November 3, 2024 • 18 mins
[VIDEO EPISODE ON YOUTUBE & SPOTIFY] Why this 100-year-old family business built a massive steel facility in a construction downturn.
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Speaker 1 (00:00):
The information provided in this program is of a general
nature and is not intended to be personalized financial advice.
We encourage you to seek appropriate advice from a qualified
professional to suit your individual circumstances. This steel supercenter can
store twelve thousand tons of the commodity, more than twice
the amount used to build the Auckland Harbor Bridge. Why
this site has been built in a construction downturn, we.
Speaker 2 (00:22):
Call it the sugar rush.
Speaker 3 (00:23):
I suppose commodity prices went up through the roof. Volumes
went up through the roof. Demand was very high. We
knew what comes up. It's got to come down on.
Speaker 1 (00:33):
The dollar figure on how much steel you've imported to
stockpile here. Though.
Speaker 4 (00:36):
What's that?
Speaker 2 (00:36):
Well, it's a long term plan.
Speaker 3 (00:38):
As MS has been around for one hundred years with
whether many cycles. This we see is just another cycle,
and you've just got to hold your nerve and it
will it'll pay dividends.
Speaker 1 (00:58):
This is the infrastructure behind industrial infrastructure. A brand new
fifteen thousand square meta logistics facility in Drury, south of
Auckland has been made to store thousands of tons of steel,
beans and pipes. This site was designed and built specifically
for Asthmus, a privately owned steel importer that was started
(01:19):
by Henry Asmus in nineteen twenty and carried on by
his son William.
Speaker 4 (01:24):
The business has been behind.
Speaker 1 (01:25):
Some of the country's most significant bills, including the Marsden
Point former oil refinery, the Waikatour River hydro dams, the
Huntley Power Station and Wellington's Waterfront Stadium. Its latest expansion
is proof that it's still growing and gearing up for
more major projects as the economy improves and efforts get
(01:46):
underway to fix our infrastructure deficit.
Speaker 3 (01:48):
So we started building this in June two thousand, in
twenty three.
Speaker 4 (01:55):
So, Jick, you moved in a few months ago.
Speaker 2 (01:58):
Yeah, the build was thirteen months.
Speaker 4 (02:00):
That is crazy.
Speaker 2 (02:02):
It is very good.
Speaker 1 (02:03):
As Mus brings in steel from mills around the world,
from Australia to South Korea, China, Thailand and Taiwan, making
it one of the more globally connected New Zealand operators.
So how do you think about the geopolitics of the
world right now given that you import from all of
these countries like China, Taiwan.
Speaker 3 (02:21):
Look, it's interesting times. I think for us, we've just
got to be mindful make sure that we've got alternatives,
and we have, so that's amazing.
Speaker 1 (02:30):
Dean Brown has been leading the Asthmus Group for the
past six years. He did the deal to lease out
the site. In this interview, we discuss why he's confident
the commodity will stay in demand after its price has
fallen over the past two years.
Speaker 4 (02:45):
Dang, thank you so much for having us here. Good
to be here.
Speaker 2 (02:47):
Welcome, thank you coming to jury.
Speaker 4 (02:49):
You are most welcome. It's awesome. This is very cool.
Speaker 1 (02:52):
I love hard commodity stuff like this, so I'm very
pleased to be here.
Speaker 4 (02:55):
I guess the first question.
Speaker 1 (02:57):
Is why why build aware of this scale and especially
why now?
Speaker 2 (03:03):
Why now? Why now? Is getting ready for when the
market picks up.
Speaker 3 (03:08):
But we have been had this in the pipeline probably
for the last four or five years. To find an
existing DC to stock steels very challenging, so we knew
we had to do a design and build started on
that journey before COVID. We parked it when COVID hit,
and probably about six twelve months later, we were up
(03:29):
to our guns with stock and we thought, right, we've
got to get this project back on the table. And
we had still sitting in three sites around Auckland. One
site we owned, the other two sites we leased, So
it made sense to get everything under the one roof.
Speaker 4 (03:45):
You see when the market picks up.
Speaker 1 (03:47):
Yes, so it was up, like you mentioned, demand skyrocketed.
It's now fallen quite dramatically with the state of our economy.
Talk to me about the demand dynamics right now and
why you're still bullish enough on construction this country which
gives you the confidence to build this now.
Speaker 3 (04:04):
Well, the market is cyclical and we've had a great run.
You know, I don't think any of us could have
imagined how well the how well the industry went, you know,
twenty one to twenty two.
Speaker 2 (04:15):
We call it the sugar rush.
Speaker 3 (04:16):
I suppose commodity prices went up through the roof, volumes
went up through the roof.
Speaker 2 (04:21):
Demand was very high.
Speaker 3 (04:22):
We knew what comes up, it's got to come down,
so as even keeping by board at at ease and saying, look,
enjoy it while we can, but we know it's going
to come down off the high site. But we saw
no other time better now because we needed to do
this bit of work. And it's probably been a blessing
in some ways that we're doing it in the quiet
time because we can still maintain a very good service level.
