Big fish out of the water

Paul Steere, head of New Zealand's largest salmon producer, New Zealand King Salmon, is stepping down - but not bowing out completely. KAREN CLARK reports.

Paul Steere's long reign as head of Nelson-based New Zealand King Salmon hasn't always gone swimmingly. He's had to deal with the company's near financial collapse, and salmon dying mysteriously en masse; two events that could easily have spelled the end of the salmon producer.

They didn't, though, and the company managed to keep its head above water during the crises, and go on to grow significantly.

Even now the 60-year-old marvels at its – and his – survival. "There were times when we didn't think we were going to last. Conventional orthodoxy in other organisations would be to get rid of management and bring others in. But our owners [the Tiong Group of Malaysia] had more foresight than that and stood by us, and kept us going," he says.

Along with those extreme tests, he's had to face the usual challenges from other businesses, such as having to compete against much bigger players overseas.

Then there have been the difficulties of operating salmon farms at sea, at the mercy of nature; in 2006, the pressure of spring tides snapped the moorings of a farm in Tory Channel in the Marlborough Sounds, causing it to drift and forcing the channel's closure to ships for several hours.

There have been plenty of challenges in the salmon farming, processing and marketing business – and that's exactly what Steere has liked about it, he says. "That's why it's such an exciting operation. You keep on learning things. It's certainly not been a dull business," he says.

Mr Steere will soon step down as New Zealand King Salmon's chief but will retain a close involvement with the company by remaining on the board of directors.

He says he has no qualms about relinquishing the reins; it's time for a change – both personally and for the company – although he admits he'll miss the people he works with. In particular he'll miss morning "prayers", the daily meeting with certain staff. It has been called prayers ever since the mass salmon death crisis, because at that time they figured they needed all the help they could get, he explains with a wry smile.

Mr Steere will hand over the helm to new chief executive Grant Rosewarne who arrives in just over a week. He will then decide an exact departure date for Mr Steere.

The handover will mark the end of a long stint of building and leading companies, which started when Mr Steere was 22. Initially he managed companies without much formal training – it was only much later in his career that he did executive studies at Stanford University in the United States. He learned most of what he needed on the job. However, he describes himself as someone who has a "thirst for knowledge, detail and understanding".

"Sometimes that may be too much for some – that I get involved in the detail, but I think with today's complex operations and marketplace, and the environment that we work in, it's important that one understands the ramifications of what we're doing," he says.

He's also a straight-talker, and "passionate about what I believe in".

"I've certainly believed in this company for a long time."

Mr Steere's first chief executive appointment was with Christchurch golf equipment manufacturer Precision Golf Forging, which had 30 staff. He took on the role with relatively limited work experience, having worked as an accounts clerk and executive assistant for import and export merchants Harrisons & Crosfield, and as company secretary for its joint venture company, Allanbrook (which became part of Precision).

After six years with Precision, he took up management roles with Harrisons & Crosfield in Hong Kong and Singapore, before returning to New Zealand with his family in 1983. He spent the next 10 years in the dairy industry, which culminated in him becoming general manager of the Dairy Board's milk powders division. At the time it had 78 staff and an annual turnover of $1.5 billion.

By the time he took over as general manager of Nelson-based salmon producer Southern Ocean Seafoods in 1994, he had accumulated a fair bit of business knowledge and experience.

"But what I didn't know was how dire a financial situation Southern Ocean Seafoods and Regal Salmon [the country's other major salmon producer] were in. They were technically insolvent at one point," he says.

It was hardly an ideal situation to walk into. The logical solution to the companies' woes was a merger and rationalisation of resources, resulting in the formation of New Zealand King Salmon in 1996 under the ownership of the Tiong Group. Tiong had previously had a shareholding in both salmon companies.

Slowly the new company clawed its way back from the brink, which Mr Steere says was due largely to the willingness of the Tiong Group to invest in it.

"We did the first television advertising in the world for salmon in 1997. The shareholders allowed us to invest in that type of promotion, despite the fact we weren't yet making any money. They allowed us to continue the genetic modification programme we were carrying out at Kaituna [hatchery], which was world-leading research. Slowly but surely we started to pull things back."

The genetic engineering research, which aimed to get fish to grow faster by giving them an extra growth hormone gene, caused a few headaches of its own. The Green Party was a vocal opponent of the project, raising fears about the possibility of GE salmon escaping into the wild if field trials in salmon farms started.

Mr Steere describes the Greens' opposition as "a song and dance" and says the research was never clandestine as they alleged.

After months of making news headlines, the company pulled the pin on the project in 2000. However, it wasn't because of public pressure, but because it needed to attend to another major crisis, he says.

That crisis was that vast numbers of salmon at its farms in the Marlborough Sounds were dying, for no apparent reason. The deaths started in 1999 and continued for about a year.

