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Case study: Bonson Industrial takes on the Aussies

Case study: Bonson Industrial takes on the Aussies
At a time when conditions for exporters have never been tougher, an Auckland-based manufacturer is taking the bit between its teeth and expanding to chase Australian sales.

Bonson Industrial, an Auckland-based manufacturer is taking the bit between its teeth and expanding to chase Australian sales.Hayes Knight's Matthew Bellingham and Bonson Industrial's David Tsui have got the business going full steam ahead. Bonson is moving into a new site in New Lynn due to the rapid expansion.

Bonson Industrial, a 27-year-old family business, makes plastic takeaway containers for the food service industry and plastic packaging for food manufacturers.

Over the past decade, says managing director David Tsui, export sales of products such as injection-moulded tubs for dairy foods have become a significant and growing revenue earner for Bonson.

“There is growing demand in the sector,” Tsui says, and Bonson wants to position itself to take advantage of ongoing opportunities, particularly across the Tasman, where it is one of just a handful of suppliers.

Bonson’s investment focus to date has been on manufacturing equipment, enabling it to cost-effectively produce innovative designs that distinguish customers’ products on store shelves.

The focus on delivering quality products of a unique design gave Bonson an early edge over its competitors, including low-cost Asia-based manufacturers.

But now the business, which was bursting at the seams on its Avondale site, is expanding its production facilities to give it significant headroom for increasing output.

Tsui says in the past Bonson has added capacity in a piecemeal fashion, but this time it decided to “bite the bullet”. It is erecting a 6000m² building to house the entire business, with room for further expansion, on a new 13,000m² site in Portage Rd, New Lynn.

“An expansion of this scale was a big step up for us so we did a thorough review with our bank, Westpac, and it recommended that an independent accounting firm asses our business plan.”

Bonson asked accounting firm Bellingham Wallace to go over its plans, which duly led to Westpac agreeing to help fund the company’s relocation. However, not without Bellingham Wallace recommending that Bonson’s decision-making be more formally structured in order to improve efficiency.

Bellingham Wallace business improvement director Matthew Bellingham says his analysis of the company was that it was very good at product design and manufacturing innovation, but as a 60-person round-the-clock operation, it had outgrown its management processes.

“Like many other startup businesses, Bonson started out with a good business model that it had grown successfully, but with significant new debt on the balance sheet, it had reached the stage where more robust oversight was called for,” Bellingham says.

A first step was establishment of a board, which the company invited Bellingham to chair. Now, instead of “gut-feel” decisions being made around the family dinner table, Bellingham plays an ongoing governance role, running monthly board meetings focused on continuous performance improvement and growth.

In line with Bonson’s commitment to sustainability, Bellingham Wallace business improvement manager Melanie Jenkin has developed a monthly reporting tool with which the company tracks environmental and personnel KPIs, such as power and water consumption, staff retention and employee training and development hours.

Emphasis by the business on environmental reporting fits with a trend for Bonson, through its associated company SAVPAC, to develop its range of biodegradable products, Jenkin says.

“It is important to the business to ensure there are no unnecessary by-products or waste and that everything is done as efficiently as possible – not just from a monetary point of view, but an environmental standpoint as well,” she says.
Another preoccupation for the business is foreign exchange management.

“It’s a huge issue for Bonson, importing raw materials and exporting to Australia, so it’s critical to get that right,” Bellingham says.

Tsui says the business is getting a big payback from the discipline Bellingham Wallace has introduced.

“Matthew Bellingham’s attention to detail, to things we may have previously overlooked, has brought huge benefits. We are able to more properly evaluate our efficiency and capability.”

Bellingham says Bonson’s continued strength in innovation, and its sound relationship with Australian business partner Cryovac, through which it supplies key customer Woolworths, is underpinning its export growth.

“That’s a pretty good news story for New Zealand,” he says.

In brief

27-year-old innovative plastic food container manufacturer
Half of sales are to the food service industry, making takeaway food containers
Half, and growing, are to food manufacturers, supplying food packaging
An increasingly important trend is the supply of biodegradable products
60 percent of sales are to Australian customers
Bonson has built a $10 million 6000m2 production facility on a new site in New Lynn
Family-run company now employs 60 people and operates around the clock

Contact:
Matthew Bellingham,  business improvement director
matthewb@bellinghamwallace.co.nz
www.bellinghamwallace.co.nz