Resin man sticking to his principles

John Hirst has displayed a talent for spotting successful acquisitions. Picture / Dean Purcell

In an Auckland suburb, down a street of industrial units much like any other, John Hirst sits in a tidy, functional office. It's a modest setting for the man running New Zealand's latest billion-dollar business - resins manufacturer Nuplex Industries.

Hirst's office at the firm's Penrose factory has a decent desk, a small meeting table, a splash of green from a pot plant and a painting of a pohutukawa to gaze at on rainy Auckland days - everything necessary, nothing gaudy.

You could be forgiven for expecting more for the brains behind a global business with sales for the last financial year of $1.3 billion - more than some better-known big hitters such as Fisher & Paykel Appliances.

Hirst, however, doesn't waste money on "flossing things up".

"There's no money made by investment in offices," he says.

Money first gets spent on upgrading manufacturing technology, laboratory equipment, improving efficiency and education.

One company - later acquired by Nuplex - which Hirst prefers not to name, spent millions on flash offices.

The result was a pecking order based on what sort of desk an employee had and the colour of the leather adorning their office chairs.

"And yet they spent nothing on the factory with the result that we beat the hell out of them, even though we were smaller than they were."

The resins that have made Nuplex a top-10 global company in its field are all around us - in curtains, newspaper inks, paints, underground pipes, surf boards and in tissues, to stop them falling to bits after use.

The company's composite resins can even be used in the manufacture of bridges. You could say they've been strong enough for Nuplex to bridge the world.

It's been a busy eight years since the acquisition of Australian Chemical Holdings in 1998, which tripled Nuplex's turnover to about $300 million.

That purchase gave the company a significant position in Australia and was followed by rapid growth and more acquisitions. But by 2005 the market had matured, restricting further expansion.

A side effect of consolidation in Australasia was the concentration of research and development within Nuplex and an accompanying risk of technological stagnation.

Hirst's answer was to buy the Netherlands-based Coating Resins business from international chemical company Akzo Nobel in 2005 for about €110 million ($210 million).

Coating Resins gave Nuplex access to new ideas and research departments, key European and US markets and expansion across Asia.

The move boosted revenue by 85 per cent to more than $1.3 billion.

"I chased it and chased it and fought a few other people off and we got there in the end," he says.

It took Hirst 18 months to land his prize catch and the billion-dollar tag that came with it was no accident.

"We did have market capitalisation targets and turnover targets and certainly a billion dollars just seemed so far off at the time when we established it [as a target]."

Hirst is only the third person to be managing director of Nuplex since Bill Campbell formed the company, then called Floor Tiles & Parquet, in 1952.

The manufacturing of resins began in about 1960 to supply the flooring business, which was having difficulty importing materials.

"So eventually the tail wagged the dog," Hirst says.

Nuplex is dual-listed on the NZX and ASX but is still an Auckland-based Kiwi manufacturer, with 88 per cent of shareholders being New Zealanders.

But there are two factors that could see it move overseas: If it was not possible to raise sufficient capital in the home market; or if listing elsewhere achieved a higher earnings multiple, giving investors better value.

"In the first instance we really haven't had any difficulty raising equity and in the second instance I'm unconvinced that moving the registry elsewhere would increase the multiple," Hirst says.

Fundamental to ongoing success is continuing the philosophy of previous managing directors Campbell and Fred Holland - build better relationships with your customers and care for your staff.

"I'm interested not just in the people who are working for me but in their wives and husbands, who is having children, and being in a position to support people when they're not at 100 per cent," Hirst says.

Hirst, 61, was born in Auckland but lives in Sydney, which is effectively Nuplex's operational head office.

"The time zone suits the business better and then the Australian market is the largest business in the company," Hirst says.

The demands of building a global company means he spends about 200 days a year away from home.

"When you make acquisitions and you're trying to achieve change of any sort you can't do it by email," he says."You've got to do it by physical presence, you've just got to be there."

It's a personal cost that sits on the opposite side of the ledger to the excitment of running a growing multinational company.

"It's quite significant actually and I think I'm probably realising it more as I get older," Hirst says.

Spending prolonged periods of time away from home can put a strain on relationships and mean missing out as children grow up.

"I'm lucky. I'm married to the most marvellous woman and have been married to her for 40 years ... but it's not easy for her." Hirst says.

"There's some prices to pay I'm afraid ... but I've been privileged to have worked for this organisation and I wouldn't have it any other way."

Hirst doesn't display the ego most people would likely develop as the boss of a billion-dollar business.

Born in Auckland, he grew up in a happy and safe environment where he was encouraged to study, was a competent swimmer and played the flugelhorn in English-style brass bands from the age of about seven until he was 20 - winning a national competition in 1961.

He's recently taken up the flugelhorn again after promising to play in an upcoming carnival in Bergen Op Zoom - the Netherlands town where Nuplex has operations.

"They have these relatively small local brass bands who play a lot, have a lot of fun and there's an awful lot of drinking ... I think for about a week everybody's totally inebriated but in a moment of weakness I undertook to come and play in one of these bands next year, so I've got to get myself back in shape."

His father was an accountant and town clerk in Mount Eden - a job which required discipline.

Much as Hirst would experience later in life, his father worked long hours during the day and sometimes attended meetings in the evening.

Hirst himself often starts work at 6am and finishes at 7pm before attending tele-conferences in the evening.

Family life, music and an early exposure to the needs of business had a profound influence on Hirst, teaching him the discipline needed to succeed, and he isn't ready to retire and stop succeeding just yet.

Nuplex is forecasting modest growth this year and an uplift in the one after, with a steady Australasian market and opportunities in the US, Europe and Asia.

Asia currently accounts for about 10 per cent of Nulpex's business but is expected to make up 20 or 30 per cent in the coming years, Hirst said.

In Vietnam and Thailand, paint usage is about one litre per person per year, compared to more than 13 litres per person in more advanced markets.

Plus there is more industry consolidation to come.

"There would not be one time when we were not actively involved in looking at an acquisition," Hirst says.

However, acquiring businesses brings challenges as well as opportunities.

Customers assume the acquired business will automatically assume the culture of the acquirer but in reality it can take years, he says.

One acquisition gave Nuplex an "absolutely appalling" supply performance in Australia for a couple of years, dropping the on-time and in-full delivery rate from a typical 95 per cent to about 30 to 40 per cent.

"There's some inevitability about it to be perfectly frank. It's just not completely smooth sailing."

Some operations in China, Britain and Brazil had not been profitable and hit the group's net profit for the year ending June - which came in at $62 million - to the tune of $6.6 million.

Work is underway to turn these businesses around, although Hirst is cryptic about exactly how the UK will play out.

"We've still got plan A, plan B and plan C in play at the moment in the UK," he says. "It's a reasonably complex game out there so I'd rather not say too much about that one at the moment."

Despite the overseas push, the company will not loose focus on the "absolutely critical" home Australasian market, which generates the cash needed to fund expansion, he adds.

The tremendous growth of Nuplex has been "exciting as hell" and when Hirst does decide to call it a day and unpack his bags it's unlikely the business world will see the back of him and his flugelhorn entirely.

One day he would like to mentor the next generation of high fliers "to give me something useful to do and perhaps add a little bit back to industry generally".


John Hirst

Group managing director Nuplex Industries
Born: Auckland
Age:61
Married with two children
Home:Sydney

Education:
St Peters College, Auckland
New Zealand Certificate in Science, Auckland Institute of Technology

Career:
1967: Nuplex technical service manager
1977-1985: Resins business in Australia
1985: General manager Nuplex resins, Auckland
1995: Chief executive of Australian operations
2001: Group managing director