The company investigated various possible causes, such as farming procedures and environmental conditions, and eventually discovered the feed it was supplied with was at fault. It switched to a new supplier, and sought an out-of-court compensation settlement from the old supplier.

However, it took several years to rebuild markets and regain the confidence of customers. It wasn't until about 2004 that "things started to normalise", Mr Steere says.

"It was a pretty tough old time for the company during that period. It was four years of a lot of hard work by some of our people. We tried to keep most people [staff] away from the distraction. Our shareholders helped out by ensuring that we continued to have working capital."

Since then the company has gone from strength to strength. Its annual turnover is now about $100 million – more than five times the turnover of Southern Ocean Seafoods' turnover in 1994.

"We've achieved splendid success fiscally, and with our reputation and our brands and our products, not just in New Zealand, where consumption has more than doubled, but around the world, too."

Sales in New Zealand now account for about half the company's turnover, and the huge growth in sales is largely the result of concerted marketing.

"We've made sure customers are aware of the benefits of our salmon; the health benefits, cooking benefits, the versatility of the product and value for money. We spend 5 per cent of our New Zealand sales on New Zealand marketing; I think that's well above anyone else in the seafood industry. That's an investment that has shown a big return."

The company has worked closely with the food service industry in New Zealand and overseas to raise the profile of its products. For example, in Australia, where a lot of Atlantic salmon are produced, the company has given presentations to chefs to show the differences between Atlantic and King salmon.

"When they try it, they buy it. We have a different species of salmon and the characteristics of that species in terms of cookability, taste and nutrition are quite pronounced."

Mr Steere says other keys to the company's success include a good distribution network, sound understanding of its markets, and careful research and product development to create value-added products.

He adds that the unwavering support of the Tiong Group, even in difficult times, has been a huge help, too, as has the support of staff.

"The company's achievements are a collective thing. Every one of the team has made them happen."

Often staff come up with innovative ways to improve work practices or tackle a problem, he says. "Sometimes this is work they will have done off their own bat, not part of their job. I'm proud of their idea, even more so that they are thinking about it, which means they think highly of the company and are part of our collective wish to succeed."

Being a manager of people has brought rewards; he has enjoyed seeing people building their skills and growing in confidence. But it has also brought heartaches, such as when two staff died last year in a boating accident in the Marlborough Sounds, after their workboat collided with a moored vessel. The company was ordered to pay fines and reparation of more than $260,000 after admitting four charges, including operating a ship in a manner causing unnecessary risk or danger.

Mr Steere says the company still faces challenges, one being the availability of sea space in which to farm. The recent release of a report by Fisheries Minister Phil Heatley – which recommended various measures aimed at making it easier to create new aquaculture space – was a welcome sign but the proposals have yet to be put to the test, he says. If it does become easier to create new fish farms – not just salmon but other species as well – then that will bring more challenges, he adds.

"We will need to make sure we avoid a gold-rush mentality." On stepping down, Mr Steere will become an independent director on the company's board.

A life of complete leisure doesn't seem to appeal because, as well as continuing to chair Nelson Airport's board, he's also on the national board of the Red Cross and chairs the organisation's central region board. He's been involved with the Red Cross for six years, an interest driven by a need to focus on something new after his marriage ended. The voluntary work takes up a fair bit of time, but he finds it very satisfying.

He's keen to take up other board roles, too. "I've had a lot of approaches since my decision to stand down was announced, but I just want to get through this [chief executive] transition first, before I start to think about what else I can do.

"I may do the odd bit of project work, too. Certainly, I would hate not having things to do."

COMPANY FACTS AND FIGURES

Staff: 415

Production: One of the top 50 producers of farmed salmon in the world, harvesting 6500 metric tonnes per annum, but a small producer by international standards. It produces 70 per cent of New Zealand's salmon, and 55 per cent of the world's farmed king salmon.

Salmon: The king salmon, also called chinook salmon, is the largest of the Pacific salmon family. It was introduced to New Zealand as a game fish in the 1800s and is the only salmon species farmed in the sea in this country. It's not an easy species to grow, but it reaches a good size and has an attractive orange-red colour and a distinctive flavour.

Products: Fresh, frozen, smoked, marinated, sashimi, kebabs. The retail brands are Regal, Seasmoke and Southern Ocean.

Exports: Australia, Japan and North America are its key export markets.

Infrastructure: Three hatcheries for rearing smolt in Golden Bay, Marlborough and Canterbury; five salmon farms in the Marlborough Sounds; processing facilities in Nelson; head office in Nelson; sales offices in Auckland and Australia.

Owners: Tiong Group, one of the largest private companies in Malaysia, and Direct Capital. The latter, a private equity firm, bought a 45 per cent shareholding in 2008.

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