(04:45):
But we are confident that the market will pick up again.
There's just so much infrastructure investment that's required across New
Zealand and as for Asthmus, we want to be ready.
So the time has.
Speaker 2 (04:55):
Actually worked out quite well as far as.
Speaker 3 (04:57):
Trading at the moment, it's tough, though it'd be fair
we are to say, look, the last six months we're
on the bottom. We're waiting for it to pick up.
I think it's going to be probably challenging times probably
for the next six to twelve months, to be honest.
Speaker 4 (05:11):
So you're an importer, Yes, we have commodities, so is
all of the steel around us.
Speaker 1 (05:16):
All of these beams. Are these pre purchased or you've
just imported these and expect to sell them at the
same price that you purchase them, or at a high
price in future for future projects.
Speaker 4 (05:27):
How does that show it?
Speaker 3 (05:27):
So look, yes, all this is for stock, so these
are for orders that we have not received yet, so
it is a big investment. We do indents as well,
so those indents will come from our supply straight to
the customer. But all this which you're seeing in this
warehouse is stocked for projects.
Speaker 4 (05:45):
How much is it here at the moment?
Speaker 3 (05:47):
Well, at the moment we've come in and look, it's
always hard to design a DC because if you build
it too small, you don't have enough capacity before the
paint's even dried, and if you go too big, especially
in Auckland where property prices are high, so you've got
to find the right balance.
Speaker 2 (06:06):
So we did quite a lot of modeling. We've come
in here.
Speaker 3 (06:08):
We're around fifty five percent capacity at the moment, so
we've got room to grow. And then we've also got
a plan B of what we do next in five
to six years if we are at capacity. So this
DC has been designed to supply the Golden Triangle for
want of a better word. Even though we have branches
in Hamilton and branches in Twonger, a lot of the
(06:29):
big structural steel will be fed from here straight down
to those sites as well.
Speaker 4 (06:33):
Goldilocks. You want that size to be to be just right,
that's right.
Speaker 1 (06:36):
Can you give me a dollar figure on the investment
or even something ballpark because I know that you're a
private operator and you're probably don't want the exact dollar
amount out there.
Speaker 2 (06:44):
Look, the investment's a big Look the lands, the land
out here.
Speaker 3 (06:47):
This is a two hectare site, so you're talking, you know,
you're talking over sort of fifteen to seventeen million for
the land, and then the build itself is around about
twenty five million for the build.
Speaker 2 (06:59):
So these are investments that you need to make on.
Speaker 1 (07:02):
The dollar figure on how much steel you've imported to
stockpile here though, what's that Well, it's.
Speaker 3 (07:06):
A long term play and you're taking that on a
long term position, right, And it's where we're back in ourselves.
As MS has been around for one hundred years with
weathered many cycles. This we see is just another cycle
and you just got to hold your nerve and it
will it'll pay dividends.
Speaker 1 (07:24):
What about New Zealand's current infrastructure environment, the money going
to it, the confidence being thrown at it. What about
that gives you confidence that you can make at this big?
Speaker 3 (07:34):
Well, you for us making a bit too big. It's
we consolidated three sites, so we had to do it
for our own business. We needed to do it to
improve operational efficiency and improve safety as well.
Speaker 2 (07:47):
It's a fast, safer site. Everything's under hook, everything's undercover.
Speaker 3 (07:52):
So we need to do that regardless, Otherwise you decide
are we going to be in the market, So you
either get in boots of wall or you decide to
make the decision to get out. And we see it's
an important part of the market. There's a lot of investment. Yes,
it's slowed down with cost of finance inflation.
Speaker 2 (08:09):
A lot of big projects are coming to an end,
but there's.
Speaker 3 (08:12):
A lot of other work that's in play, and once
that picks up, we'll be ready.
Speaker 1 (08:16):
Bottom line, we have an infrastructure deficit and you're getting
ready to help fill it.
Speaker 3 (08:20):
Correct And this has been a huge enabler for us
because our property in Mount Wellington where probably probably sixty
percent of the steel in this building was on that site.
Jury has been an enabler for us to develop that
site now. So we have started an eight million dollar
reinvestment on that site, building all the offices total new
(08:43):
fit out, get people back to work, get people back
in the office, and then the back part of that building,
which is about a ten thousand square meter warehouse as well.
We're in the process of redeveloping stage two of that now,
putting a whole new racking system in palette racking and
that's for our valve and fitting business again, all targeted
(09:03):
getting ourselves ready for the infrastructure investment when.
Speaker 2 (09:07):
It does happen.
Speaker 1 (09:08):
Tell me about the kind of projects that your products
go into.
Speaker 4 (09:11):
You said, Asthmus has been around for over one hundred years.
Speaker 1 (09:13):
It was started in nineteen twenty, which is a very
long time ago.
