Bendon

Stefan Preston, it has to be said, has an office many men would kill for.  Above his desk is a large framed print of a woman in sexy pink lingerie that could have been lifted from a soft porn magazine. And there is plenty more where that came from.  The clean white walls of his spacious office feature quite a few framed images of gorgeous girls in gorgeous knickers that, in any other company, would probably land the occupant in trouble with HR.

In fact, it's hard to know quite where to look when visiting Bendon's flash new headquarters on the outskirts of the aerotropolis that now dominates Mangere. Almost every surface is decorated with an image of a naked or semi-naked woman - some larger than life-size.

"There were some moments early on that were interesting," Preston grins. Like the time one of the models in a lingerie show took exception to the chief executive slaving away on his laptop while she strutted her stuff. She grabbed Preston's computer, thrust her boobs in his face, and cooed: "What are you doing that's so important that you're not looking at me?"

Five-and-a-half years after taking on the top job at New Zealand's favourite lingerie company, pert breasts and firm buttocks no longer faze the 44-year-old. In fact, you get the impression the saucy side of the business is a bit wasted on Preston, who has done such a superb job of trying to understand his overwhelmingly female customers that he probably knows far more about women's complicated relationships with their bodies than his own wife.

He was originally a structural engineer who, after completing an MBA at Stanford, somehow ended up being Eric Watson's fix-it man for companies as various as U-Bix, Cogent Communications, Whitcoulls and Pacific Retail Group. And, ahem, the dotcom disaster that was online retailer Flying Pig.  A much more revealing insight into his psyche than his office art is the pile of management books stacked on his impeccably tidy desk. They include, of course, Jim Collins' Good to Great, as well as rather more dreary titles such as Customer Experience Management and The Experience Economy.

His children's masterpieces are also proudly displayed, and the kids - who are primary school age - are in fact one of the main reasons he announced to staff yesterday that he was leaving.  "I've given it a fair shake and I've achieved what I set out to do," he explains. "You have to sit there and say 'I've got to commit myself to the next five years and the sort of life that will represent'. I've got young kids and, realistically, it's going to be more of the same now. The back's been broken, we've built the infrastructure, we've broken into the markets we needed to, we've developed a profitable position in those markets, and now you have to take a deep breath and run a different game to get that benefit out.  "And it requires me to spend more and more time in the Northern Hemisphere and so on. There are probably people in the world who can do that job better than me because they've got more experience and more focus and more connections in those markets."

A global search is already under way for a new chief executive, who might even be based overseas. It's unclear whether it will happen in the short term, but it certainly looks as though yet another iconic Kiwi brand might eventually be headed offshore.  Could New Zealand really be about to lose Bendon? "It depends how you define New Zealand," Preston replies.  The turnaround in Bendon's fortunes in recent years is indeed a textbook example for other New Zealand companies of how to go global.

When Watson's Pacific Retail Group took over the company in 2002, by a somewhat messy manoeuvre, it was in a "reasonably parlous" state, says Preston.  Watson had originally invested in the company because he could see it had enormous potential. "Clearly it hadn't had anything spent on it. It had been through five pretty tough years of manufacturing and exporting and it had been one of those businesses where people had tried to rescue the profit margin by cutting costs, and of course the costs they cut were the very costs that support the revenue - things like training, and so on."

Its warehouse was old-fashioned, and management worked in an executive suite with big windows, while the rest of the staff toiled in a semi-air-conditioned space.  "We were based out in East Tamaki, and I don't know what vintage the building was, but it looked like it hadn't been touched since the 70s. The computer system was 12 years old and, if something went wrong with it, people would switch it off at the wall, and switch it back on and pray. There was only one person alive who knew anything about it."

What the company did have, however, was some strong brands, including a potentially huge partnership with Australian supermodel Elle Macpherson.  Preston fell into the top job after getting involved in doing due diligence for Watson. He took over temporarily when managing director Hugo Venter parted ways with the company, and after a few months decided he wouldn't mind staying. 

Unlike most other turnarounds Preston has overseen, Bendon was complex. It not only designed and made its own products, but also sold them through various channels in various countries, including wholesale, third-party retail, franchise stores, its own shops, and discount outlets.  On his first day, he got a letter from Bendon's largest customer, saying it would no longer be stocking the company's flagship brand, Elle Macpherson Intimates. And Macpherson herself was not happy that sales of the brand were declining, while private label products were growing.

