NZ Steel quietly confident

Press, 13 July 1984, Page 8

NZ Steel quietly confident

Dramatic swings in demand, leading to production lags, are causing New Zealand Steel, Ltd, to sharpen its economic forecasting, the managing director (Mr John Ingram) says in the report for the year ended March 31.

Orders for galvanised flat products had recovered to 11,000 tonnes by January after dropping to 6000 tonnes six months earlier, which created production difficulties.

Mr Ingram says that reduced sales because of the first half downturn were only partially offset by exports — so resources had to be re-allocated, and productive momentum wound down.

“Restoration of high production levels in response to the suddenly expanding demand, involving the recruitment and training of staff, could not be accomplished overnight,” he says. “Consequently the company was unable to match orders, deliveries suffered

and about 10,000 tonnes of galvanised flat product had to be imported to meet essential customer requirements.”

At a news media briefing on Wednesday Mr Ingram said the real solution would come only when the expansion of the plant was complete. “Then we will be producing our own flat rolled steel, rather than importing it, allowing us to shorten lead times for orders. “In the meantime, we will have to do a better job of forecasting. But it’s difficult at the best of times. I don’t know anyone who predicted the true extent of last year’s upsurge in demand.” Mr Ingram said that when domestic demand slackened, NZ Steel became committed to export but when domestic customers suddenly wanted to order there were short-term problems.

The marketing manager, Mr Alex Green, said the company would have to im-

prove its forecasts of gross domestic product and develop a better liaison with the customer to identify market trends. He said there had been only two examples in New Zealand Steel’s history - 1974 and last year — when the company had not offset decline in the local market by increased exports. Mr Green confirmed that New Zealand Steel was committed to the removal of import licensing in the steel industry by 1991, with the phase-out starting two years earlier. “That applies to all countries, including Australia. The only difference C.E.R. makes is that tariffs against Australian goods will be nil. The debate that is going on at the moment is about the transition period,” he said.

However, experience in export markets during the latest year reinforced the company’s expectation that the big export targets would be met once the expansion programme was completed.