Speaker 4 (09:17):
Incredible that it's been around for that long.
Speaker 1 (09:19):
What kind of projects has Asthma's been involved in and
what kind of projects going forward you're expecting to sell
your products.
Speaker 3 (09:25):
Asmus has been involved in some of the biggest infrastructure
projects in New Zealand, you know, back through to a
lot of the think big projects, Hunty Power Station, a
lot of the hydro stations, geothermal, Marsden Point Refinery in
nineteen sixty five, we supplied.
Speaker 2 (09:42):
A lot of ows into that.
Speaker 3 (09:43):
That's amazing, so very strong pulp and paper with the
likes of OG.
Speaker 2 (09:50):
In that market. We supply those industries today.
Speaker 3 (09:53):
The Central Interceptor has probably been one of our most
recent where we supplied a number of our into that project,
but also polyethylene pipe as well, so we extrude polyethylene
pipe for water pressure systems. We make that in Hamilton,
so we're supplying those sort of projects as well.
Speaker 1 (10:14):
Think Big was a great initiative for businesses like this.
Do you think we need something like that again? Or
if I can ask that another way, is your business
hoping that we see something like that again in this country?
Speaker 2 (10:28):
Look, I think we are hoping for it.
Speaker 3 (10:29):
I think New Zealand needs investments and we can't do
it alone. And I think it's how does the government
attract good offshore strategic partners who can help us get there,
because I don't think we're going to get there alone,
but it needs to happen. You can't not do the maintenance,
(10:49):
you cannot repair the pipes. This work has to be done.
So we're just being patient. I think our cels, our competitors,
a lot of our custom in that civil infrastructure market,
we're all being patient at the moment. It was great
to hear the government talk about the fast track projects
and release of one hundred and forty odd projects. Which
(11:11):
are they going to try and get those moving? But
at this stage it's talk. What we're all looking for
is the action right and then things will start moving again.
Speaker 1 (11:21):
Let's talk about steel demand globally, it's been falling, yes,
for the past three years. According to the World Steel Association,
if we do have an uptick care that would be
a tiny blip to help production globally. What are you
seeing with the businesses that you deal with? Can you
import from yes, around the world. Are they struggling? Are
(11:41):
they glad that you're at least buying their products?
Speaker 3 (11:43):
Well, I think they're glad we're buying. I think, look,
there is more demand. There's more supply than there is
demand out there. China sort of sets the pace as
far as what's happening with prices.
Speaker 2 (11:55):
Out there in the marketplace.
Speaker 3 (11:56):
Their exports out of China have increased dramatically over the
last few years. And then Jina's trying to you know,
they've introduced the stimulus to get infrastructure going again there,
but that is going to take some time. So I
think we I think we we think we're at the bottom,
like we're not quite back where we were pre COVID.
(12:20):
But that said, you know, energy costs for making steel
has increased, labor costs has increased, shipping costs have increased.
Speaker 4 (12:28):
Yet the steel prices down.
Speaker 3 (12:29):
And the steel prices have come down deserts and you've
just got to navigate that and you've just got to
you've just got to pick your battles of what projects
you go after, and sometimes you've just got to take
a pause and be patient as well.
Speaker 1 (12:41):
So you're quite wise then, given that there is excess capacity, yes,
and steel, and you're buying and you can stock pilot.
This stuff isn't food, it doesn't expire. It may rust,
but you can clean it and it's still usable.
Speaker 4 (12:53):
Right, pretty wise, that's correct.
Speaker 2 (12:55):
But you need to have the range and you need
to be ready. And we're still moving.
Speaker 3 (12:59):
You know, our volumes are down probably around about five
to six percent down on last year, so we're managing
our position. Okay, look, we're expecting the market to soften
and we've just got to ride through it.
Speaker 2 (13:12):
Now.
Speaker 3 (13:14):
I'd like to be the optimistic and saying is going
to come right early next year, but I honestly I
think it's going to take a bit longer than that.
Speaker 1 (13:20):
But what I said to you is that this is
the infrastructure behind the infrastructure. This is the construction supply chain.
How critical is all of this, the product, the commodity
behind the scenes to actually making construction happen in this country.
Speaker 3 (13:34):
It's very important because they need you know there's some
customers who will indent for large projects, but you still
need the local stock. Your lee time for this product
is twelve to fourteen to fifteen weeks wow, So a
lot of our ordering were fitting in with the mill
runs overseas, so they are the long lea times as well,
(13:54):
so you need to accommodate that.
Speaker 1 (13:56):
So effectively you want constructors to come to you. You've
got the product ready to go, so you're in front
of line.
Speaker 3 (14:03):
That's correct, absolutely, and look, it comes look as steel
is a commodity, but it's more than just steel. It's
about look table stakes as we're all bringing in quality
product from repidal mills that meet a standard. I think
some of the differentiators are your people. It's certainly your
service delivery model is really important. The relationships your people
(14:25):
have is very important. And making sure your people got
the product knowledge right so you can still differentiate in
a commodity.
