The last few years have been challenging for Kawerau-based wood processing firm Sequal, thanks to the havoc wrought by Covid – yet it’s grown 100 per cent in that time.
How? A combination of factors but mostly the development of innovative software that allows for mass customisation of Sequal’s products and, extraordinarily, a bank which decided to customise itself so it could support what it saw as Sequal’s unique approach to sustainability, the environment and their local community.
Kiwibank quickly understood the impact of Sequal’s success in establishing a digital way of cutting logs to meet customers’ precise needs, while minimising waste. It’s been a game changer for Sequal, which supplies radiata pine to firms around the world to be used for packaging, furniture and the construction markets.
The company worked with the University of Auckland to develop the technology over the last three years. The software runs millions of simulations daily to figure out the best cuts, sometimes intricately precise, for each customer’s order. It means Sequal creates more value – and New Zealand doesn’t just export raw wood.
“In New Zealand, we’ve predominantly been raw material exporters,” says Sequal CEO David Turner. “Sending raw materials overseas is so easy but we really hate to see our logs being exported in that raw form when we should be adding value to them here.
“Focusing on a mass customisation business model has been a key part of our ability to grow. For New Zealand manufacturers to succeed globally, we need to transition from mass-standardisation to mass-customisation.”
What Sequal’s doing is novel in the wood processing industry – and that’s because it’s hard, says Turner. “It’s not easy but there is definitely demand for mass customisation. We’re sold out for the remainder of this year despite markets being lacklustre.”
Business was booming in 2019, thanks to signing deals like a particularly large one with a new overseas client. But along came Covid and with it operational challenges.
“We were in a really interesting situation where we lost all of our ability to ship to our export markets in one particular area by containers. So we had to start chartering ships, which was a big change for us, and that completely changed our working capital requirements.”
That’s when the relationship with Kiwibank, which began three years ago, proved to be vital.
“Kiwibank worked with us through this journey to support the growth of the new form of distribution that we needed to create,” says Turner. When you’re dealing with a lot of change and ambiguity, the key to being able to succeed is the ability to rely on partners and, for us, our relationship with Kiwibank was one of those key partnerships.”
Like Sequal, who recognised the value in customising their product for clients, Kiwibank customised their services for the Kawerau company, making large changes to their back office, according to the Head of Sustainable Finance, Tom Williams: “They had quite a technical need around trade finance and how they could access offshore markets and funding. Rather than say, ‘That sounds too hard’ or offer them standard solutions we have, our team worked with them to custom-build a solution that would meet their needs.”
Sequal’s planned period of growth over the next 12-24 months will include spending money on its plant to increase capability and building forest roading infrastructure, linking directly to rail, taking over 500 trucks a week off the state highway and enabling the investment in alternative fuel opportunities – a positive for the environment and the community.
One of the reasons Turner wanted Sequal to work with Kiwibank was because the two share common values. Sequal is focused on giving back to the community in Kawerau, including contributing to local initiatives; it also believes it has an obligation to give more to the future by supplying a sustainably harvested product.
It already uses geothermal energy at its plant and is constantly looking for ways of doing things that are better for the environment. For example, woodchip left after the pine has been cut is used as packaging, while sawdust is turned into wood pellets to be used as biofuel.
“Wood is a crucial part of a low carbon environment, and Kiwibank has the same aspirations for New Zealand that we do when it comes to reducing emissions and also seeing value-added manufacturing thrive in New Zealand,” says Turner.
Williams says Kiwibank likes the fact Sequal is not just in business for the revenue: “They’ve had extraordinary growth by using technology to maximise what they can do with a log and to give perfect products to a customer every time, but they’ve also been equally invested in supporting their community, socially and environmentally.”
“A lot of businesses say they care about their communities and the environment but, for some, it is often a marketing exercise. When we see a business like Sequal – where they understand the importance of sustainability and they know that without their community and their people they are nothing – then we really want to get behind them.
“We feel like we have really been on a journey with them, especially their business banker Simon Whittington, who is their daily contact. Their success feels like our success and we’re really proud when we see them continuing to grow.”
“It [the Kiwibank partnership] gives us tremendous confidence because the last thing I have to worry about is my banking relationship,” says Turner. “All I have to focus on is making sure we’ve got the sales and production capabilities. Knowing that you’ve got someone like Kiwibank in your corner is just one less thing to think about.”
Kiwibank wants to help other businesses who share the ideals of serving New Zealand and its interests in sustainable and community-focused ways, whether they’re in manufacturing, transport, wholesale trade and construction or health, childcare and aged care services.
“It’s comforting to see more and more businesses today looking beyond just their bottom line and thinking more about the bigger picture,” Williams says. “At Kiwibank, we can customise our business banking facilities, we have an amazing team of people, and we want to do more for businesses. We have a huge appetite to grow and to fund businesses in New Zealand, and the capability to do it.”
Watch the full episode in Kiwibank’s series, Business for Better, and learn more about how Sequal are leading the way in how they do business for better www.kiwibank.co.nz/businessforbetter. This article was proudly brought to you by Kiwibank, who believe sustainability and profitability go hand-in-hand when creating a future proof business. That’s why Kiwibank support Kiwi businesses making a positive impact on the environment, their customers and their employees. This is business banking for better #ThisisKiwi.