Keeping a tight rein on capital and operational expenditure has been a favourite tactic of almost every business looking to get through the economic downturn but a leading supplier of safety gear and other industrial equipment is starting to see a turnaround.

Blackwoods Paykels national manager Paul Watson said capital expenditure among the companies it provides goods to was still subdued but operational expenditure was starting to pick up.

“It has been difficult and continues to be difficult but there is the odd patchy change coming through.”

He said companies who were being cautious about capex were postponing purchases but after a year of that, it was getting to the point where it could not be put off any longer.

“Rather than kitting out the work gang with new gear, they’ve been asking them to hold off and make do with what they’ve got but that old gear has to be replaced sooner or later.”

The company – which is owned by Wesfarmers Industrial and Safety New Zealand and includes the Protector Safety brand – officially launched its new distribution centre, manufacturing plant and retail outlet in Manukau last week.

Mr Watson told NBR the new headquarters for the company is part of a $5 million investment into its retail model and was initially targeting industries that were increasing their capital expenditure.

“It’s too early to say we’re out of the worst stuff, but we are seeing some activity coming back around the country, in a number of different areas.

“In the meat industry, the season seems to be kicking off a couple of months later for many and they’re just starting to fire up now. We’re also seeing more interest in spending from everyone from offshore drillers to superyacht makers to building businesses.”

He said the building downturn over the past year had affected the company’s safety gear sales but gear for roading construction was still needed, while several government contracts had also kept business ticking along.

Agriculture had been a pretty steady market right through the recession, largely driven by independent farmers and the hose business it provided to Fonterra but Mr Watson said some areas of agricultural work had shrunk.

“The milk is still flowing, but sales related to dairy conversions have slowed right down. Just about everybody who was thinking about converting seems to have made the plunge, although we are starting to see more work coming through on the processing plants side.”

Blackwoods Paykels began the re-engineering of its business two years ago, when concept stores were first launched around the regions to test the new model.

While the industrial and engineering industry primarily relies on word of mouth and continuing accounts for most of its business, Mr Watson said Blackwoods Paykels had already seen rewards from bucking that trend.

“We’ve been doing a lot more promotion, which is not normal in this industry, where you expect people to know what you are and where they can find you. But that has seen a 23% lift in cash sales for October, so it’s getting people in the door.”