Maui Capital

Who: Euro Corporation
What: Innovative, fast-growing business supplying New Zealand and international rural and building sectors
Relationship with Maui: Maui purchased a 67% share of Euro in December 2010
Website: www.eurocorp.co.nz

Sometimes success turns on redefining how a market works. Or at least that was Maurice McKenzie’s experience when, in a company started with his sons Greg and Randal, he tried to sell a nail gun to a building sector then dominated by entrenched suppliers. When they hit on the idea of lending guns for free in return for selling the nails, it attracted derision from rivals. But customers were pleased. The fledgling business won major contracts quite quickly. Within a month they were struggling to meet demand. And, as the company has grown, that first success has continued to shape its approach.

In 1994 when they founded the business, renamed Euro in 1997, Maurice McKenzie had left senior roles with Fletcher Challenge. From construction they expanded into rural products and today are national suppliers to both sectors. At each step, success has followed a similar path: seeing a market in a new way, giving customers more and ensuring product quality to build on gains.

When they started supplying construction reinforcing steel rods in 1997, that market was also defined by dominant suppliers. Building merchants faced an unsatisfactory choice between uncertain local supply or often inferior imports. And they had to accept minimum deliveries of unwieldy two-tonne bundles for each bar size. Sourcing quality steel from Malaysia (for which it retains an exclusive contract), Euro provided one-tonne bundles containing multiple sizes, all uniquely colour-coded for easy stock management. It was not long before they were taken up by nearly all national chains.

From their factory in East Tamaki, where they had also installed machinery for forming reinforcing steel, Euro began selling farmers single-line fencing wire in 2002. But to win major distributors they needed to offer a full suite of fencing products. A key step came in 2004 when they bought South Fence Manufacturing, a Christchurch company previously owned by a rival. Now they could make a full product range. But, as importantly, they established a strategic alliance with a sister company, South Fence Machinery, that would enable them to go one step further in the market again.

Competitors sell netting with gaps of at least 150mm between vertical wires. But using a unique “x-knot” Euro’s XFENCE range can reduce that by two-thirds. As a hoof no longer fits through, one application is fencing for horses. Faster to erect, the range is also stronger, more animal-friendly (the knot reduces rubbing friction) and highly adaptable. It is used on New Zealand high country farms and to contain camels in Qatar and buffaloes in Arizona. As its mesh can only be penetrated by cutting every strand it has significant security applications as well.

Now operating from expanded premises, the company is established as a leading national supplier of fencing products which it manufactures in Christchurch. It holds the No. 1 position in the nail and fastenings market (having expanded into the pallet industry), the No. 1 position in the rural fencing market and a significant position in reinforcing steel sales. With over 1000 customers nationally and exporting to 23 countries, it has twice featured in the Deloitte / Unlimited Fast 50 awards. Revenues have grown to over $60 million, with fastest growth through the financial recession. Staff numbers have grown to 60. But Randal McKenzie, the company’s General Manager, says its founding culture has remained strong. Tagged to every PC and email, the mantra remains: “Dedicated to helping our customers succeed.”

Further growth will come from both within New Zealand and, particularly with its unique fencing products, overseas where new investment will enable the business to target significantly bigger opportunities. He says that once steel gets into your blood it stays there. With Maui they are able to realise some of the value the industry has brought so far, and work with an investor who understands what has made that growth possible. “What we have is some very big pipelines into our markets,” he says. They are looking forward to having a stronger platform to build on, and from which to reshape new markets as well.