Fight for survival yields great benefits

By Geoff Senescall

Viking Pacific and its clutch of manufacturing assets would have gone under with the rest of the Skellerup Group if the clock were turned back 10 years, says chief executive Laurie Margrain.

"But manufacturing has undergone a major change in New Zealand," he says. "It had to if it was to survive after industry protections were taken off. Businesses had to become efficient. As a result manufacturers have become much more market-driven."

Even areas such as subcontracting have improved out of sight over the past 10 years. "Now there are not very many components you can't outsource domestically. Their quality has come up, their capacity to deliver on time has come up and their prices have improved."

Viking is an industrial company whose assets include eight manufacturing operations. Among them are household names such as Masport, Skellerup Industries and Hardings Electronics.

Mr Margrain said the strength of Viking's manufacturing operations helped to ensure there was life after death for the former Skellerup Group of companies.

Facing a $130 million loss, Viking's main shareholder, US investment firm Goldman Sachs, saw fit to inject $40 million of fresh capital to restructure the group.

Nearly a year on Mr Margrain has few complaints.

Even without the restructuring to cope with, last year was tough for Viking as it was for most manufacturers.
Recessionary conditions and a volatile dollar made life difficult.

"But you can't get distracted by short-term economic blips; you need to keep your nerve. It might hurt profitability but that will recover if you have the right strategy in place.

"We are now focused on export marketing rather than export selling. Exporting manufacturers have learned to live with exchange-rate volatility, which would have been impossible 10 or 12 years ago."

On the local front, business conditions, inquiries and expressions of interest in projects are certainly starting to increase on the last calender year. "Our view is that we have seen the trough."

Mr Margrain says one of the most important things for manufacturing was the Employments Contract Act. Having a flexible workforce and no down-time through industrial disputes were crucial competitive components.