Mitre 10 In Trade Magazine - August 2015

AUGUST 2015

RED STAG TIMBER INVESTS IN FUTURE INNOVATIVE THINKING AT GIBSON CONSTRUCTION DRUG AND ALCOHOL TESTING GUIDELINES BUILDING WITH CROSS-LAMINATED TIMBER UPSKILLING YOUR BUSINESS

SEE INSIDE FOR CHANCES TO WIN GREAT PRODUCTS Offers open to account holders only Call 0800 M10 TRADE to find out more All prices and offers in this publication are valid from Saturday 1st August to Monday 31st August 2015 from participating stores.

FOREWORD Innovative thinkers drive Trade business Over the past few months, we’ve attended a number of national building and construction industry events, which have given us the opportunity to mix with builders, subcontractors and suppliers from throughout the country.

It’s a great experience for us to get to these seminars, workshops, conferences and expos, where we can meet new people, reinforce previous connections and absorb some of the feedback from what is going on in the industry from those people at the coalface.

Whether Mitre 10 Trade clients or trade suppliers to our business, the relationships we have are both highly valued and widely varied, as shown in the main profile article we carry in this month’s In Trade magazine.

The story of Gibson Construction, based In Te Awamutu, is an interesting one, and shows what innovative thinking can do for an established business. During the production of this month’s In Trade publication, the team travelled to one of the very impressive dairy farm conversions they had completed in the Waikato, which showed the extraordinarily high level of development that goes into today’s dairy farming operations.

Long gone are the roughly-erected tin sheds, replaced now with purpose-built structures and highly sophisticated systems all designed to make life easier for the farmers, less-stressful on the stock and as economical and efficient as possible.

Find out more about the Gibson Construction operation, starting on page 2.

Neil Cowie

Adrian Moreton

Chief Executive Officer Mitre 10 (New Zealand) Ltd

Acting General Manager Trade Mitre 10 (New Zealand) Ltd

CONTENTS 2

PROFILE

Gibson Construction

5

STATISTICS NZ

Building activity in the March 2015 quarter across New Zealand was up nearly 10 percent on the March 2014 quarter and worth almost $3.9 billion, Statistics New Zealand announced recently.

6

SUPPLIER PROFILE

Red Stag Timber

8

BCITO

Training motivates employees to achieve because they feel more invested in the work they’re doing. It’s great for your business because it encourages your staff to stick around and creates a positive organisational culture.

Under the joint ownership of Blair Atkinson and Brent Bird, Te Awamutu company Gibson Construction has embarked on a dynamic and fresh approach, and has a commitment to deliver the highest quality building projects to all its clients.

Red Stag Timber runs the largest and most modern sawmill in the country, has a turnover of around $200 million, 250 staff and 60 contractors, and is the largest private employer in Rotorua.

Cover: Red Stag Timber’s sawmill facility in Rotorua is undergoing huge expansion

Volume 9, Issue 2 August 2015 Mitre 10 In Trade magazine is published 12 times a year in association with Mitre 10.

Managing Editor

Scott Wilson Phone: 021 725 061 Email: editor@M10magazine.co.nz

Contributors

12

SAFETY – SITE SAFE NZ

Upskilling employees is one of the best investments you can make.

Competent employees are less likely to injure themselves, more productive, more likely to feel motivated and loyal to a company because they feel valued.

14

BRANZ

Cross-laminated timber – a relatively new building material for use in structural applications – has great potential here in New Zealand. A BRANZ study examines its advantages and what needs to happen for it to gain wider acceptance.

16

LEGAL – MEREDITH CONNELL

The use of drugs and alcohol in the workplace, and the effect on people at work of the use of drugs outside the workplace, are increasingly contentious issues.

TRADES COACH

You are working long hours, but you never seem to get ahead consistently or have the spare cash to fund growth, buy new equipment or have the comfortable lifestyle that matches the efforts you put in.

18 20

BUSINESS RIGHTWAY

If you are serious about your business, you should have some sort of plan, a budget and targets. Every so often, you need to check how you are actually doing against that plan. Is cash flow the issue?

21

THE BACK PAGE

Stuff to win, points to earn.

Don’t miss the back page.

Adrienne Jervis Erin Davies and Sarah Gribben – Meredith Connell Statistics NZ BCITO BRANZ Site Safe NZ RightWay Ltd Andy Burrows – Trades Coach

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All rights reserved. Opinions expressed in In Trade magazine are not necessarily those of Mitre 10 or the publisher. No responsibility is accepted for the suggestions of the contributors or conclusions that may be drawn from them. Although the publisher has made every effort to ensure accuracy, the reader remains responsible for the correct use and selection of any tools, materials and systems followed, as well as the following of any laws or codes that may apply.

1

PROFILE New approach drives rural business Waikato boys Brent Bird and Blair Atkinson, owners of Gibson Construction, both served their apprenticeships under Pat Gibson. A legend in the region, Pat founded Gibson Rural in 1998 and has been a driving force behind the growth of the company which includes residential and commercial construction.