Speaker 2 (14:32):
But it's still very tough, you know.
Speaker 3 (14:34):
And look, we've all come off very high stock levels,
so the market I think a number of us where
our stock levels increase eighty percent from where they were
pre COVID.
Speaker 2 (14:47):
We've all rebalanced back a lot better now.
Speaker 4 (14:49):
How much down are you from that?
Speaker 2 (14:51):
Now we're down. We're down.
Speaker 3 (14:52):
We got very high at the peak, had the tiger
by the tail, if you wanted to call it. I
was looking for other sites around Auckland to stock steel
because what was happening is a lot of the shipments
were being consolidated.
Speaker 2 (15:06):
So while we thought we.
Speaker 3 (15:07):
Had a thousand tons comeing into the port, there could
be two thousand tons come into.
Speaker 2 (15:12):
The port and you had to clear it very quickly.
So that was very challenging.
Speaker 1 (15:17):
We have domestic steel manufacturers in this country, so you
do why should the big projects use imported steel instead.
Speaker 2 (15:24):
The domestic steel.
Speaker 3 (15:25):
As far as New Zealand Steel, and they're a great
partner of ours. The plate you saw out under the canopies,
majority of theirs from New Zealand Steel.
Speaker 4 (15:33):
A Fletcher Steel sign on there.
Speaker 3 (15:35):
It could be too so they look but they're a
strategic partner for us. But they manufacture plate, very very
big in their wire products and also in roofing irons.
Speaker 2 (15:47):
And coil product.
Speaker 3 (15:49):
But they don't mean if no one in New Zealand
and manufacturing structural steel or hollows, so we need to
import that product.
Speaker 4 (15:56):
Would you ever consider getting into manufacturing.
Speaker 3 (15:58):
No, there the scale, just the economics don't stack up.
Speaker 2 (16:03):
That don't stack up. You need to New Zealand.
Speaker 3 (16:07):
While we punch above our weight in the global scheme
of things, if you look at the total supply of
steel into New Zealand, it's still quite small.
Speaker 1 (16:16):
Economics of this investment, when are you expecting to break
even on it?
Speaker 2 (16:19):
Oh, we're very comfortable with this building.
Speaker 3 (16:22):
Look, we've come in to this on a this is
a design build lease. We've gone a twenty year term,
so we're a long term strategic partner. We could have
built this ourselves, but we've got other investment projects that
we're working on and we'd rather use that capital on
those areas.
Speaker 2 (16:41):
So we're more than comfortable. We built this at the
right time.
Speaker 3 (16:44):
We got in there just before the interest rates started
to increase, so we're very comfortable and we've got certainty
on the site for the next twenty years.
Speaker 4 (16:55):
So look around.
Speaker 1 (16:56):
Then, What would your message be to anyone wanting to
kick start a pet a big infrastructure project.
Speaker 4 (17:02):
You guys are good to go.
Speaker 3 (17:03):
Look, I think if you I think you've got to
look ahead, you've got to back yourself. I think you've
got to really look at where your strategic positions and
where you want to be the next five and ten
years for Asthmus, regardless of the ebbs and flows of
the market.
Speaker 2 (17:17):
We need to do it.
Speaker 3 (17:19):
Ourselves because we have already seen productivity gains. It's enabling
us to do what we need to do in Mount
Wellington and we've got the balance sheet to do it.
So we're going through quite an exciting time because Asthmus
has flyn under the radar for many, many years.
Speaker 2 (17:36):
So our board and our.
Speaker 3 (17:37):
Shareholders are very excited because this is one of several
investment projects which we're underway with which is great.
Speaker 1 (17:43):
I wasn't going to ask you this, but you certainly
do fla under the radar as a business.
Speaker 4 (17:47):
It's a real privilege to be here.
Speaker 1 (17:48):
Lovely, why come on camera and show us around your warehouse.
Speaker 3 (17:52):
Look, I think it's it's time that we do beat
the drum a little bit. I think, Look, we work
with some of New Zealand's biggest fabricators who are great customers,
some of the biggest civil infrastructure organizations in New Zealand,
and I think they want to see Asthmus out there
beating the drama.
Speaker 2 (18:11):
A little bit as well. We've been around for a
long time.
Speaker 3 (18:14):
I think there's not many companies which are what I
call New Zealand Inc.
Speaker 2 (18:18):
That have been around for as long as we have.
Speaker 3 (18:21):
With fifth generation getting involved in Asthmus now as far
as at a board level.
Speaker 1 (18:25):
Fifth generation family, family business that's incredib absolutely yeah.
Speaker 3 (18:29):
And they still as committed to the business and the
future of the business, so it's pretty exciting and the
future of the country by the lacks absolutely and for
me it's a privilege to be part of it. They
got a lot of support, a lot of autonomy and
here we're looking forward to what the next five to
ten years will bring for us. Well.
Speaker 4 (18:46):
Thank you for having us really appreciate it.
