Steel & Tube says its move to consolidate its three Nelson divisions on one site is not a downsizing but part of a strategy to provide better customer service.
The listed steel products distributor has had a difficult year, according to chairman Sir John Anderson, who told investors at its Wellington annual general meeting last week that trading had been "more challenging and complex" but it was pleased with performance.
Earlier in the year, the company reported net profit fell almost $4 million to $13.1m for the 12 months to June. Results for the first half of the current financial year are expected to be in line with the same period last year when it reported profit after tax of $6.4m.
In October, Australian majority shareholder Arrium sold its 50.3 per cent share to New Zealand retail and institutional investors, bringing most of the company's ownership back into Kiwi hands and giving its management more freedom.
As part of its "One Company" strategy, Steel & Tube has been streamlining its business by reducing the number of sites it operates from and cutting its inventory from $13m to $6m.
At Nelson it has shifted all its divisions onto one refurbished site at Carkeek and Graham streets at Port Nelson. Previously its fastenings business was in Richmond and its stainless business was in Annesbrook, while its steel and reinforcing divisions were at the port site.
It is soon to bring three Hamilton sites together in one central location and will be moving its National Support Centre to a new Hutt Valley office shortly when its Lower Hutt lease expires. Anderson said the company remained focused on "getting the house in order".
Chief executive Dave Taylor said the streamlining, which had seen the number of sites around the country fall from 52 three years ago to 41, was not principally about cost savings but about taking advantage of the company's wide product range and geographic reach by offering customers a more co-ordinated service.
The consolidation process would continue as leases on other sites lapsed, he said.
It would not mean further staff reductions as the company, which employs 700 people, had already downsized after the global financial crisis saw steel volumes fall by more than 30 per cent, Taylor said. Volumes were still down more than 25 per cent.
There was intense competition across all the products it sells and all the sectors it deals in, especially construction, which had put downward pressure on prices and margins, he said.
"In recent weeks as Europe appears less volatile and the Chinese economic outlook is a little stronger, raw material prices have rebounded. This in due course will perpetuate steel pricing volatility in the domestic markets over coming months."
In the year ahead, Steel & Tube would be putting more emphasis on product development. It recently launched a new roofing profile with high strength and yield called ST963 for the commercial market.
"Earlier in the year, we launched a new range of residential and commercial seismic-reinforcing meshes that are fully compliant with the revised building codes," Taylor said.
Top of the south area manager Derek Liddington said customers had welcomed the move to centralise services at its large, leased port site, which had undergone extensive building modification and rebranding, including the construction of a 200-square-metre trade shop.
"They like the fact that all products are available from one location and that we are a lot easier to deal with than in the past when we had multiple sites and accounts."
Nelson staff numbers remained at 12, and being based at a busy port had helped business, he said.
- © Fairfax NZ News
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