Two years ago, after deciding to take a well-earned break, Pat handed the reins over to Brent and Blair, but stayed on as CEO and Quality Control Manager of the comopany.

His expertise adds weight to the business and ensures the company’s projects are in the best of hands.

Under Blair and Brent’s joint ownership, the company embarked on a dynamic and fresh approach while staying true to the Gibson commitment of delivering the highest quality building projects to all clients. They both live in Te Awamutu with their young families and are involved in the local community.

Morrinsville-born Brent went farming at a young age. He took on his apprenticeship with Gibson Rural in 2003 after deciding on a career change.

“At the time, Pat Gibson was just entering the rural construction market after many years building residential properties. I saw this as an opportunity to still be involved with farming while getting a trade.”

Blair started with Gibson Construction in 2001. He was in the middle of a joinery apprenticeship when he met Pat. Noticing something special in Blair, Pat offered him an apprenticeship with Gibson Rural.

2

Equity partners since 2006 and 2008, Brent and Blair attribute their skills and work mantra to Pat. The business initially specialised in housing construction but Pat was quick to recognise the huge opportunity in the rural market for construction of modern cowsheds, milking systems and their related infrastructure. After rapidly gaining significant market share in the under-served rural market, Gibson Rural became recognized as a dominant player in the cow shed building arena, based on its reputation for quality workmanship and state-of-the-art building and system designs. Success in the rural market encouraged Gibson Rural to expand into the commercial market while continuing to service the needs of rural and residential housing clients.

In 2009, having outgrown its premises, Gibson Rural relocated to a new purpose-built office and workspace in Te Awamutu’s main centre. The new space gave the business a fresh, new, user-friendly base to operate from. Three years later the company expanded into the Taupo area after Gibson Rural had been awarded a Landcorp contract.

After becoming the sole owners in 2013, Brent and Blair drove the company forward with the formation of Gibson Construction and a re-branding exercise which saw all areas of the business come under one umbrella. Gibson Construction is divided into three divisions; Gibson Rural, Gibson Housing and Gibson Commercial.

Seeing further opportunity in the South Island rural market, a branch was opened in Timaru.

“This allows us to operate on a national level,” says Blair.

“With our head office in Te Awamutu, we can service the

PROFILE

Waikato and north regions. From Taupo, we service the central and south regions, and from Timaru we cover the South Island.”

Operating under the slogan, “A company where quality is never compromised,” Gibson Construction continues its upward thrust. Forty staff are involved in construction supported by seven office members. As the company has grown so has its ability to provide easy and cost effective construction solutions for its clients. Quality control, and health and safety remain top priorities.

In recent years, the team has delivered in excess of $20m worth of commercial and Government projects in the Waikato region, in the role of both main contractor and sub contractor. The company has a string of projects on the go across all sectors.

Gibson Construction has been a customer of Mitre 10 MEGA Te Awamutu since its opening a couple of years ago.

Availability, reliability, great staff, and Mitre 10’s countrywide presence have been winning factors, along with the focus and assistance from the store’s key account managers.

Brent Bird

Blair Atkinson

A close relationship has also developed with the store owners.

“Mitre 10 MEGA goes above and beyond in regards to service, assisting with joint tender documentation, IT and pricing. This allows us to remain competitive in an everchanging construction market,” says Brent.

Gibson Construction has an excellent relationship with staff at Mitre 10 MEGA stores in Te Awamutu, Taupo and Timaru, who go the extra distance to cater for the company’s needs.

“Mitre 10 MEGA Te Awamutu remains our home branch where we purchase most of our large quantity construction material, including steel and blocks. Taupo and Timaru provide us with all other materials to meet our everyday construction needs,” explains Blair. “We expect good and reliable service, reliable supply of material and a competitive price, all of which Mitre 10 MEGA support us with.”

Mitre 10 MEGA Te Awamutu Business Development Manager Gavin Scott-Petersen says the relationship with Gibson Construction began in 2011 when Blair started shopping in store at the weekend to complete his own home.

Pat Gibson

This impressive, modern cowshed on a Waikato dairy farm is typical of the type of work undertaken by the Gibson team.

3

PROFILE Gavin Scott-Peterson

“Over a period of four months or so we provided Blair and his business partners with pricing and information on how the store could assist them. This resulted in Gibson Construction moving a good portion of their business over to Mitre 10 MEGA Te Awamutu’s Trade division.”

unit, Gavin’s extensive range of business, financial, IT and management skills and qualifications is a huge asset. He fixes Gibson’s computers, sets up new computers, email and phones, and offers other IT support to improve the business process. He also helps with the completion of tender documentation and registrations of interest.

Gibson’s relationship with the owners and management team is very strong, both in a business and personal sense.

Additionally, the store has assisted in ensuring delivery of building supplies to Taupo and Timaru.

“It moved from being a strictly business relationship to close friendships. We nurture that by regular visits, weekly meetings and providing Gibson Construction with a point of difference,” states Gavin.