Speaker 2 (18:47):
Dan, thank you very much. Thank you for coming in
The information provided in this program is of a general
nature and is not intended to be personalized financial advice.
We encourage you to seek appropriate advice from a qualified
professional to suit your individual circumstances. This steel supercenter can
store twelve thousand tons of the commodity, more than twice
the amount used to build the Auckland Harbor Bridge. Why
this site has been built in a construction downturn, we.
Speaker 2 (00:22):
Call it the sugar rush.
Speaker 3 (00:23):
I suppose commodity prices went up through the roof. Volumes
went up through the roof. Demand was very high. We
knew what comes up. It's got to come down on.
Speaker 1 (00:33):
The dollar figure on how much steel you've imported to
stockpile here. Though.
Speaker 4 (00:36):
What's that?
Speaker 2 (00:36):
Well, it's a long term plan.
Speaker 3 (00:38):
As MS has been around for one hundred years with
whether many cycles. This we see is just another cycle,
and you've just got to hold your nerve and it
will it'll pay dividends.
Speaker 1 (00:58):
This is the infrastructure behind industrial infrastructure. A brand new
fifteen thousand square meta logistics facility in Drury, south of
Auckland has been made to store thousands of tons of steel,
beans and pipes. This site was designed and built specifically
for Asthmus, a privately owned steel importer that was started
(01:19):
by Henry Asmus in nineteen twenty and carried on by
his son William.
Speaker 4 (01:24):
The business has been behind.
Speaker 1 (01:25):
Some of the country's most significant bills, including the Marsden
Point former oil refinery, the Waikatour River hydro dams, the
Huntley Power Station and Wellington's Waterfront Stadium. Its latest expansion
is proof that it's still growing and gearing up for
more major projects as the economy improves and efforts get
(01:46):
underway to fix our infrastructure deficit.
Speaker 3 (01:48):
So we started building this in June two thousand, in
twenty three.
Speaker 4 (01:55):
So, Jick, you moved in a few months ago.
Speaker 2 (01:58):
Yeah, the build was thirteen months.
Speaker 4 (02:00):
That is crazy.
Speaker 2 (02:02):
It is very good.
Speaker 1 (02:03):
As Mus brings in steel from mills around the world,
from Australia to South Korea, China, Thailand and Taiwan, making
it one of the more globally connected New Zealand operators.
So how do you think about the geopolitics of the
world right now given that you import from all of
these countries like China, Taiwan.
Speaker 3 (02:21):
Look, it's interesting times. I think for us, we've just
got to be mindful make sure that we've got alternatives,
and we have, so that's amazing.
Speaker 1 (02:30):
Dean Brown has been leading the Asthmus Group for the
past six years. He did the deal to lease out
the site. In this interview, we discuss why he's confident
the commodity will stay in demand after its price has
fallen over the past two years.
Speaker 4 (02:45):
Dang, thank you so much for having us here. Good
to be here.
Speaker 2 (02:47):
Welcome, thank you coming to jury.
Speaker 4 (02:49):
You are most welcome. It's awesome. This is very cool.
Speaker 1 (02:52):
I love hard commodity stuff like this, so I'm very
pleased to be here.
Speaker 4 (02:55):
I guess the first question.
Speaker 1 (02:57):
Is why why build aware of this scale and especially
why now?
Speaker 2 (03:03):
Why now? Why now? Is getting ready for when the
market picks up.
Speaker 3 (03:08):
But we have been had this in the pipeline probably
for the last four or five years. To find an
existing DC to stock steels very challenging, so we knew
we had to do a design and build started on
that journey before COVID. We parked it when COVID hit,
and probably about six twelve months later, we were up
(03:29):
to our guns with stock and we thought, right, we've
got to get this project back on the table. And
we had still sitting in three sites around Auckland. One
site we owned, the other two sites we leased, So
it made sense to get everything under the one roof.
Speaker 4 (03:45):
You see when the market picks up.
Speaker 1 (03:47):
Yes, so it was up, like you mentioned, demand skyrocketed.
It's now fallen quite dramatically with the state of our economy.
Talk to me about the demand dynamics right now and
why you're still bullish enough on construction this country which
gives you the confidence to build this now.
Speaker 3 (04:04):
Well, the market is cyclical and we've had a great run.
You know, I don't think any of us could have
imagined how well the how well the industry went, you know,
twenty one to twenty two.
Speaker 2 (04:15):
We call it the sugar rush.
Speaker 3 (04:16):
I suppose commodity prices went up through the roof, volumes
went up through the roof.
Speaker 2 (04:21):
Demand was very high.
Speaker 3 (04:22):
We knew what comes up, it's got to come down,
so as even keeping by board at at ease and saying, look,
enjoy it while we can, but we know it's going
to come down off the high site. But we saw
no other time better now because we needed to do
this bit of work. And it's probably been a blessing
in some ways that we're doing it in the quiet
time because we can still maintain a very good service level.
