Tariff changes positive for PNG
Controlling costs and adapting to trends in the market are key to success, says Michael Kingston, chief executive of diversified manufacturer KK Kingston.
He says that changes to tariffs have encouraged overseas manufacturers to invest in PNG.
“A lot of companies are looking at manufacturing locally, whereas previously the trend was the opposite – people were getting out of local manufacturing and offshoring.
“Some of the tariffs have had an impact. Until recently, we were probably the last domestic bottler of cooking oil left. Now there are four, maybe five, who are bottling locally.”
KK Kingston is diversified. It wholesales products directly to customers and also produces Fast Moving Consumer Goods (FMCGs), which are sent to retailers.
He says currently the FMCG sector is experiencing the fastest growth.
Kingston says the likely start up of new resource projects, such as the proposed gold-copper mine Wafi-Golpu and Papua LNG, will positively affect his business.
But he has learned some lessons from the last boom and is keen to avoid previous mistakes, when he allowed the “cost base to grow too quickly and we over invested in assets and capacity that we didn’t really need and we took on too much debt in anticipation of sustained growth that didn’t eventuate”.
This time, he is aiming to keep his overheads constant, or even reduced. “I am focusing keenly on producing products at a lower cost per unit than previously by trying to do more with less.” He is avoiding additional investment, reducing debt and looking to eke out more efficiencies and more productivity from the labour force, and “the assets we currently operate”. – DAVID JAMES