The store’s strengths lie in its deliver, going the extra mile for customers and assisting its trade partners in every aspect of their business. Gavin personally assists Gibson Construction with IT support, tender support and supplier negotiation.

A former NZ Police sergeant in charge of a tactical crime

“Over the last three years we’ve also assisted Gibson Construction by negotiating commodity pricing from suppliers to ensure they are competitive in the commercial market.”

Key team members include Gavin and store owner Daniel Fitzgerald, who has been in the hardware industry since he was 15. During this time, Daniel has gone from owning a small independent hardware store to Mitre 10 MEGA Te Awamutu.

For the future, the Trade team at the store would like to assist Gibson Construction in becoming a truly national construction business.

“This has been the case in Taupo where we have set up an interstore account for their supplies, and in Timaru where we have worked with Timaru Mitre 10 MEGA in setting up an account with them,” says Gavin.

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STATISTICS

Value of building work continues growth in March quarter Building activity in the March 2015 quarter across New Zealand was up nearly 10 percent on the March 2014 quarter and worth almost $3.9 billion, Statistics New Zealand announced recently.

“Overall, the value of both residential and non-residential building work increased,” business indicators manager Neil Kelly said. “Residential building work increased mainly in Auckland and Canterbury, but non-residential building work chiefly increased in the South Island.”

In current prices, the actual value of all building work was $3,864 million, comprising $2,447 million of work on residential buildings and $1,417 million of non-residential work.

For all building work, 60 percent of the total came from two regions: • Auckland - $1,246 million • Canterbury - $1,083 million Lift in residential building activity volume After removing price changes and seasonal variations, the volume of residential building activity increased 2.6 percent in the March 2015 quarter. The trend for residential building activity has grown by two-thirds since the low point in the September 2011 quarter.

However the current level is 6.7 percent lower than the series peak more than 10 years ago in the June 2004 quarter.

The volume of all building activity rose by 1.0 percent, including a 1.2 percent fall in non-residential work.

5

PROFILE

Red Stag Timber invests in growth Red Stag Timber is the largest and most modern sawmill in the country.

It was purchased in 2003 by the Verry family, who immediately endorsed a exciting plan proposed by the existing management team to launch the mill into the future. The plan involved a complete change in direction from where it had been, moving from cutting low grade logs destined for the Asian market, to cutting high grade structural logs to develop and support the New Zealand construction industry.

The plan was fully endorsed and the site, which was the foundation of New Zealand Radiata sawmilling in the 1930’s, embarked on a total redevelopment strategy to become the flagship producer of superior structural timber.

again with a $60m investment into the latest technology from the USA to potentially double the capacity for sawn timber.

This new sawmill will not only increase volume but also efficiency by introducing a tandem quadmill with curve sawing technology that will improve the yield and the quality of the sawn timber.

This is good news for the New Zealand building industry, paving a sound platform of growth for many years to come.

But this is only what is happening right now.

Today the Red Stag Timber sawmill has a turnover of around $200 million, 250 staff and 60 contractors and is the largest private employer in Rotorua. It is situated in the middle of the country’s largest resource of high density structural logs, which are grown in renewable plantation forests.

Since 2003, there have been major improvements in capacity and quality, starting with modernisation of the existing sawmill, application of computerised control systems and installation of new bin sorters. Drying technology has kept pace with international innovations with four new kilns installed, the last being two counterflow kilns that each hold 600m3 of timber to be dried in a continuous process. Red Stag was the first in the country to introduce this technology, which gives more consistent moisture control for the products being dried.

Each year 750,000 tonnes of these logs enter the site to produce 450,000 m3 of sawn timber. This makes it the largest structural sawmill in New Zealand, and capacity is set to increase yet

After drying, the timber is gauged and mechanically stress graded. Even here, Red Stag has gone above and beyond standard practice. The company commissioned the most

6

PROFILE over many decades. To endorse this view, a further investment of $5m was made with construction of a state-of-the-art treatment plant that will pressure-treat the timber to a level substantially exceeding the required standard but leaving the timber dry. This is an important time-saver for builders because many processes leave a high moisture content which causes delays on the building site when it comes to close in.

All of the abovementioned investments have taken Red Stag Timber to the forefront of timber production. But, despite building the highest volume sawmill in the country it remains unable to process the predicted output of the new sawmill still under construction. Initially volumes will be tailored to meet processing capacity as it is increased over the next three years.

The mission statement at Red Stag Timber is “Best in Timber”.

These are not just fancy words, but have become a very real goal that is now a reality. One example is the exclusion of pith from structural products. It’s a fact that the least stable part of a log is the area in the centre immediately around the pith.

This region is prone to distortion when made into timber. You will see pith in timber on various building sites, but it will not be found in Red Stag timber. It is graded out and used in less critical products so the builder and homeowner receive a stable product that is fit for purpose and with less wastage on site. There is a cost, not just to the capital investments being made, but also in choosing the best part of the log from which to produce your timber, before processing it with the very best systems available internationally. Red Stag have put their money where their mouth is at every step of the process to provide truly superior structural timber. advanced planer mill in the country, sourcing it from Canada and Sweden at a cost of $12m. The metrigard mechanical stress grader installed is 20 years more modern than anything of its type in New Zealand. More recently, a further $4m was outlaid to install a cutting-edge Comac optical grading system that uses cameras, lasers and computer technology to provide more consistent visual grading of timber.