(04:45):
But we are confident that the market will pick up again.
There's just so much infrastructure investment that's required across New
Zealand and as for Asthmus, we want to be ready.
So the time has.
Speaker 2 (04:55):
Actually worked out quite well as far as.
Speaker 3 (04:57):
Trading at the moment, it's tough, though it'd be fair
we are to say, look, the last six months we're
on the bottom. We're waiting for it to pick up.
I think it's going to be probably challenging times probably
for the next six to twelve months, to be honest.
Speaker 4 (05:11):
So you're an importer, Yes, we have commodities, so is
all of the steel around us.
Speaker 1 (05:16):
All of these beams. Are these pre purchased or you've
just imported these and expect to sell them at the
same price that you purchase them, or at a high
price in future for future projects.
Speaker 4 (05:27):
How does that show it?
Speaker 3 (05:27):
So look, yes, all this is for stock, so these
are for orders that we have not received yet, so
it is a big investment. We do indents as well,
so those indents will come from our supply straight to
the customer. But all this which you're seeing in this
warehouse is stocked for projects.
Speaker 4 (05:45):
How much is it here at the moment?
Speaker 3 (05:47):
Well, at the moment we've come in and look, it's
always hard to design a DC because if you build
it too small, you don't have enough capacity before the
paint's even dried, and if you go too big, especially
in Auckland where property prices are high, so you've got
to find the right balance.
Speaker 2 (06:06):
So we did quite a lot of modeling. We've come
in here.
Speaker 3 (06:08):
We're around fifty five percent capacity at the moment, so
we've got room to grow. And then we've also got
a plan B of what we do next in five
to six years if we are at capacity. So this
DC has been designed to supply the Golden Triangle for
want of a better word. Even though we have branches
in Hamilton and branches in Twonger, a lot of the
(06:29):
big structural steel will be fed from here straight down
to those sites as well.
Speaker 4 (06:33):
Goldilocks. You want that size to be to be just right,
that's right.
Speaker 1 (06:36):
Can you give me a dollar figure on the investment
or even something ballpark because I know that you're a
private operator and you're probably don't want the exact dollar
amount out there.
Speaker 2 (06:44):
Look, the investment's a big Look the lands, the land
out here.
Speaker 3 (06:47):
This is a two hectare site, so you're talking, you know,
you're talking over sort of fifteen to seventeen million for
the land, and then the build itself is around about
twenty five million for the build.
Speaker 2 (06:59):
So these are investments that you need to make on.
Speaker 1 (07:02):
The dollar figure on how much steel you've imported to
stockpile here though, what's that Well, it's.
Speaker 3 (07:06):
A long term play and you're taking that on a
long term position, right, And it's where we're back in ourselves.
As MS has been around for one hundred years with
weathered many cycles. This we see is just another cycle
and you just got to hold your nerve and it
will it'll pay dividends.
Speaker 1 (07:24):
What about New Zealand's current infrastructure environment, the money going
to it, the confidence being thrown at it. What about
that gives you confidence that you can make at this big?
Speaker 3 (07:34):
Well, you for us making a bit too big. It's
we consolidated three sites, so we had to do it
for our own business. We needed to do it to
improve operational efficiency and improve safety as well.
Speaker 2 (07:47):
It's a fast, safer site. Everything's under hook, everything's undercover.
Speaker 3 (07:52):
So we need to do that regardless, Otherwise you decide
are we going to be in the market, So you
either get in boots of wall or you decide to
make the decision to get out. And we see it's
an important part of the market. There's a lot of investment. Yes,
it's slowed down with cost of finance inflation.
Speaker 2 (08:09):
A lot of big projects are coming to an end,
but there's.
Speaker 3 (08:12):
A lot of other work that's in play, and once
that picks up, we'll be ready.
Speaker 1 (08:16):
Bottom line, we have an infrastructure deficit and you're getting
ready to help fill it.
Speaker 3 (08:20):
Correct And this has been a huge enabler for us
because our property in Mount Wellington where probably probably sixty
percent of the steel in this building was on that site.
Jury has been an enabler for us to develop that
site now. So we have started an eight million dollar
reinvestment on that site, building all the offices total new
(08:43):
fit out, get people back to work, get people back
in the office, and then the back part of that building,
which is about a ten thousand square meter warehouse as well.
We're in the process of redeveloping stage two of that now,
putting a whole new racking system in palette racking and
that's for our valve and fitting business again, all targeted
(09:03):
getting ourselves ready for the infrastructure investment when.
Speaker 2 (09:07):
It does happen.
Speaker 1 (09:08):
Tell me about the kind of projects that your products
go into.
Speaker 4 (09:11):
You said, Asthmus has been around for over one hundred years.
Speaker 1 (09:13):
It was started in nineteen twenty, which is a very
long time ago.
Speaker 4 (09:17):
Incredible that it's been around for that long.
