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Triumph Over Adversity Trade NZ Export Award

Triumph Over Adversity Wins Southland Company Trade New Zealand Export Award

January 31, 2001 -- Growing annual exports of medium density fibreboard from zero to $80 million in five years in the face of challenging market conditions has won Southland company Rayonier MDF New Zealand a Trade New Zealand Export Award.

(Media are invited to attend the presentation of the Rayonier Export Award by the Minister for Trade Negotiations the Hon. Jim Sutton, on Thursday 31 January, at 5pm, at Rayonier’s premises, Mataura-Edendale Highway, Gore. The Trade New Zealand Export Awards are sponsored by DHL Worldwide Express.)

Employing 101 people at its Mataura facility, Rayonier manufactures medium density fibreboard (MDF) from New Zealand Radiata Pine for export around the world. MDF is an engineered wood panel, used in the manufacture of furniture and building materials such as doors, window frames, mouldings and wall panelling.

Rayonier’s General Manager James Everett says the $180 million Mataura plant was commissioned by the company’s US parent Rayonier Incorporated in late 1997 to capitalise on the huge growth in the MDF industry – the global market had been expanding at 15% compounding year on year since 1965 when MDF was developed. However, production start-up coincided with two significant and adverse factors - the Asian economic collapse and dozens of MDF mills being built around the world at the same time.

“The result was a huge over capacity coming on stream just as the market collapsed. This is a very capital-intensive business so when Rayonier started production we were initially losing money. We were almost 100% export focused but we had no markets, we were new players on the block, and we had to go into markets that were already oversupplied and try and sell our product,” says Mr Everett.

He says Rayonier put in place a market strategy that has seen the company overcome these challenges to become a profitable exporter, and world class in terms of mill uptime and production rates.

“We target countries that are net importers of quality MDF - in particular Japan and the USA - New Zealand Radiata Pine is very good for making MDF, producing bright, white panels compared to the dark brown produced by other wood varieties.

“China is also a key strategic market, converting Rayonier’s MDF into high quality furniture for re-export to Europe and the USA. And because our product is re-exported, we don’t have to pay the 20% import tariff.

“As well as the quality angle, we target customers who require environmentally friendly products – this is an emerging trend everywhere. We have the international standard ISO14001 accreditation for environmental management. We also sell to customers who want to know the product is coming from a sustainable forestry resource, which New Zealand Radiata Pine is.”

Mr Everett says Rayonier’s successful marketing strategy is underpinned by a culture of innovation. The company is in the process of launching two world leading MDF products – one an ultra lightweight MDF for utilisation in furniture and solid doors; the second the manufacture of a board where one of the faces can be completely removed (as in highly decorative furniture manufacture) with the board remaining stable.

Trade New Zealand Regional Account Manager John Sear says since its establishment Rayonier has had to make significant changes in its marketing strategy, product mix and staff structures to achieve profitability in difficult trading conditions.

“Rayonier has remained steadfast in marketing its quality position and is seeking to further leverage its technical and manufacturing excellence through developing a more added-value product mix that will continue to enhance foreign exchange earnings. Rayonier MDF is amongst the very best companies operating in New Zealand.”

James Everett says Rayonier’s manufacturing ability is its core competency.

“Our mill is designed for a certain level of production and in our industry most people operate at that level – probably less in Asia. However, we are running at 27% above the mill’s design level and doing that on a product mix that would be unfavorable to even achieving its design level. We are very proud of what we have been able to accomplish and we have not needed to invest capital to do it.”

Rayonier seeks its competitive advantage from being able to produce very thin MDF more economically than its competitors. Making thin MDF panels down to 1.8 mm in thickness can only be done by half the world’s manufacturers due to differing production processes, and even then only half of those choose to make thin MDF due to the difficulties it imposes.

Building strong customer relationships is also important to Rayonier's success. It has established offices in Singapore and the USA so its sales people can operate in the same time zone as its customers. It is also developing an interactive web site so clients can order directly on-line.

Getting product to market has been one of the challenges of being located in Southland but by rationalising markets and cooperating with other Southland sawmills that export to similar destinations it is now enticing shipping lines to call at Bluff on a regular bases.

Mr Everett says Rayonier MDF New Zealand is aiming to continue its strong growth trend.

Ends

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