Preservation of timber provides builders and homeowners with assurance that their home will remain structurally sound for longer should moisture find its way through the building envelope. Red Stag have always been strong promoters of Boron treatment, which has proven its effectiveness and safety

Red Stag Timber, from the outset, have committed to the long-term growth of the New Zealand construction industry.

In doing so they have also committed to the security of the merchant chains and to the many competent builders who put roofs over the heads of Kiwi families.

This capacity to produce large volumes of high quality timber provides a natural fit for Red Stag Timber with Mitre 10 as a channel-to-market partner. This growing relationship initially started with interactions between Red Stag and Mitre 10 MEGA stores with a strong trade focus. Strong alliances at this level led to a national supply agreement first being signed in 2008. The importance of this valuable partnership is growing on a daily basis, and it is a key one, not only for Red Stag Timber and Mitre 10, but also for ever-growing base of quality builders who take advantage of their offerings.

You can view the progress of the sawmill project online by opening www.redstagtimber.co.nz , clicking on “About us”, then “Links” and then clicking “New Sawmill Construction Site - June 2015.” This will allow you to be taken on an aerial view of the project as it is erected. Updates will be posted monthly.

7

BCITO

Apprentice joiners Alex Mott and Kaleb Halley with Ken Monk.

Why train apprentices?

Ken Monk, Managing Director, Montage Kitchens & Joinery, Hamilton, and member of the Executive of the Master Joiners Association is a lifetime supporter of industry training and having qualified tradespeople working in his business. Here’s what he has to say about why he trains apprentices.

“We’ve got 19 staff and we probably have 100 jobs on the go at any one time - some large, some small. Like a cupboard over the fridge or one door, or some would be a houselot of joinery or a full kitchen.

“We’ve got a lot of apprentices that have served their time with us that have stayed with us. Building relationships, whether it’s with your staff or your customers, is really important in business today. We’re pretty straight shooters, we tell people how it is and we don’t fluff things up. Some people don’t like that, but that’s just the way we operate. We’ve trained more than 20 8

apprentices in our time. We always try to have two on the go, one at the start of training and one nearly qualified.

“When I was an apprentice, I was taken care of by my employer.

The costs were paid by the employer and it was a great way to train. For me, training is about putting something back into the industry and giving someone the opportunities that I had.

The other reason for training apprentices is that it’s important to ensure that we have a stable workforce and we’re seen as contributing to industry, not just bludging off it.

“One of the best things about training apprentices is that you end up with highly skilled, valuable tradespeople who understand how your business operates and this helps the bottom line as well as your ability to create high quality product. We include that information in our business profile for customers so it’s a marketing tool for us.

“Training apprentices also helps with staff retention – I haven’t had a guy leave for five years now!”

BCITO Taking on an apprentice allows you to develop your workers’ skills according to your standards – it’s an investment in growing both your business and the industry. Currently, more than 5,000 employers across New Zealand train apprentices.

Train apprentices and build success Training motivates employees to achieve because they feel more invested in the work they’re doing. It’s great for your business because it encourages your staff to stick around and creates a positive organisational culture.

Develop a high level of craftsmanship within your business A consistent level of craftsmanship is important to your clients and your business, so you need to have confidence in your workers’ skills. When you have oversight into the training of your workers, you can understand their strengths and areas for development, and teach them according to the standards of your business.

industry has enough qualified professionals to be sustainable, we need skilled and willing employers to help shape the next generation of qualified professionals.

Stay up-to-date by training others Training others will keep you on your toes – it’s a good way to keep abreast of the latest industry developments, meet others in the industry and learn some new skills yourself.

If you’re an employer interested in taking on a new apprentice contact BCITO on 0800 4BCITO (422 486) and they may be able to help you find a career seeker who fits your profile.

Give back to your industry You were an apprentice once – someone gave you an opportunity to gain the skills of your trade. To make sure the

W

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Ken Monk

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SITE SAFETY

Up-skilling your business People who know what they are doing, do a better job. Apart from meeting basic legal requirements, leading businesses recognise that upskilling employees is one of the best investments you can make. Competent employees are less likely to injure themselves, more productive, more likely to feel motivated and loyal to a company because they feel valued.

Benefits of workplace training: Safety Studies have shown that there is a significant drop in both accidents and severity of injuries where employees have been regularly trained in workplace safety.

Motivation When people are provided with training that enables them to work more efficiently, it leads to higher motivation levels and confidence to come up with innovative ideas.

Productivity With an increase in motivation, employees become aware of the benefits of improved workflow and are able to further increase productivity.

Innovation As the overall skill level rises, the business will be motivated to adopt new technologies and methods to become more efficient.

