Under the flight path to Auckland Airport, two ex-Air New Zealand bosses aim to do what they helped do in the airline industry – shake up the aluminium canmaking sector in the country.
Rob Fyfe headed the airline for seven years and was a founder of canmaker Recorp, Bruce Parton was chief operating officer at a time when Air NZ expanded rapidly and was brought in to Recorp in the middle of the year.
The canmaker will be officially opened next week by another ex-Air New Zealander who Fyfe recruited and whose career has taken a different course: Christopher Luxon, now Prime Minister.
Parton is picking that Luxon will be chuffed with what his ex-colleagues have done at what is one of New Zealand’s biggest homegrown start-ups.
While all those involved, including some big-name Kiwi investors, want a commercial return for the $100 million-plus project, there’s a positive and important environmental goal; ridding the country of plastic bottles and cutting the use of glass.
“They’re all passionate about the outcome, and yes, we want this business to make money so that it can survive. But this is really about in 10 years changing the landscape,” says Parton, with the same high-wattage enthusiasm he brought to Air New Zealand.
He left the airline as an executive shake-up loomed in 2018 after 22 years there. After a break, he headed a travel agency as it was navigating its way out of the pandemic.
“I was in a great job as CEO of House of Travel and I moved over to this business [in the middle of this year] because I care passionately about it,” he says.
“I want to sit there with my kids at one point, and hopefully they’ll be proud of their father for having gotten rid of single-use plastic bottles.”
He’s got a financial stake in the operation, capable – at full capacity – of making half the 1.1 billion cans made in New Zealand now. They’re made here mainly by two Australian-based rivals, Visy and Orora Beverage.
Between 150m and 200m cans are imported for Australia which Parton is confident Recorp can provide instead, eat into the market share of existing canmakers and capitalise on the organic growth of the aluminium container market which was growing at 7% a year before the pandemic.
This is high-volume, small-margin manufacturing with a massive upfront cost for sparkling new machinery including a kilometre of conveyer belts imported from around the world and installed in a sprawling former Kmart warehouse that has been heavily modified.
“I’m heavily invested so if this doesn’t work I’m not doing so well,” says Parton. “That’s always what I do. I think CEOs should be willing to do that [invest] or go into a different job.”
Fyfe also has a stake and is a director of the company, incorporated in 2022.
Others with a stake include Zuru toy empire co-founder Anna Mowbray, property investment mogul Justin Wyborn and Forsyth Barr executive director and investor Jonty Edgar.
Parton says backers are in it for the long haul.
“This is a New Zealand company owned and run by New Zealanders. These are smart, well-heeled New Zealanders coming together, seeing a problem, being willing to invest.”
Mowbray also brings practical experience of mass production techniques in China.
“There’s not a lot of that [she] doesn’t know about factories and how to run them and how to be efficient.”
While Fyfe retains more typical post-CEO roles (he chairs Michael Hill and is an Air Canada director), he’s personally backed other Kiwi start-ups with money and time. Recorp is his biggest venture yet.
Speaking on his way home from an Air Canada board meeting, Fyfe says getting from the idea stage to pressing go on the production line was more challenging than he ever imagined.
“If I knew how complex the project was and what the magnitude of what we were undertaking at the outset, I’m not sure I would have picked it up. It’s one of those projects that kind of every step along the way it just seemed to get bigger and harder and got all sorts of challenges to solve.”
But his enthusiasm for the project and rationale for it hasn’t dimmed.
“You learn more about the market and there’s a shortage of supply. There’s a number of customers that we didn’t even know about who are importing cans because they haven’t been able to source them in New Zealand,” he says.
“They’re hungry for innovations and ways that they can differentiate their particular brands.”
Fyfe says investors had sufficient resources to fund expansion – possibly a recycling operation or another production line. He wouldn’t rule out a public listing but that was not the aim of starting the company and wasn’t on the radar now.
In addition to big names, there were other small investors which was good for running a company.
“The good thing about having a bunch of small investors. is that you almost operate the company like a publicly listed company. You have good communication disciplines, you have good audit disciplines and you make sure that before any decisions we make we consult all shareholders.”
