Reinvesting earnings and paying attention to its core customers has enabled engineering and industrial supplier Bishops to ride out the peaks and troughs of the Papua New Guinea economy. General Manager Len Pianta explains to Business Advantage PNG how the company manages volatility.

Bishops’ Port Moresby store Source: Bishops

‘The biggest thing with our company is that Mark Bishop, the sole owner, has put a lot of his profits back into the business, whether that be stock, or infrastructure, or upgrading or building new branch outlets throughout the country.’

In the lead up to the PNG LNG project, Len Pianta says the company did not take a standard approach to scaling up.

‘As a result we didn’t lose our general customers. We maintained our service levels to the balance of the industry.’

‘We took a different approach for the LNG project,’ says Pianta. ‘We set up an individual office to handle the LNG side of the business, which meant we concentrated on that, separate to our day-to-day business. We didn’t want to place all our emphasis and effort on one project.

‘As a result, we didn’t lose our general customers. We maintained our service levels to the balance of the industry.

Bishops’ Len Pianta Source: Bishops

‘The effects on our business since the LNG project has gone to production haven’t been as significant as a lot of businesses around that I talk to.’

Pianta says last year Bishops’ sales were down a comparatively modest 9 per cent.

‘A lot of other people are talking about 30-40 per cent down. So, I think the way we approached it, by looking after our loyal, day-to-day customers, worked in our favour in the long run.’

Home brands

Pianta says the company does a lot of direct sourcing to create home brands.

‘We have managed to survive and maintain our profit levels by direct importing, or direct sourcing, probably 50 per cent of our product mix. That has obviously made a substantial difference to the business.’

‘Another strategy is to maintain high levels of stock.’

Prices on house brands are typically 30 to 40 per cent lower, says Pianta. ‘If we had to rely on buying everything out of Australia, and sell it second hand effectively, we probably would be struggling a bit.’

High stock levels

Another strategy is to maintain high levels of stock.

‘The main thing for us, being in PNG, is that you can’t get things quickly. So our philosophy is to maintain a fairly substantial stock holding: at present, our stock holding is around 50 million kina.

‘The philosophy is to keep the stock coming, because if we don’t have it here we will lose out to the Australian market.’

‘That is above and beyond; it would be over 12 months stock of most lines. But the philosophy is to keep the stock coming, because if we don’t have it here we will lose out to the Australian market. Guys will just jump on the internet and order something. It’s so easy these days.’

Pianta adds that the company has not been greatly affected by the recent foreign exchange issues. ‘We haven’t had as much trouble with the Aussie dollar.’

Service

Bishops has been in PNG since 1972. Pianta believes the general business outlook is positive.

‘I have been here 20 years and it has always been one project to the next. You have a peak, you will bottom out and go back to where you were, and then you will have a three-year lapse and then it will pick up again.

‘But there is always enough industry, and enough things happening, for a business like ours to maintain what we are doing.

Bishops claims to be the largest industrial tools supplier in PNG and the Solomon Islands. The company offers a range of safety and industrial goods, supplying government departments, manufacturing industries, logging companies, mines and primary industry.

The company is also diversified. It has equipment hire and engineering divisions and also offers embroidery services in its Port Moresby and Lae branches.