Job Satisfaction The self-confidence gained with new knowledge also provides staff with a healthy level of perspective and self-esteem.

Staff Loyalty When staff are provided with training, it demonstrates a belief, trust and commitment to their continued employment.

Training is important and effective, but it’s also important to figure out what the best training is for your employees. First figure out the skills and competencies needed for the company and then for individual staff members. Staff should be involved in this process to ensure it is thorough and to get their buy-in.

It’s also vital that training and competency be recorded in a register.

12

Tips on deciding workplace training: Understand the job Break down each job and work out the specific skills needed for each plant, material or equipment item, processes or activities.

Understand your employees’ skills Clearly identify the existing skills and competencies of your employees. This can be carried out by a review of past training, a discussion to test their knowledge base, and observing their work.

Identify the gap Training is required where there is a gap between the skills and knowledge needed for a job and what the employee can actually do.

Fill the gap with appropriate training Decide how to best fill the skill and competency gap by referring to specific regulations or best practice guides for help, research into different training providers and ask your local site safe advisor for help. Also think about the best delivery method – formal, informal, on the job, or e-learning.

Our free to download Site Specific Safety Plan (SSSP) has a training register to help you record and map out your employee’s competency. Head to www.sitesafe.org.nz/sssp to download your free SSSP.

Types of workplace training: Training can be delivered a number of ways to improve skills in areas such as, job process, machinery, materials and safety. It must be emphasised that although training is a key component, employees must be competent to do their jobs or supervised by someone until they reach the required skill level.

When the decision is made to carry out training it can take the form of: Induction training This is training that an employee will receive when they first join an organisation or begin a new role. This type of training is designed to provide the employee with the essential skills needed to perform their job. Induction training can also include an introduction to the company safety rules and culture so that the employee is aware of the behaviours expected of them.

On the job training This is training provided during the regular performance of duties. This can take a variety of forms including:

SITE SAFETY • The employee being guided through a task or process by a colleague or supervisor, so that the employee knows how to perform the task and to what standard.

• The employee is observed whilst they perform their duties.

At the end of the observation, the observer will provide the employee with feedback on their performance.

• The employee will learn new skills and have the opportunity to practice the skills with a mentor before using the skills in the workplace. The mentor will review the employee’s performance to ensure that the employee correctly uses the new skills until they become habit.

Off the job training – This is training is often provided away from the employee’s place of work, although many external training providers will bring the course to the workplace.

Common examples of this that are industry standard include Site Safe Passport courses, first aid training, driver training, and height training. Most leading companies have also recognised

the need to train their supervisors; in both the management of the workforce and the coordination of safety.

The key message to remember about workplace training is to look past the initial cost and think about how it will benefit you long term in the form of safer, more motivated, loyal and productive staff.

Site Safe is a not-for-profit, membership based organisation that promotes, inspires and supports a culture of health and safety in New Zealand construction.

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BRANZ

Building with cross-laminated timber

Cross-laminated timber – a relatively new building material for use in structural applications – has great potential here in New Zealand. A BRANZ study examine its advantages and what needs to happen for it to gain wider acceptance.

Cross-laminated timber (CLT) is an engineered wood product made form solid timber boards face-glued in alternating directions. Connected panels provide a strange building structure that does not require stick framing.

In 2014, BRANZ launched a four-year study into the use of CLT in New Zealand. Stage 1 looks at scope and opportunities.

Stage 2 focuses on new developments and testing, particularly connections for seismic applications, and creating guidelines for use.

BRANZ Study Report SR336 (2015) Cross-laminated Timber for Building Structures outlines the material’s potential and what needs to be done to increase its acceptance.

Uses and advantages CLT is used across Western Europe and North America.

Manufacture of panels for roof and floor diaphragms and shear walls began in New Zealand in 2012. Several local buildings have used the material: • The three-storey Kaikoura District Council building uses posttensioned CLT shear walls.

• A Nelson commercial building uses CLT and LVL as shear walls 14

and columns respectively with concrete beams and floor.

• The Tait Communications building in Christchurch uses CLT with LVL beams and column and steel frames.

Timber buildings performed well in the Canterbury earthquakes and the rebuild presents new opportunities for engineered wood products in multi-storey buildings.

Across the Tasman, CLT is used I one of the world’s tallest timber buildings – the 10-storey Forte Apartments in Melbourne.

Challenges Structural systems and details have to meet seismic design requirements. Some concepts developed or other materials can be modified and used with CLT, but more work is necessary on jointing systems.

Proof of acceptable fore performance is a hurdle for any new material’s acceptance into buildings codes, particularly in multistorey structures.

Serviceability criteria such as floor vibration, acoustic and flanking noise, deflection and sway must be satisfied.

Insufficient knowledge of CLT’s performance in local conditions, together with limited design information has slowed its acceptance, but more research and more technical guidelines will support greater use of CLT in future.

