group has developed its own patented online testing system called EXARO, the only one of its type in Australia and New Zealand. The programme, managed by Hose Supplies, stores information on assemblies and repairs. End-users can log in and check the reliability and safety of the hoses, while customers can plan maintenance and meet audit requirements. "It takes the pressure off them having their own testing procedure," Mr Talbut said.

BGH also issues certificates after becoming ISO 9001 accredited and a member of JAS-ANZ, the government-appointed accreditation body for Australia and New Zealand.

"Testing has been done in-house and there is a drive to outsource it to improve standards," said Mr Talbut. "Health and safety is so paramount - it can be dangerous putting acids and chemicals through hoses - and when the Pike River inquiry is over the regulations will be tougher again.

"We have a testing system that is web-based and easily accessible and we believe we can grow into a gap in the market in Australia."he said.

BGH has established a fabrication workshop in the Sunshine industrial area of Melbourne, where it employs four people. If there is a surge in work BGH will fly staff from Tauranga.

Hose Supplies Pacific, run by Mr Talbut's son Andrew, is assembling and supplying hoses and fittings for the chemical and food industries, particularly dairying.

The group supplied specialist hoses for Fonterra's drying machines and it now wants to transfer its skills to Australia. "Australia has a very big food industry and is the second largest dairy exporter after New Zealand," Mr Talbut said.

BGH also wants to piggyback on the success of its long-term supply arrangements with the likes of Orica Chemicals, Marstel Terminals, New Zealand Steel and Solid Energy.

"We are feeling our way in the Australian market at present. There have been a number of New Zealand companies who have gone over and fallen flat on their faces.

"We are working through it in a methodical manner. We would rather grow the market slowly and properly and create sustainable sales."

Mr Talbut expects the Australia operation to break even with about $2 million of sales this year but he said it could be as big as the hose supplies business in New Zealand within five years.

BGH also hopes the experience of working with leading salvage company Svitzer on the Rena container ship grounding will stand it in good stead in the oil and gas sector in Australia.

The group was given 10 days to provide hoses and specialist fittings for pumping the oil from the Rena to the ships Awanuia and Go Canopus.

"We cleaned out all the stocks in Australia and New Zealand for a particular oil-resistant rubber hose," said Mr Talbut.

BGH rounded up enough floats and had them flown from Australia within 24 hours - the floats kept the hoses buoyant in the sea while the pumping took place.

In those frantic 10 days a team of 15 worked around the clock fabricating and assembling the hoses, clocking up a total of 400 overtime hours.

During the four weeks of the oil recovery BGH provided 500m of fuel hose and more than 600 specialist fittings and acted as a project manager for local businesses and Svitzer.

"I was very impressed at the way Svitzer was conscious of of using local suppliers and spending the money in town," Mr Talbut said.

"It would have been easy to contract out to international companies.

"The Rena grounding was a tragedy but lots of outfits around here did well from it. The oil had to be cleaned up and I reckon we did a good job. It was a good test for our skills."

BGH has also researched the Californian dairying industry. It is bigger than New Zealand's but the state doesn't export. "We think we can offer specialist expertise there but we will work on getting our Australian operation profitable first and then look further afield," Mr Talbut said.

He and his wife, Lesley, arrived in Tauranga from the Hutt Valley 30 years ago and bought Bay Engineers Supplies - which "was small and barely surviving" - in First Ave. Bay Engineers was established in 1945 as a division of A.A. Edwards and Son, which made sawmilling equipment at Sulphur Point.

Mr Talbut then bought Wanganui-based General Machinery and Cycle Sport New Zealand in 1988, and established Hose Supplies two years later. To complete his business offering, he purchased Maud Kirk in 2000 and merged General Machinery into Bay Engineers in 2004, while selling Cycle Sport.

BGH, formed as the holding company in 1998, developed a branch network through North Island and in Christchurch. Bay Engineers has nine branches, Maud Kirk four and Hose Supplies three. The group, which deals in wholesale and retail, has a total of 180 staff including nearly 60 in Tauranga.

BGH is renowned for looking after its staff and a third of them have been there for more than 15 years. It has an in-house gym, and the Watch Office cafe, run by chef Craig Montgomerie, who serves only healthy food. Staff get a 50 per cent discount. The cafe, which has Wi-Fi connection and Sky Television is open to the public. Mr Talbut even hosts corporate dinners there.

BGH also runs a cadet programme allowing staff to understand all aspects of the business and rise through the ranks.

"We never have any problem recruiting in Tauranga, and we won't be moving our head office from the Mount," said Mr Talbut. "We are an old-fashioned company that supports its people outside work, in sport and other endeavours."

One of them is Gordon Tietjens, who has spent 28 years with Bay Engineers Supplies and has been given the time off he needs to coach the world champion New Zealand sevens rugby team. Tietjens was general manager of Bay Engineers and is now strategic sales manager.

Mr Talbut's eldest son, Cameron, 35, has become Bay Engineers chief executive as succession planning kicks in. Andrew, 33, continues to run the Australian operation.

"The future of the group is overseas expansion, but it may be more under Cameron and Andrew's watch than mine," said Mr Talbut.

- Bay of Plenty Times

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