NZECO Q & A with G Tech Group, Geoff Carston

Issue date:

We interviewed G-Tech's General Manager, Geoff Carston, on G Tech's international focus during recent challenging years.

What is the G Tech Group?

G Tech Group is a privately owned Group of business headquartered in Christchurch with operations in Australia and USA. Its businesses consist of manufacturing separation and rendering machinery and parts for industrial food, meat processing, fish processing, and oil and gas industries customers.

In total there is approximately 100 staff, with the majority based in Christchurch.

What does the G Tech Group do?

We are a highly specialised operation producing rendering and separation equipment and are regarded as leaders in our field. We can accommodate all client needs from a one-off project for a unique product or situation to multiple batch runs of equipment and parts.

G Tech Group centrifuge

How has G Tech been funded to date?

It was started in 1989 with founder funds and over the 20 years of operations has grown through a mixture of bank finance and retained earnings.

What are your growth opportunities?

Most recently our growth has been with USA based multi-national oil and gas industry players, although the products we supply them end up wherever oil is drilled in the world. The Australian market also has a lot of opportunity, although it is a very competitive market, while NZ is a static but stable market.

How did the global financial crisis (GFC) affect your NZ and international demand?

Like many other manufacturing companies, the GFC hugely affected G Tech, but it didn't really hit us until early 2009 due to long lead times with contracts. During the 2009-10 financial year the business had one major NZ project that kept the business going and the owners decided that even with the downturn they would keep staff employed and invest in designing new products for new industries and new markets – namely the USA, oil and gas industry. This resulted in sales of the new centrifuge products which was great but led to increased capital requirements.

How did you address this capital requirement?

Growth was coming on two fronts, via our US business growth supported by manufacturing capability from NZ. All entities had increased capital requirements, mainly working capital to meet growing debtors and inventory as a result of increased US sales of the new oil and gas industry products plus there are long lead times for suppliers providing specialist parts and products. On top of this was an increase in machinery required.

Our bank, the BNZ, was extremely supportive, increasing our funding through a range of facilities – including term debt for plant, trade finance (specifically for the export markets) and an overdraft.

The challenge for the BNZ is that most demand for capital has been for the US entity that now accounts for roughly 70% of the turnover of the group. Plus there is inter-Group trading between the NZ and US operations as the NZ operations part-manufactures units for the US operation. There was very little start-up finance available from banks in the US for the US entity even though we had blue chip US customers, but thankfully the BNZ has been very supportive.

In December 2010, the NZECO came into the picture when the NZECO introduced their financial guarantee and credit insurance product range. At that point the Group was facing some cash-flow constraints and in mid-2011 G Tech went to the Bank to discuss trade facilities related to contracts with two US customers. NZECO underwrote one of these debtors, with the policy being assigned to the bank to access finance.

Where is the firm predicting it will be in the next 10 years?

We have a 3 year strategy and are targeting being a $50m turnover business within that timeframe. The Group is well on the way to achieving this target.

How did the Canterbury earthquakes affect the business?

It was extremely disruptive, but we have had amazing support from suppliers both onshore and offshore, the bank and G Tech staff, many of whom were significantly affected personally. One major challenge was settling the nerves of the exporting customers, yet we never missed a sale and suffered only minor delivery delays due to the earthquakes.

Do you have any other advice for other exporters out there?

Not really as we are by no means experts....but keep talking to everybody (the bank, staff, suppliers, etc) whether the news is positive or negative to ensure transparency in your operations, and continue to deliver on promises made.

Last updated