Kawerau sawmill Sequal has developed smart software allowing them to cut logs in precise ways so they can meet their customers' intricate needs, while minimising waste.

A custom-cut purpose

The last few years have been challenging for Kawerau-based timber processing firm Sequal, namely due to Covid, yet its grown 100% in that time.

Kiwibank worked with Sequal to understand what they were developing and wanted to support them on their journey to create a viable sustainable and environmentally friendly product that's also innovative in the manufacturing industry.

Kiwibank quickly understood the impact of Sequal’s success in establishing a digital way to cut logs to meet customers’ precise needs, while minimising waste. The technology has been a game changer for Sequal, which supplies radiata pine to firms around the world to be used for packaging, furniture and the construction markets.

The company worked with the University of Auckland to develop the technology. Based on customer orders, the software runs millions of simulations daily to figure out the best cuts to ensure there's no waste. It means Sequal creates more value – and New Zealand doesn't just export raw timber.


Watch our episode on Sequal in our Business for Better series, created in partnership with TVNZ Sunday.

“In New Zealand, we’ve predominantly been raw material exporters,” says Sequal CEO David Turner. “Sending raw materials overseas is so easy but we really hate to see our logs being exported in that raw form when we should be adding value to them here.

What Sequal’s doing is novel in the timber processing industry – and that’s because it’s hard, says Turner. “It’s not easy but there is definitely demand for mass customisation. We've sold out of capacity to fill orders for the remainder of this year despite markets being lacklustre.”

Business was booming in 2019 due to signing a few large deals with overseas clients. But along came Covid and with it operational challenges.

“We were in a really interesting situation where we lost our ability to ship to our export markets in one particular area by containers. So we had to start chartering ships, which was a big change for us, and that completely changed our working capital requirements.”

That’s when the relationship with Kiwibank, which began three years ago, proved to be vital.

Kiwibank worked with us to support the growth of a new form of distribution. When you’re dealing with a lot of change and ambiguity, the key to being able to succeed is the ability to rely on partners and, for us, our relationship with Kiwibank was one of those key partnerships.
David Turner, Sequal CEO

Like Sequal, who recognised the value in customising their product for clients, Kiwibank customised their services for the Kawerau company, making large changes to their back office, according to the Head of Sustainable Finance, Tom Williams: “They had quite a technical need around trade finance and how they could access offshore markets and funding."

Rather than say, ‘That sounds too hard’ or offer them standard solutions we have, our team worked with them to custom-build a solution that would meet their needs.
Tom Williams, Kiwibank Head of Sustainable Finance

One of the reasons David Turner wanted Sequal to work with Kiwibank was because the two share common values. Sequal is focused on giving back to the community in Kawerau, including contributing to local initiatives; it also believes it has an obligation to give more to the future by supplying a sustainably harvested product.

It already uses geothermal energy at its plant and is constantly looking for ways of doing things that are better for the environment. For example, woodchip left after the pine has been cut is used as packaging, while sawdust is turned into wood pellets to be used as biofuel.

“Timber is a crucial part of a low carbon environment, and Kiwibank has the same aspirations for New Zealand that we do when it comes to reducing emissions and also seeing value-added manufacturing thrive in New Zealand,” says Turner.

Williams says Kiwibank likes the fact Sequal isn't in business for the revenue: “They’ve had extraordinary growth by using technology to maximise what they can do with each individual log and to supply perfect products to a customer every time, but they’ve also been equally invested in supporting their community, socially and environmentally.”

A lot of businesses say they care about their communities and the environment but, for some, it's often a marketing exercise. When we see a business like Sequal – where they understand the importance of sustainability and they know that without their community and their people they are nothing – then we really want to get behind them.
Tom Williams, Kiwibank Head of Sustainable Finance

“We feel like we have really been on a journey with them, especially their business banker Simon Whittington, who is their day-to-day contact. Their success feels like our success and we’re really proud when we see them continuing to grow.”

“This partnership gives us tremendous confidence because the last thing I have to worry about is my banking relationship,” says Turner. “All I have to focus on is making sure we’ve got the sales and production capabilities. Knowing that you’ve got someone like Kiwibank in your corner is just one less thing to think about.”

“It’s comforting to see more and more businesses today looking beyond just their bottom line and thinking more about the bigger picture,” Williams says. “At Kiwibank we can customise our business banking facilities, we have an amazing team of people, and we want to do more for businesses. We have a huge appetite to grow and to fund businesses in New Zealand, and the capability to do it.”

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