Resene: Rethinking the business

The recovery is there, but it's tenuous, says Resene's Nick Nightingale. Photo / Mark Mitchell

Some enduring good has come out of the recession for 60-year-old paint company Resene.

Business in the decorating trade is nowhere near as buoyant as it was two or three years ago, but Resene is beginning to see the benefits of re-evaluating its business model during the tough times.

"We aren't out of the woods yet, but there is renewed optimism," says managing director Nick Nightingale, the third generation of the Nightingale family to run the company out of Lower Hutt.

"We've reviewed our business model and operations from the bottom up, and we'll continue to do so. Our managers are more focused on the business as a whole, not just on revenue, and we're a much better business as a result.

"We took a lot of different actions to refocus, bearing in mind we are an integrated company that has its own R&D function, manufacturing and wholesale, and retail operation. So all areas came under scrutiny.

"Most effective was a full review of our customers' business with us, including pricing and service levels. This is ongoing and now embedded within the company."

While the DIY market started to show signs of improvement around eight months ago, Nightingale says there's still a lack of confidence among consumers. "We're seeing a recovery, but it's still very tight and tenuous.

"Customers are more aware of quality and service. They are conscious of past problems that have occurred with housing and renovations and are more enquiring and careful."

Resene has seen reduced revenue and margins over the past two years. The company has high fixed costs and is vulnerable to fluctuations in the exchange rate and the price of raw materials.

While the company delayed some developments during the downturn, it also started a number of new projects which had not been planned, including working on a new "greener" paint using a $1 million research grant won in Industrial Research Ltd's "What's your problem New Zealand?" competition a year ago. It is deep in the process of developing a high-quality waterbased paint based on resins made of up to 80 per cent sustainable ingredients.

Nick Nightingale
Managing director, Resene

* Your big hope?
That the recovery continues unabated and at a measured, sustainable basis, and that NZ's economy becomes more competitive and sophisticated as a result.

* Your big worry?
That growing bureaucracy and over-emphasis on process will stilt the growth potential - particularly in construction and new housing.

* What would help right now?
I believe the tax changes and the targeted infrastructure projects will be positive. Looking at what's impeding and adding cost to construction, particularly housing, would be useful, and taking action to remove the impediments.