BRANZ Study Report SR336 (2015) Cross-laminated Timber for Building Structures by Asif Iqbal was funded by the Building Research Levy. It’s available for download from the BRANZ website www.branz.co.nz/study_reports

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LEGAL

Drug and alcohol testing – how relevant is impairment?

By Erin Davies and Sarah Gribben

The use of drugs and alcohol in the workplace, and the effect on people at work of the use of drugs outside the workplace, are increasingly contentious issues.

The Courts have confirmed that employers are entitled to implement drug and alcohol policies in their workplaces, which are an important tool in ensuring a healthy and safe working environment. However, testing creates a tension between workplace safety and an employee’s right to privacy and freedom from intrusion. The Employment Court recently considered the extent to which evidence of impairment, following a positive drugs result, was necessary to justify the employee’s dismissal. This case also highlights the need for employers to have a robust drug and alcohol policy in place, which is tailored to suit the specific needs of the employer’s business.

Thorne v Kiwirail Limited [2015] NZEmpC 48 Introduction On 27 May 2014, there was a train accident in Wellington. The train overshot the end of the line and crashed into a concrete block stop, badly damaging the train and resulting in minor injuries to two passengers on board. There was no evidence to suggest that the train driver, Mr Thorne, was at fault, or that he presented himself as being impaired by drugs or alcohol.

Following the incident, in keeping with KiwiRail’s normal procedures, Mr Thorne was required to undergo a post-incident drug and alcohol test. The test proved positive for cannabis (60 ng/ml which was above the 50 ng/ml cut-off level for concentrations of cannabis). After undergoing a disciplinary process, Mr Thorne was dismissed by KiwiRail for serious misconduct. The Authority determined that KiwiRail’s decision to dismiss Mr Thorne was justified, and he challenged the Authority’s determination in the Employment Court.

Background Mr Thorne was employed under a multi-employer collective agreement (MECA). The MECA in force at the time of the accident contained a new Drug and Alcohol Policy, which had 16

been agreed to between KiwiRail and the Union.

Under the new policy all KiwiRail employees were subject to random testing at any time, even if they had been tested before. After a confirmed positive result, the manager would be informed of the result and the disciplinary process would commence. The MECA provided: The employer and the union will discuss the merits of the case. Rehabilitation is preferred, but KiwiRail and the Union acknowledge that rehabilitation may not be appropriate in all cases… In the event of an employee returning a positive test rehabilitation may be offered.

Mr Thorne was familiar with KiwiRail’s new Drug and Alcohol Policy.

Decision Judge Ford found that, although there was no evidence that Mr Thorne, whether impaired or not, had actually caused the accident, KiwiRail was still entitled to dismiss him.

Mr Thorne’s drug use and subsequent operation of passenger trains was an act of serious misconduct, because it was destructive of the trust and confidence that is essential to the employment relationship.

Also, while KiwiRail was required to discuss the merits of the case with the Union (which they did), they still had a discretion as to whether to offer rehabilitation. Therefore, the Judge held KiwiRail’s decision not to offer Mr Thorne rehabilitation was open to them, and justified because a fair and reasonable employer in all the circumstances at the time could have reached the same conclusion.

Developing a Drug and Alcohol Policy This case highlights the importance of having a clear Drug & Alcohol Policy, which all employees are aware of and understand. The policy needs to be relevant to the level of the employer’s activity of risk (i.e. random drug testing can only be used for safety sensitive roles). Also, the policy must be fair and reasonable and not inconsistent with existing contractual terms. They should also follow consultation with staff and any

LEGAL relevant unions, should clearly set out the testing protocols, and be subject to ongoing review as scientific advances in testing procedures are made. A good policy is one that everyone is committed to. It should include the following: • The purpose, aims and objectives of the policy.

• Legal issues including privacy and disciplinary matters.

• Identification of “safety sensitive” roles or workplaces and coverage (all employees and contractors?

• Testing methods.

• The role of education of all employees, and training of supervisors and managers in “reasonable cause” identification.

• Rehabilitation.

• Evaluation and auditing.

Erin Davies “Erin Davies, Special Council, and Sarah Gribben, Solicitor, Meredith Connell. Erin leads Meredith Connell’s specialist employment team, which offers a full service practice, advising and representing employers on all employment-related issues”.

IMPORTANT

The 1st of January 2015 saw significant changes to the Building Act and Regulations that affect EVERY builder. The changes include new responsibilities such as: 1. the need to provide a written building contract for all jobs over $30,000 2. make correct pre contract disclosures to all customers and 3. to attend to any defects reported by the customer for a period of 12 months. The question is,

ARE YOU READY?

We’re sure you’d rather be fishing than running around like a headless chicken sorting out paperwork, so we have good news for you. Certified Builders already have a suite of contracts ready to go and a help-line available to all members for a minuscule cost. If you’re already a member you’ll be

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WAVE22340M10_210x140

and if you’re not don’t worry, simply give us a call and we’ll help ensure you don’t hit any unnecessary speed bumps. To join the Certified Builders team visit www.certified.co.nz or call us today on 0800 237 843

TRADE COACH Solving the big issue of business

by Andy Burrows Word of mouth is producing plenty of leads for new business.

