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23. July 2008

New Zealand - Heavyweight order leaves Dunedin for Germany

The first Europe-bound consignment of what may become a $23 million export order left Dunedin for Hamburg from Australian-owned Dunedin foundry Newlcast.

During the next two months, seven containers would deliver about 725 motor brackets for rail bogeys, each weighing 280kg, to Hamburg for distribution to a European rail contract, Newlcast director Ian Rissman said.

The seven containers represented 25% of the potential contract and Newlcast would know in about a month if it had secured the entire $23 million contract - comprising 2900 engine brackets weighing a total 1200 tonnes, he said.

A year ago, Farra Engineering sold its decades-old Farra Casting division to specialist Australian business AustCast, of Brisbane, for an undisclosed sum.

Since then, foundry staffing had increased 100% from 20 to 40 employees.

About $500,000 in capital had been invested in the past year, with the same level of investment earmarked for the next three years.

Tonnage turnover was up from 350 tonnes per year to 1000 tonnes and financial turnover this year was expected to be about $12 million, Mr Rissman said.

In Brisbane, parent company AustCast, which was double the size of the Dunedin operations, concentrated on supplying 50/50 the mining/resource and rail sectors while, in New Zealand, Newlcast's output was 40% for the Australian mining sector, 40% for European trade and the 20% balance was the domestic casting market.

"Forward orders are looking very good and the books full for some time yet," Mr Rissman said.

However, the past year had not been easy for Newlcast, as weeks of advertising for tradesmen elicited no response at times and scrap metal prices skyrocketed from $450 per tonne to $900 per tonne.

In order to fill the present 25% of the entire order, the foundry was working 21 hours per day and eight hours on a Saturday, with at least six tradesmen from Farra computer-machining the 280kg blocks.

Each of the castings took about eight hours to machine completely.

Newlcast general manager Dean Taig, who moved to Dunedin from Brisbane with his family a year ago, said the casting for the European rail contract was the most demanding and technically difficult order in the foundry, alongside other rail and mining work.

"It [the engine bracket casting] is a very complex part because of the high fatigue [stresses] on it," Mr Taig said.

A year ago, Farra chief executive John Whitaker said foundry work was becoming technically more difficult and the foundry required further specialist technical management in order to grow.

Mr Rissman said the Australian company came to Dunedin because of its trades, port, rail and support infrastructure and the former Farra casting division had the capacity to expand.

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