Speaker 1 (09:19):
What kind of projects has Asthma's been involved in and
what kind of projects going forward you're expecting to sell
your products.
Speaker 3 (09:25):
Asmus has been involved in some of the biggest infrastructure
projects in New Zealand, you know, back through to a
lot of the think big projects, Hunty Power Station, a
lot of the hydro stations, geothermal, Marsden Point Refinery in
nineteen sixty five, we supplied.
Speaker 2 (09:42):
A lot of ows into that.
Speaker 3 (09:43):
That's amazing, so very strong pulp and paper with the
likes of OG.
Speaker 2 (09:50):
In that market. We supply those industries today.
Speaker 3 (09:53):
The Central Interceptor has probably been one of our most
recent where we supplied a number of our into that project,
but also polyethylene pipe as well, so we extrude polyethylene
pipe for water pressure systems. We make that in Hamilton,
so we're supplying those sort of projects as well.
Speaker 1 (10:14):
Think Big was a great initiative for businesses like this.
Do you think we need something like that again? Or
if I can ask that another way, is your business
hoping that we see something like that again in this country?
Speaker 2 (10:28):
Look, I think we are hoping for it.
Speaker 3 (10:29):
I think New Zealand needs investments and we can't do
it alone. And I think it's how does the government
attract good offshore strategic partners who can help us get there,
because I don't think we're going to get there alone,
but it needs to happen. You can't not do the maintenance,
(10:49):
you cannot repair the pipes. This work has to be done.
So we're just being patient. I think our cels, our competitors,
a lot of our custom in that civil infrastructure market,
we're all being patient at the moment. It was great
to hear the government talk about the fast track projects
and release of one hundred and forty odd projects. Which
(11:11):
are they going to try and get those moving? But
at this stage it's talk. What we're all looking for
is the action right and then things will start moving again.
Speaker 1 (11:21):
Let's talk about steel demand globally, it's been falling, yes,
for the past three years. According to the World Steel Association,
if we do have an uptick care that would be
a tiny blip to help production globally. What are you
seeing with the businesses that you deal with? Can you
import from yes, around the world. Are they struggling? Are
(11:41):
they glad that you're at least buying their products?
Speaker 3 (11:43):
Well, I think they're glad we're buying. I think, look,
there is more demand. There's more supply than there is
demand out there. China sort of sets the pace as
far as what's happening with prices.
Speaker 2 (11:55):
Out there in the marketplace.
Speaker 3 (11:56):
Their exports out of China have increased dramatically over the
last few years. And then Jina's trying to you know,
they've introduced the stimulus to get infrastructure going again there,
but that is going to take some time. So I
think we I think we we think we're at the bottom,
like we're not quite back where we were pre COVID.
(12:20):
But that said, you know, energy costs for making steel
has increased, labor costs has increased, shipping costs have increased.
Speaker 4 (12:28):
Yet the steel prices down.
Speaker 3 (12:29):
And the steel prices have come down deserts and you've
just got to navigate that and you've just got to
you've just got to pick your battles of what projects
you go after, and sometimes you've just got to take
a pause and be patient as well.
Speaker 1 (12:41):
So you're quite wise then, given that there is excess capacity, yes,
and steel, and you're buying and you can stock pilot.
This stuff isn't food, it doesn't expire. It may rust,
but you can clean it and it's still usable.
Speaker 4 (12:53):
Right, pretty wise, that's correct.
Speaker 2 (12:55):
But you need to have the range and you need
to be ready. And we're still moving.
Speaker 3 (12:59):
You know, our volumes are down probably around about five
to six percent down on last year, so we're managing
our position. Okay, look, we're expecting the market to soften
and we've just got to ride through it.
Speaker 2 (13:12):
Now.
Speaker 3 (13:14):
I'd like to be the optimistic and saying is going
to come right early next year, but I honestly I
think it's going to take a bit longer than that.
Speaker 1 (13:20):
But what I said to you is that this is
the infrastructure behind the infrastructure. This is the construction supply chain.
How critical is all of this, the product, the commodity
behind the scenes to actually making construction happen in this country.
Speaker 3 (13:34):
It's very important because they need you know there's some
customers who will indent for large projects, but you still
need the local stock. Your lee time for this product
is twelve to fourteen to fifteen weeks wow, So a
lot of our ordering were fitting in with the mill
runs overseas, so they are the long lea times as well,
(13:54):
so you need to accommodate that.
Speaker 1 (13:56):
So effectively you want constructors to come to you. You've
got the product ready to go, so you're in front
of line.
Speaker 3 (14:03):
That's correct, absolutely, and look, it comes look as steel
is a commodity, but it's more than just steel. It's
about look table stakes as we're all bringing in quality
product from repidal mills that meet a standard. I think
some of the differentiators are your people. It's certainly your
service delivery model is really important. The relationships your people
(14:25):
have is very important. And making sure your people got
the product knowledge right so you can still differentiate in
a commodity.
Speaker 2 (14:32):
But it's still very tough, you know.
