K K Kingston, one of Papua New Guinea’s largest manufacturers, turns 40 in 2012. Paying a visit to its HQ in Lae, Robert Hamilton-Jones found the company evolving at a furious pace.

A level playing field: K K Kingston’s new facility will remove significant operational obstacles. Credit: K K Kingston

‘We’re bursting at the seams,’ declares K K Kingston’s General Manager Michael Kingston. We are sitting in the boardroom of the company’s head office in Lae, having a preliminary chat before viewing the company’s facilities. His point is perfectly illustrated a few minutes later when a couple of managers enter the room to make a quick cuppa, and it becomes apparent that the boardroom doubles as an executive tea room.

From there, it’s just a few steps to the company’s main Lae industrial showroom, catering mainly to local tradespeople. On through a door and around the corner and suddenly we find ourselves in a factory producing plastic bottles for soft drinks. Next, it’s up a narrow wooden staircase to squeeze into a room where machinery tools are repaired. Our journey through the rest of the site twists and turns in similar fashion, revealing more production lines (plastics and chemical) interspersed with packed warehousing areas where pallets of finished goods jostle for space with raw materials.

A range of K K Kingston’s PNG-manufactured polyethylene containers. Credit: K K Kingston

Exponential growth

But the tour is far from over because the company has no less than three other, albeit smaller, sites dotted around central Lae, responsible for rotomoulding (the ubiquitous ‘Tuffa’ tanks) and paper/cooking oil products.

‘We often have to move raw materials, work in progress or finished goods between a plethora of different sites’, explains Michael Kingston. And yet he speaks with understated relish rather than frustration, for two reasons.

The first is that the clutter and fragmentation is the consequence of the company’s exponential growth, which has seen one of PNG’s largest manufacturers of industrial machinery and equipment double in size in the past five years alone. The company has benefitted not just from the general upswing in the PNG economy, but even more so from its particular role as a major equipment supplier to the country’s galloping natural resources sector.

K K Kingston’s Michael Kingston

Building a new home

The second is that there is light at the end of the tunnel. The final leg of the tour sees us make a longer drive, out to the Kamkumung (or ‘Speedway’) district on the outskirts of PNG’s manufacturing centre. Just after passing the recently-constructed Lae Biscuit Company factory, we turn off into a huge lush paddock, part of which is staked out. This 110,000 square metre (very) green-field site has been acquired by K K Kingston to consolidate virtually all its Lae operations under one expansive roof. The new manufacturing and distribution hub will initially occupy 26,000 square metres of ‘under-roof’ space and 60,000 square metres in total.

‘We’re just about to award a new contract for the civil engineering side of things,’ says Michael Kingston (speaking in mid 2012). ‘Similarly, we’ve just about finished all the design work for the buildings and services for the site. We hope to relocate sometime in 2014.’

It is not difficult to appreciate the transformative effect that moving to a purpose-built, modern and larger facility will have on the company’s operations. The immense efficiencies and newly acquired scalability it will deliver will essentially launch the company into a new era.

It will certainly provide a huge boost to the company’s ongoing and vigorous efforts to raise the standard of its production and improve workplace safety. In December 2011, K K Kingston attained ISO 9000 Certification as the cornerstone of a wide-ranging project to overhaul its production processes. While a lot of progress has already been made, there is inevitably a limit to what can be achieved in the existing operational environment.

Automation

The relocation will also expedite the automation of its production, a process that has already yielded some remarkable results, as Michael Kingston reveals: ‘We used to produce say 30 tonnes of a certain chemical every two days, but since automating the process we produce 30 tonnes per 10-hour shift. So, incredible improvements in productivity, and there’s been a total elimination of workplace injuries in that process.’

It is interesting to note that, in spite of this embracing of automation, galvanised by a significant increase in PNG’s minimum wage in early 2010, the company’s total head count has continued to rise.

A 40-year history in PNG

It is highly appropriate to be talking about K K Kingston reaching a watershed at this moment since the company celebrates its 40-year anniversary in 2012. In fact, it was founded by Michael’s father, the eponymous Keith K Kingston, who remains very involved in the business and is the major shareholder. The company’s longevity also translates into an important competitive advantage in a market sector that is often highly technical, in the form of years of accumulated product and market know-how.

Despite its growth – it now has over over 800 employees—the company still retains a strong sense of being a family business.

Despite its growth – it now has over over 800 employees—the company still retains a strong sense of being a family business. During our visit we stopped and spoke to several employees on the shop-floor who had worked with the company for many years and who repeatedly referred with genuine affection to the friendly atmosphere that prevails in the firm, while the company’s reputation is more or less synonymous with the family name.

A more corporate structure

At the same time, as it has grown the company has recognized the importance of adopting a more corporate structure, at board level at least. In 2010, it became the first producer in PNG to receive direct investment from the International Finance Corporation (IFC), the private sector arm of the World Bank. The presence of an institutional investor on the board placed the company on a more formal footing (including more rigid reporting requirements) and is expected to provide a stepping-stone to a listing on the Port Moresby Stock Exchange (POMSoX) in around four years’ time.

Of course, the deal struck with the IFC (in partnership with the Pacific Islands-focused venture capital specialist, the Kula Fund) also provided a ringing endorsement of the company’s prospects and its vision for the future.

Back in the communal boardroom, that prompts a final question of just what the company’s main goals are for the next decade, listing aside? Michael Kingston pauses briefly before summing up thus: ‘To continue growing, to make K K Kingston an employer of choice for all those skilled workers out there, and to continue our mission of demonstrating that Papua New Guinean companies can produce quality products and compete with the best.’

First published in Made in PNG 2012