Parton, 58, says this will be his last big role and is also riding high on enthusiasm. He says New Zealand is well behind the rest of the world when it comes to drinking out of aluminium cans which unlike glass doesn’t break and is much lighter to transport and doesn’t have the same environmental problems as plastic. Parton points to alarm at plastic bottles clogging waterways and the health risks of microplastics.
‘‘Whether it’s our cans or our competitors’ cans, I would like to see the end of all of those products and seeing people just drink out aluminium.
“This country is way behind – part of that is stifled innovation, and we want to be part of changing it.’'
Parton joined Air NZ in 1996 and rose through senior jobs under Fyfe and then Luxon to sit on the airline’s executive as chief operating officer for five years where he was accountable for the major operational areas of the company, with responsibility for more than 7000 staff.
Staff numbers are much lower on the factory floor at highly automated Recorp (about 11 specialised operators per shift) and the overall operation is not nearly as complex and vulnerable to the outside events that plague airlines. Parton says he loved his time working at Air NZ, and still keeps in touch with ex-colleagues who have left or still work there but has no regrets about moving on and doesn’t look back.
“Airlines going through tough times, Air New Zealand is no different. I feel for them and I have my share of war stories from having gone through the same. They’re a good bunch and it’ll work it out, but it’s pretty challenging.”
Parton was on the executive at Air NZ when it hit a few speed bumps as it grew rapidly but it was before the pandemic, sky-rocketing inflation and disruptive aircraft shortages.
Besides experience in dealing with the unexpected, he says what he and Fyfe have brought from Air NZ was a commitment to technical innovation and the airline’s punch-above-its-weight ability to sell it such as the early safety videos that doubled as successful international marketing, and new passenger products such as Grabaseat.
There’s a showroom where customers can see what’s on offer and he cites one key difference between Recorp and its competitors is its ability to be more flexible with can runs. Recorp is not disclosing who its customers are yet but they range across all beverage sectors and with smaller runs they have te opportunity to do limited promotion products such as Christmas drinks. Being nimble required millions of dollars more in upfront investment but Parton says that distinguishes Recorp from its Australian-owned competitors.
“[What] Rob and I are really pushing hard on this is the whole customer piece.”
In the entrance lobby to the rugby-field sized-factory there’s a message on the wall that spells that out.
“We’ve purpose-built the ultimate beverage can manufacturing facility housing the most advanced technology to deliver the broadest range of can formats offering customers a playground to craft their beverage vision with superior flexibility and efficiency.”
The company has devised a technique for fitting the top of a 250ml can on to the body of a 330ml can – a simple but effective way of speeding up manufacturing by avoiding the need to change out equipment mid-run, and it saves on weight.
“Our cans are about 5% or 6% lighter than our competitors’ and that means cheaper and less aluminium. Lighter is better for emissions,” says Parton. “All of this is of value to the end customer because ultimately it all comes down to the price.”
While there’s potential for an environmentally virtuous cycle of aluminium re-use, New Zealand is not there yet. Recorp imports seven-tonne rolls of raw aluminium sheet mainly from China. It’s made from recycled aluminium from around the world, but re-processing in China relies heavily on fossil fuel energy.
“Essentially we bring in like everyone. There is no ability to source New Zealand-made metal, so there’s no milling plants in New Zealand that do aluminium. We’ll look at that sometime in the future. But that’s just not on our immediate plan.”
Domestic stocks could have been boosted by a national can recycling programme – encouraged by a container deposit scheme – but that was shelved before the last election.
Fyfe says he’d like to see work on the scheme re-started and although it was something he would talk about with Luxon, he understood the Government had a full agenda and other priorities.
While there have been some commercial runs already, the factory is still also in a shakedown phase to optimise efficiency and get the end product right.
Parton says the company would rather be slower to get to breakeven than to be too fast.
It was critical to get the fundamentals right at Recorp.
“Back to the Air New Zealand days it’s about getting the basics right, and then you go more, more, more.”
Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
Air NZ engine problems mean just over half of flights are departing on time.