You are converting enough of them to keep your team, or teams really busy. You are working long hours, either on site, or in the office at night or, most likely, both.

BUT…..

You never seem to get ahead consistently or have the spare cash to fund growth, buy new equipment or have the comfortable lifestyle that matches the efforts you put in.

So what’s the problem? “It’s a cash flow issue”, most people say.

I say, “probably not”. So, if it’s not a cash flow issue, what is it?

I’m not trying to be cute, but most companies I talk with that express their frustrations around a lack of cash actually have great cash flow. It flows in the front door…and then right out the back door, just as fast as it’s coming in. The flow of cash is not the issue. It’s a volume and retention issue.

The magic pill Sorry, there isn’t one.

Unfortunately the “we have plenty of work, but no money in the bank” problem is not one that can be fixed with one action (or it is very unlikely to be). The generation and consumption of cash in your business involves many activities, so a more holistic and systematic approach needs to be taken to improve your

cash volume and retention performance. I can talk about more than 20 strategies you could implement that will have a positive effect on your cash situation. This article would be 100 pages long if I went into all of them, so I have selected my top five strategies to get you started on your journey to generate and retain more cash in your business, and start to enjoy the fruits of your labour more. You deserve it!

1. Get your pricing right Just like Goldilocks and her porridge dilemma; price too high = no work, price too low = no business, price just right = perfect!

With little knowledge of their true company costs, no desired owner salary target and no profit goal, many owners tend to price on the low side. While this helps to secure work, a price that is too low has set you up for failure from the start. It’s a rare job that delivers MORE than the budgeted profit. Unforseen issues, errors and time delays typically eat away at the profit, so this needs to be factored in to your pricing calculation, or at least tagged out so additional billing can be issued to make up for shortfalls.

I suggest that pricing is done two ways. The way you have always done it, but then a cross check to ensure the total margin for the job is in line with the required gross profit rate (porridge temp = just right) that will consistently generate a fair bottom line return for you, considering the effort and risk that you are expending. I can help you determine this “porridge temp = just right” gross margin rate during a budgeting session or two.

Andy Burrows

2. Build a better sales system

Andy Burrows has been a professional business advisor, mentor and coach since 2006.

He specialises in working with the owners of constructionrelated businesses to build systems and profitability into their operations.

Pricing your work a bit higher than you perhaps feel comfortable with will require you to up-skill a bit in the sales process. The advantage of a lower price is that it is easy to sell but, as I mentioned above, you are setting yourself up for a disappointing financial result right from the get-go. No matter what you do in the delivery process, you won’t improve on the job profit, as the die has been cast. (This excludes pushing through dodgy variations to create revenue, which I don’t condone).

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TRADE COACH Becoming better at the sales process will enable you to present your higher priced service in such a way that the prospect recognises the additional value they are receiving and is prepared to pay for it. It will also enable you to eliminate the price checkers and time wasters early, before you have invested a lot of your precious time preparing detailed quotes, for free.

3. Know your numbers You probably went into business because you didn’t enjoy dealing with numbers and all the issues that they seem to bring. You love your trade. That’s where your passion is and where you want to spend most of your time.

That’s fine, but you are not just a builder now. You own and run a building company. You need to get a new attitude to money and the numbers that monitor what is happening in the money department of your business. You need to know the magic gross profit figure for your business, whether the last project achieved it and, if not, why not. Are the current projects on track compared to budget? What are the leading indicators for your trade and do you monitor them to prepare for the future, or do you just wait to see what happens and react accordingly?

Is your business in a safe cash position to meet upcoming commitments (your liquidity)? What other KFI’s are you looking at on a regular basis?

You do not need to become an accountant to monitor and understand your numbers, but you do need to develop an interest in certain ones and have systems in place to generate them for you on a regular basis. What is the dashboard for your business?

4. Get paid faster, and in full As the saying goes, “A sale’s not a sale ‘til the money’s in the bank”. With some trades there could be many months between making the sale and banking the last bit of money, and it’s often the last payment that’s the hardest to nail. With this payment often goes the profit for the whole job, so there is some merit in thinking and discussing this last payment with the customer BEFORE the job starts.

Credit control of your customer payments is often a task that comes towards the end of your relationship on any particular job. It can be a touchy area and one that many trade business owners are not comfortable with. The best way to minimise issues in this area is to address it at the start of the relationship and set out your terms and expectations clearly, before any work is done. By raising a possible issue that might arise at the end of a job (slow payment of final invoices) at the start, it can be dealt with more calmly before the pressures of the job start to add tension to the relationship. By getting written agreement over when and how invoices are to be paid, you are in a much stronger position to press for payments, right through each project’s life cycle.

What is your variation process like? Do you have a system that documents any agreed variations and invoices these to the client immediately? A lot of money is often left on the table by owners through shoddy or non-existent variation processes.

Better to over-document issues as you go through than dealing with an angry client near the end of the job who doesn’t want to pay you.