Speaker 3 (14:34):
And look, we've all come off very high stock levels,
so the market I think a number of us where
our stock levels increase eighty percent from where they were
pre COVID.
Speaker 2 (14:47):
We've all rebalanced back a lot better now.
Speaker 4 (14:49):
How much down are you from that?
Speaker 2 (14:51):
Now we're down. We're down.
Speaker 3 (14:52):
We got very high at the peak, had the tiger
by the tail, if you wanted to call it. I
was looking for other sites around Auckland to stock steel
because what was happening is a lot of the shipments
were being consolidated.
Speaker 2 (15:06):
So while we thought we.
Speaker 3 (15:07):
Had a thousand tons comeing into the port, there could
be two thousand tons come into.
Speaker 2 (15:12):
The port and you had to clear it very quickly.
So that was very challenging.
Speaker 1 (15:17):
We have domestic steel manufacturers in this country, so you
do why should the big projects use imported steel instead.
Speaker 2 (15:24):
The domestic steel.
Speaker 3 (15:25):
As far as New Zealand Steel, and they're a great
partner of ours. The plate you saw out under the canopies,
majority of theirs from New Zealand Steel.
Speaker 4 (15:33):
A Fletcher Steel sign on there.
Speaker 3 (15:35):
It could be too so they look but they're a
strategic partner for us. But they manufacture plate, very very
big in their wire products and also in roofing irons.
Speaker 2 (15:47):
And coil product.
Speaker 3 (15:49):
But they don't mean if no one in New Zealand
and manufacturing structural steel or hollows, so we need to
import that product.
Speaker 4 (15:56):
Would you ever consider getting into manufacturing.
Speaker 3 (15:58):
No, there the scale, just the economics don't stack up.
Speaker 2 (16:03):
That don't stack up. You need to New Zealand.
Speaker 3 (16:07):
While we punch above our weight in the global scheme
of things, if you look at the total supply of
steel into New Zealand, it's still quite small.
Speaker 1 (16:16):
Economics of this investment, when are you expecting to break
even on it?
Speaker 2 (16:19):
Oh, we're very comfortable with this building.
Speaker 3 (16:22):
Look, we've come in to this on a this is
a design build lease. We've gone a twenty year term,
so we're a long term strategic partner. We could have
built this ourselves, but we've got other investment projects that
we're working on and we'd rather use that capital on
those areas.
Speaker 2 (16:41):
So we're more than comfortable. We built this at the
right time.
Speaker 3 (16:44):
We got in there just before the interest rates started
to increase, so we're very comfortable and we've got certainty
on the site for the next twenty years.
Speaker 4 (16:55):
So look around.
Speaker 1 (16:56):
Then, What would your message be to anyone wanting to
kick start a pet a big infrastructure project.
Speaker 4 (17:02):
You guys are good to go.
Speaker 3 (17:03):
Look, I think if you I think you've got to
look ahead, you've got to back yourself. I think you've
got to really look at where your strategic positions and
where you want to be the next five and ten
years for Asthmus, regardless of the ebbs and flows of
the market.
Speaker 2 (17:17):
We need to do it.
Speaker 3 (17:19):
Ourselves because we have already seen productivity gains. It's enabling
us to do what we need to do in Mount
Wellington and we've got the balance sheet to do it.
So we're going through quite an exciting time because Asthmus
has flyn under the radar for many, many years.
Speaker 2 (17:36):
So our board and our.
Speaker 3 (17:37):
Shareholders are very excited because this is one of several
investment projects which we're underway with which is great.
Speaker 1 (17:43):
I wasn't going to ask you this, but you certainly
do fla under the radar as a business.
Speaker 4 (17:47):
It's a real privilege to be here.
Speaker 1 (17:48):
Lovely, why come on camera and show us around your warehouse.
Speaker 3 (17:52):
Look, I think it's it's time that we do beat
the drum a little bit. I think, Look, we work
with some of New Zealand's biggest fabricators who are great customers,
some of the biggest civil infrastructure organizations in New Zealand,
and I think they want to see Asthmus out there
beating the drama.
Speaker 2 (18:11):
A little bit as well. We've been around for a
long time.
Speaker 3 (18:14):
I think there's not many companies which are what I
call New Zealand Inc.
Speaker 2 (18:18):
That have been around for as long as we have.
Speaker 3 (18:21):
With fifth generation getting involved in Asthmus now as far
as at a board level.
Speaker 1 (18:25):
Fifth generation family, family business that's incredib absolutely yeah.
Speaker 3 (18:29):
And they still as committed to the business and the
future of the business, so it's pretty exciting and the
future of the country by the lacks absolutely and for
me it's a privilege to be part of it. They
got a lot of support, a lot of autonomy and
here we're looking forward to what the next five to
ten years will bring for us. Well.
Speaker 4 (18:46):
Thank you for having us really appreciate it.
Speaker 2 (18:47):
Dan, thank you very much. Thank you for coming in
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