Personal finance and KiwiSaver columnist at the NZ Herald

Keeping work in NZ stacks up

Hamilton is home for company supplying international automobile markets

Nick Smith says the company suffered blows from the downturn in 2008 and a factory fire last year, but adapting quickly is part of the game. Photo / Christine Cornege
Nick Smith says the company suffered blows from the downturn in 2008 and a factory fire last year, but adapting quickly is part of the game. Photo / Christine Cornege

Sitting down with his insurance company late last year, Proform Plastics' managing director Nick Smith weighed up the figure for fire cover.

Running through the numbers in his head, he reckoned it was 10 times more than the Hamilton-based business would ever need.

Within 24 hours, the theoretical numbers were put to the test.

A few days out from Labour weekend, one of the company's buildings caught fire, the only one of four on the site without sprinklers, badly damaging a busy production line.

With orders piling up, Smith scrambled to find a new site and second-hand production robot and, with the help of 35 staff who gave up part of their long weekend, had a functioning production line in under a week.

"It was one of those things we thought was so unlikely we didn't even plan for it," says Smith.

"We now realise we should have done things differently."

It turned out that even the insurance company underestimated the final cost of the fire.

It's just the latest challenge the company has overcome to survive in its 20 years of supplying the automotive industry with accessories for the backs of utes - everything from hard canopies and lids to its original bedliner, a plastic insert for the ute deck.

Smith's father, Tony, started the firm in his 40s, selling his sheep and beef farm just outside Cambridge and ploughing the remaining equity into starting the plastics engineering business.

He managed the manufacturing and technical side, leaving the sales and marketing to business partner Ferras Townshend.

From the beginning, the company was gunning for the export market, supplying a product that was only commonly available for big American pickup trucks.

An early breakthrough came at the SEMA automotive show in Las Vegas.

Signing on late to the 1997 event saw them offered the only spot left - a tent site right outside the main entrance, which inadvertently became the best location in the show.

"They literally had potential customers follow them home from America back to New Zealand to come and sign deals," says Nick Smith.

Within 10 years Proform's products were protecting the backs of utes in more than 50 countries.

Smith says the firm likes to think it punches above its weight.

"As an organisation we love winning the big fight, so we love winning the big contracts."

The nature of the business has undergone some radical changes in 20 years.

A decade or so ago it focused on supplying retailers who sold after-market accessories to consumers.

Now the market has switched, with most of Proform's sales coming from car makers who are adding the company's products to utes before they leave the factory, says Smith.

"If you looked at a map of the world and took a drawing pin and said 'let's stick this where we are going to make accessories for the world automotive industry' the absolute last place you'd do that would be from New Zealand."

To date the company has resisted moving its plastics manufacturing base away from Hamilton, where it employs 130 staff, producing around 140,000 bedliners and turning over close to $30 million a year.

Smith says that while it has looked at options for manufacturing overseas, the advantages of staying put, such as maintaining quality, service and contributing to the wider New Zealand economy, have always outweighed the downsides of distance from market and higher labour costs.

"We've really come to the conclusion that we'd rather change the way we do business than to shift offshore and do the commodity thing."

The biggest challenge for the company came in 2008 when the global financial downturn hit the car market and resulted in a drastic cut in orders.

Proform, in turn, quickly pruned its workforce, cutting 25 jobs.

"It's a tough decision to make but it's also a very easy decision to make at the end of the day because if we hadn't acted quickly in the way we did then there is a chance that Proform wouldn't have survived it."

Smith is now 40, and dad Tony is still in the business as chief executive, although illness has seen him cut back to part time with a focus on governance issues and project work.

Smith says his father never appeared to have struggled with the decision to make a mid-life career switch away from farming.

Twenty years on Smith says his father's can-do attitude and readiness to try new things and learn from them is still at the heart of the Proform Plastics business.

"I suppose those courageous decisions have been very important to Proform throughout the years.

"Doing things that if they hadn't worked out would have been pretty bad for the business."

- NZ Herald

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