Invoice promptly and have a documented system for following these up before they fall due, and then after. Who will do this for you? Handle in-house or out-source? Either way, make sure that it happens. Even paying someone to do this role will probably be cash positive with the increase in payment speed achieved.

5. Make fewer mistakes on-site One of the fastest ways to burn profit, and therefore put pressure on your cash supply, is through wastage on-site. Poor performance on-site comes straight off your bottom line’s net profit and can have a multiplier effect as well. For example when materials are wasted, not only do you need to replace them, you need to pay for the removal or demolition of the mistake and then more labour to repair and rebuild to the point you were at before.

If you are running multiple projects, it will be essential to install systems to enable you to remotely drive quality control, production efficiency and communications through your key personnel. Do these people have the right training, attitude, responsibility and authority to represent you on-site as if you were there yourself?

So, there are my top five cash generation and retention strategies for your business. Implementing these will build a solid foundation for your long-term business stability and success. You will have better profits to fund long-term growth and your personal life. Also more cash on hand to better meet your day-to-day funding requirements and help you sleep better at night.

Contact me at andy@tradescoach.co.nz or phone 027-688-6721 to make a time to discuss how these strategies can be adapted for your specific situation and whether additional strategies can be added into the development process.

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BUSINESS

Business basics essential for basic business I have always felt that a lot of NZ business do not do as well as they should simply because they do not stop and take a honest look at their business every now and then. Imagine being in a bike race and never knowing what place you are in or where you are positioned overall.

If you are serious about your business, you should have some sort of plan, a budget and targets. Every so often, you need to check how you are actually doing against that plan.

At RightWay, we have a monthly board meeting where we look at the strategic parts of the business. We are not interested in the detail; we want the ‘helicopter’ view of how is each part of the business performing against our targets. At the board meeting, we are reforecasting, challenging the targets and thinking about the business in 6 to 12 months’ time, plus the long-term vision for where we want to be.

We also have a weekly executive meeting which is more tactical and looking at the KPIs or pulse of the business. This meeting is more about the detailed aspects of our business and makes sure everyone knows the game plan and that it is getting executed properly.

If you want to have a successful business these are the minimum requirements:

1. Have some sort of business plan, annual budget or set of targets; 2. Every month prepare a Management Report that looks at actual versus budget for sales, costs, profits, receivables, payables and cashflow; 3. Hold a meeting with your Accountant on a regular basis preferably monthly – where you will look at: a.

Sales activities. Critique the results against target.

Agree what the plan is for the next few months.

b. Your operations and the execution of what it is that makes you revenue.

c.

Receivbles and Payables. Are they inside acceptable levels/. d.

Finance. Your accountant should also be looking at cashflow forecasting, considering tax savings and planning, plus considering your balance sheet. e.

HR. Do you have the right people in the right positions?

Where is your next hire and what will they do?

f. Anything else that is important.

Honestly, do not sell yourself short. Part of running a business is managing it and making sure its heading in the direction you want it to go.

Greg Sheehan is the CEO of RightWay, a team of chartered accountants/business advisors who are straight-up, super-knowledgeable and 100% behind grassroots Kiwi businesses. For more, go to rightway.co.nz

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GET IN

TO WIN A MAKITA 1010 WATT RECIPROCATING SAW

Answer the following question and go in the draw to win a Makita 1010 watt reciprocating saw worth $369*.

Question: Building activity to March this year was up nearly 10 percent year-on-year. In dollar figures, how much was that building work worth?

Conditions of entry: You may enter only once/ Prize(s) are as outlined. Prize(s) are nonrefundable, non-transferrable and not redeemable for cash. The winner(s) will be notified by phone or email. Employees of ReFocus Media Ltd Ltd, Mitre 10 (NZ) Ltd, suppliers of goods to Mitre 10 and their immediate families and agencies are not eligible to enter. By entering this contest, you consent to the use of your name in all matters related to this contest, including any advertising or publicity without further compensation. Results of this promotion will be published in a later issue of Mitre 10 In Trade magazine. Prices that may be quoted in this promotion were accurate recommended retail prices at the time of publication. ReFocus Media Ltd and Mitre 10 (NZ) Ltd accept no responsibility for any loss or damage incurred from the use of these products.

Email your answer to m10trade@mitre10.co.nz with the words ‘August competition’ in the subject line and you’ll go in the draw to win.

You must include your photo, your name, company name, physical address, daytime phone number and the name of the store you hold an account with.

All entries must be received by 5pm on Tuesday September 1st, 2015.

THIS PUBLICATION IS RECOGNISED BY THE BUILDING AND HOUSING GROUP AS CONTRIBUTING TOWARDS THE SKILLS MAINTENANCE REQUIREMENTS FOR THE LICENSED BUILDING PRACTITIONER SCHEME. If you are a Licensed Building Practitioner, cut out and safely retain this panel with your skills maintenance literature for future reference and audit confirmation.

Ref. In Trade Vol 9, Issue 2 August 2015

*369 RRP (inc GST)

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