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Deloitte Growth Forum May 2005

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Hamilton, Hawera, Melbourne JVs in Blenheim and Timaru. Winner 2002 ... Acquisition of Pititto Engineering Ltd (Melbourne) in 2002 ... – PowerPoint PPT presentation

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Title: Deloitte Growth Forum May 2005


1
Deloitte Growth ForumMay 2005
  • An NDA Perspective on Planning

2
NDA History
  • Established in 1894
  • A co-operative owned by the dairy co-operatives
  • Role to service the needs of the dairy industry
  • Many guises
  • Exporter
  • General goods importer
  • Veterinary products
  • Cryogenics

3
NDA Today
  • Engineering
  • Factory design and project management
  • Stainless steel mechanical design and
    fabrication
  • Todays dimensions
  • Revenue 55M
  • Staff 320
  • Hamilton, Hawera, Melbourne JVs in Blenheim and
    Timaru

Winner 2002 Waikato Business Excellence Awards
Overall Manufacturer of the Year Exporter of
the Year
4
A Change of Ownership After 103 Years
  • Dairy owners decided not core business
  • GM/DF negotiated and structured the deal over 18
    months
  • Joined by 4 senior managers
  • Put everything on the line
  • NDA had not performed consistently for the
    previous 10 financial years
  • Deliberate strategy to divide
  • Ownership
  • Governance
  • 3 independent directors
  • GM DF
  • Management
  • GM 4 Other senior management

5
Growth Since MBO
  • Acquisition of Challenge Engineering Ltd in 1989
  • Acquisition of ProFab Stainless in 2000
  • Establishment of Dairy Technology Services Ltd
    (50) in 2001
  • Acquisition of Pititto Engineering Ltd
    (Melbourne) in 2002
  • Establishment of NDA Longveld Engineering Ltd
    (50) in 2003
  • Establishment of Truform Stainless Ltd (33)
    2003
  • Turnover 1998 30 M
  • Turnover now 55 M

6
Planning Approach
  • Philosophy of inclusiveness
  • Board role not to just question management
  • Key to get value and buy in from the Board
  • Involvement of senior management group
    fundamental to successful implementation
  • Environment of no secrets, the good and the bad

7
Planning Approach
  • Three stages
  • Primary
  • Immature plans/process and/or relationship
    between CEO and organisation
  • Pre review of Strategy, Structure and Staff
  • Broad staff involvement, external facilitation
  • CEO determines Strategy, Structure, Staff and
    sells to Board
  • Secondary
  • Once outcomes of Primary process have been
    implemented
  • Board and Key management (GKM, DBF)
  • Quick no brainers but where a leap of mindset
    required

8
Planning Approach
  • Tertiary
  • Maturity of process and board/management
    knowledge of the business
  • No more no brainers
  • Board and broader management group including
    group of trusted lieutenants

9
Planning Approach
  • What do we do now?
  • Offsite for two days
  • Keep it simple
  • Informality of Environment Scan
  • CEO backgrounder
  • SWOT
  • Issues Analysis
  • Case Studies

10
NDA Strategy Review
  • Issue
  • We have inadequate understanding of our
    competitor cost structures and dont do enough
    analysis of our potential competitors on a job by
    job basis with the result that we price cost
    plus rather than to the market.
  • Objective
  • To improve margins by pricing to the market
  • Strategy
  • To identify potential competitors by segment and
    estimate their costs of production
  • Action 1
  • Establish a project group including Ben, Craig,
    Rob, SA and DBF
  • Action 2
  • Do the work
  • Driver DBF

11
The Value Matrix
Value
Low
6
2
10
8
1
4
7
3
5
9
High
Short term
Long term
Time
High level financial analysis
12
What to Achieve
  • For each item (we use maximum of 10)
  • Objectives
  • Strategies
  • Actions
  • Use detailed financial model to ensure value
    captured

13
Case Studies
  • Risk Management
  • Came from MBO and all on the line
  • NDAs tender and contract work
  • large peaks and troughs of demand
  • long lead times to make sales
  • Value Crystallisation
  • Realise value to shareholders
  • Growth - Domestic
  • Product driven
  • Geographic and market segments focus
  • Growth - International
  • How to grow when NZ and Australia strategies
    complete
  • Leverage off of core knowledge, skills and
    international reputation for work quality and
    trust

14
Risk Management
  • Milk Powder
  • Market position
  • Incremental milk growth in NZ goes to powder
    production
  • Three European technologists world-wide, two
    suppliers in NZ, all three in Australia
  • NDA was fabricator for CPS, Niro had own
    fabrication shop
  • Result
  • Win Big / Lose Big

15
Risk Management
  • Milk Powder
  • Strategy
  • Position NDA as Fabricator to the World
  • Acquire Niros NZ and Australian shop
  • Fabricate for all drier technologists
  • Key Issues
  • Trust and IP protection
  • Price competitiveness
  • Outcome
  • Purchased Niro fabrication facilities
  • Open book trading with all using the same rates
    and margins
  • Have manufactured major plant for both in the
    last 5 years

16
Value Crystallisation
  • DTS
  • Market Position - On Farm Milk Cooling
  • NDA manufactures vats and did on farm work for
    Kiwi
  • APV did on farm work in South Island
  • NZDG did own on farm work
  • NZDG wanted to exit
  • Strategy
  • Form a JV to create only national coverage
    organisation and vertically integrate revenue
    streams
  • Key issues
  • Governance model with two previously competing
    partners
  • Providing value to NZDG and Fonterra

17
Value Crystallisation
  • DTS
  • Outcome
  • Formed Dairy Technology Services Ltd
  • 1/2 NDA, 1/2 APV
  • Equalised contribution with value created for NDA
  • Governance
  • 2 Directors each
  • Full Board papers and meetings
  • Contribution from all
  • Purchased NZDG business
  • Highly successful growth
  • NDA now trusted APV partner world wide

18
Growth - Internationally
  • Market Position
  • No more growth available
  • NDA active in all sectors
  • Strategy
  • China workshop
  • Leverage off
  • Reputation / Trust / Relationships
  • NDA quality at local cost
  • Protection of IP
  • Outcome
  • Preliminary work complete now focus is on
    implementation

19
Planning From a Board Perspective
  • SME focus
  • A Board is an investment
  • NDA 105,000
  • What should the return on this investment be
  • Not just governance
  • Not just to turn up
  • Get hands dirty, time to understand the business
  • Not to involve in the day to day and in the line,
    this is managements job
  • Add real value
  • Use the networks
  • Entrepreneurial ideas
  • Experience
  • Inclusive participation by the Board alongside
    management in the planning process is important
    in achieving a return on the Board investment

20
Planning From a Management Perspective
  • Planning process must fit the business, its
    maturity and your maturity with the business
  • Must get Strategy, Structure and Staff aligned
  • Dont get bogged down in analysis
  • Strategy in only as good as its implementation
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