Recently I was asked to be the keynote speaker at the Export NZ Awards Gala Dinner in Wellington on 24th May 2018.
As CEO of Tekron International I was ideally placed to talk about Tekron’s export journey – about some of the challenges and experiences I’ve had since joining them two years ago.
Tekron International exports to 70+ countries world-wide and is an innovative R&D company producing accurate time devices that ensure all connected equipment is in sync and at the right time. The GPS devices are proudly made in New Zealand and with so many locations buying Tekron products, the team faces many challenges around shipping, currency, cultures and distance. I shared some of these stories and provided what I hope were some useful tips for other exporters.
In my first post URL here I covered Sales Growth. You can go to URL to read it.
The next big major challenge for exporters is Currency Fluctuation. If we don’t get this right the consequences can potentially be catastrophic on the profits of the company.
This is our second major focus and at Tekron we manage Currency Fluctuations through Hedging.
And what is currency hedging? Some of you will know this, some of you won’t and some might just be hoping for the best…
The act of reducing uncertainty about future (unknown)
price movements in a Commodity, Financial Security and/or Foreign Currency. This can be done by undertaking forward sales or purchases of the commodity, security or currency in the Forward Market, or by taking out an Option which limits the option holder’s exposure to price fluctuations. Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
The Founders of Tekron are proud of the fact that we had never been in debt since we started in 1999. This means we also did nothing about currency fluctuations.
Perhaps they didn’t know how to utilise banking services – we’re now ASB customers and, thanks to them, we have learned a lot about using their various services.
Here’s the Problem - Only 5% of our income is in NZ Dollars and nearly all of our expenses are!
We deal with EURO’s, USD’s and AUD’s too. Soon we will have to deal with GB Pounds. Our Contract Manufacturer is paid in NZD’s as that company is based here in NZ. Our most problematic currency is the USD and this is our largest currency.
We started hedging at the end of last year after doing our research, talking to other Exporters and seeking their advice, we convinced our owners the benefits of hedging our USD when the USD is at or below 69c.
We haven’t looked back since!
We have more to learn
but our move to hedging
has really helped
to smooth things out
When asking for help and advice I’ve been amazed, grateful and humbled by the response.
Other Exporters have been completely open and helpful with us on a range of currency and related issues. I urge all of you to reach out and ask questions.
For example, you could use the amazing people at NZTE and Callaghan for contacts / mentors.
As an exporter are you getting caught short (or long)? How are you managing currency fluctuations in this mad, uncertain and changeable world of ours? How is your bank performing for you?
I hope this has given you yet more serious food for thought – simple questions with not so simple answers once again!
As I said in my first post it’s vital that you get this stuff right! It’s not really something you can risk ‘learning on the job’ – that’s too costly!
Look out for my next Post where I’ll talk about Innovation. You have to get this one right too!
Today’s Tip - It’s funny – Isn’t it?
I went to Spain with our Europe sales person to complete some contract negotiations. After my very long flight from New Zealand to Spain I had dinner with the client.
It was a lavish affair with all of us eating and drinking too much! It is typical of the Spanish to wine and dine one in order to become “friends” before the deal is done. We finished dinner very late.
And of course I indulged – it would have been rude not to…
The next morning I went without breakfast as my body was rebelling against the time difference and all that food eaten at the wrong time. We got into the negotiations and went at it from 8.30 am until 3pm with no food and no breaks.
If only I had known this I would have had breakfast or at least squirrelled away some food to eat secretly in the loo. I was so hungry I actually searched my handbag in case. We all survived and then we went out for a late lunch that ended up being three courses and which included more wine!
Feast and Famine!
When I go again this July guess what I’ll be tucking in to my bag…..