Fancy yarns key to company's success

SPINNERS: With 100 years experience between them, Design Spun sales director Peter Chatterton (left) and technical director Ian Kelly have no problem developing new yarns. PHOTO/DUNCAN BROWN

With the help of celebrities David Letterman, Ellen DeGeneres and Robin Williams, Napier natural fibre company Design Spun is selling its specialty yarns globally.
Australian Merino and Alpaca wool joins local product at the Onekawa yarn maker, one of two yarn makers in New Zealand - a dogged survivor in a world awash with Asian textiles.
As Chinese exports flooded the market, bankers lost faith in the New Zealand wool-manufacturing industry, pulling the plug in 1996.
"Suddenly there was no overdraft, no nothing," founder Ian Kelly said.
He was a minor shareholder due to previous difficulties but conducted a management buyout.
"There were lots of local knitters in New Zealand we supplied with yarns. We had our share of the worsted trade but China were really starting to pump."
With their homes remortgaged the directors successfully targeted fine-gauge fibre such as merino.
The plan worked and the Onekawa company built staff numbers to 85, working three around-the-clock shifts to meet demand from local knitwear manufactures.
Again China's shadow affected business - their knitwear customers relocated to China.
"We were suffering and restructured down a couple of times."
Staff reduced to 18, a single shift.
Banking support was found "but they were tight".
"We had to report every day.
"We stayed alive by making lots of fancy yarns - small runs which the Chinese couldn't compete with.
"We built a dye house which gave us independence - we could dye and spin in the one place."
Wool had been dyed by a Clive half-owned by Design Spun "but the service was not great".
"Any profits went back into the business and we bought more modern equipment from Australia and England. Most of it was second-hand."
He has considerable technical expertise. He worked for Belfast-based James Mackie & Sons, the second-largest family concern in the United Kingdom, employing 10,000 people supplying textile machinery to the world.
"I was looking after Eastern Europe, Japan and Taiwan. I got a bit fed up because I was away for six months at a time. I got stuck in Taiwan for Christmas once, which wasn't good.
"I had been in it 25 years and was getting a bit fed up with the travelling."
Friend Ronnie Lysk looked after sales in Australia and New Zealand.
"Thirty years ago he came to dinner and says why don't you come and build a little mill in New Zealand?
"I said no but he said to my wife it was a good opportunity. It's got nice sunshine, lemons and oranges and she said yes. They coaxed me into it."
Six months later they arrived in Napier with second-hand Mackie machinery and built the mill at its current site.
The opportunity was thanks to Perendale Marketing Ltd, a group of farmers in Dannevirke ambitious to add value. They were made wool on a commission basis at Dannevirke's Wool Spinners.
Peter Chatterton emigrated from England to work for Wool Spinners in 1974 but left after five years to work for Perendale.
"The board were described as five farmers and a businessmen - that's the way it was put - the businessman being a Wellington high-street man," he said.
"Their managing director took me and in the next five years the Dannevirke business, which had no equipment of any consequence, doubled, then doubled, then doubled."
The managing director obtained finance from government-owned Development Finance Corporation for the new mill.
Mr Kelly said the mill's managers "ran before they could walk"and it was soon in financial difficulty, entering a "scheme of arrangements"run by an outside accountant.
"It was one step away from a winding up," Mr Chatterton said.
Mr Kelly found a new investor - a client of the company who saw potential - and the Englishman, Irishman and New Zealander Brendan Jackson took control.
Today Design Spun is a successful worsted and fancy yarn spinner, but demand is inconsistent.
It decided to embrace the internet with its Skeinz yarn brand, launching on March 2011 targeting the Northern Hemisphere to lift off-season production.
"This product of hand knitting yarn - little balls of wool - is very seasonal," Mr Chatterton said.
"If you go to America and other parts of the world hand knitting is across the year. In winter it is wool and in summer cotton. In summer New Zealand people want to get out into the sunshine and do outdoor things. It is a very seasonal market for the craft sector, so we decided to launch our own online website.
Business was reasonable, until seven months later when container ship Rena grounded on Astrolabe Reef off Tauranga.
"Maree Buscke runs our website and conjured up the little knitted jackets for the little blue-eyed penguins. They were trying to clean/preen themselves but were ingesting oil."
A knitting pattern was put on the website.
"The thing went viral - we were on the Ellen DeGeneres Show, ABC, Good Morning America, BBC - right through Europe - Good Morning Australia. It was incredible."
Thousands more than were needed arrived.
"We still get them sent and today, three years later. "I tried to translate the pattern for a French lady you couldn't understand but when her jersey arrived it was an emperor penguin size."
The French jacket is on display at the Skeinz retail outlet at the Onekawa factory. A percentage of sales from jacket-wearing penguins is given to wildlife charities including Hawke's Bay's Cape Sanctuary.
The website is a small part of the company "but it has great potential".
As well as the craft market the company makes yarns for further manufacturing: socks, garments, weaving, upholstery fabrics and homewares.
With the directors nearing retirement succession was an issue.
"I've been in New Zealand 40 years this year and Ian has been here for 30 years. So we brought in our management team and one of our customers as shareholders, for longevity and succession."
They have no plans to quit soon, especially with keeping ahead of the market, Mr Chatterton said.
"We never stop development of new products. The whole world says, what's new, what's next."