It was clear what had to be done: he needed to stabilise and fix the domestic business, then build the infrastructure to support growth, then grow the business internationally.  First off, it was a matter of working on some fast-moving lines and sorting out delivery issues. This had a "surprisingly quick" effect, he says.

Working on Macpherson took a bit longer. The Aussie icon told the Australian Financial Review recently: "I explored other avenues before I decided to expand with Bendon. But I chose the company because it has a young attitude, it is interested and open to my ideas. It doesn't have brand image baggage."  One of the tricky issues was working out how to develop the Elle Macpherson brand without having her continue to be "The Body" who modelled the products.  "I guess what we thought is, if the brand is dependent on her being in the photography, then we're in trouble, because she's not going to be in the photography forever," says Preston. "But if Elizabeth Arden can be dead and her brand is alive, then it doesn't really matter."

The answer was a deliberately controversial ad campaign which, Preston admits, was "almost queasily voyeuristic". The campaign was spectacularly successful and won a swag of awards in Australia and Britain (where Bendon spent just £70,000 ($199,000). Even now, he says, there is strong demand for the Elle Macpherson brand in countries where Bendon does not yet sell.

Hiring the right people was also a crucial part of the strategy. Almost the entire senior team was replaced.  In order to turn the business from a manufacturing-led culture to a marketing culture, he hired marketers with a background in fast-moving consumer goods. An enormous amount of research was done to improve the company's retail experience, for example. Initially, its flagship store, Bendon on Broadway, existed just to build the brand, says Preston. But all its stores have now been revamped as separately themed, upmarket boutiques with excellent service and customer-friendly changing rooms. The stores won the fashion, apparel and footwear category in the Top Shop awards last year.

The next growth spurt required another change, to a more design and marketing-led approach. In other words, rather than asking consumers what they wanted and giving it to them, the company had to use its own knowledge of the industry and its customers to create products no one had yet thought of, like the Bendon sports bra. The latter approach has required a much more collaborative culture, and has meant the company has undergone two cultural transformations in just five years.  However, Preston is now very happy with the team that's in place.  "The core group of people here work together really well. We felt we were on a great adventure - this plucky, irreverent group of New Zealanders who just want to have a go, but with the brains and experience to make the right calls."

Bendon's determination to break into the hypercompetitive United States market is a case in point.  "You've got to start out with a bit of recklessness," he says. "You've got to be willing to get on the plane and give it a go. But you won't get anywhere unless you're fully committed to it. A lot of New Zealand exporters think they can develop their brand overseas through distributors, and not really fly anywhere and not really put any staff on the ground. They see some orders come in and think they can build a business, but all that is is a bunch of retailers looking for something new. Unless you're willing to be on the ground and commit, it's not really going to happen."

It also goes without saying that you need to have a unique selling point. In Bendon's case, he says, that is a surprisingly uncommon blend of comfort and creative design. Most lingerie, he insists, either looks good but doesn't fit, or fits but doesn't look good.  It took a year of listening, networking and radically transforming what it was doing in the US before the company's patience began to pay off. And again, clever and inexpensive marketing was crucial. One of Bendon's stunts was to clad a 16-storey building on the Long Island Expressway with a giant billboard during New York Fashion Week. The billboard gave the impression that the brand was much bigger than it was - it also helped that a planning violation was committed, which meant that it made the TV news.

Bendon now sells in several top department stores in the US, and has an office in New York that also services Canada. But its initial efforts did require bravery on the part of the board, he concedes.  "I think a lot of boards lack the vision ... You can't write a business plan that tells you exactly what's going to happen. You just know you've got to reach a break-even position in one of the world's largest markets. What you do with that later is going to be subject to what you learn, but you have to have the willingness to commit to get to that level."

That said, Preston admits he's deliberately kept a low profile during his tenure at Bendon because of some of the risks the company has had to take. Its biggest hiccup was when it introduced its global enterprise resource planning system, intended to integrate all its data and processes into a unified system. He's glad it wasn't a public company at that point.  Other infrastructural investments have included a $14 million state-of-the-art distribution facility at its new headquarters in Mangere. The 7000sq m facility, which opened a year ago, handles up to 1 million packages a month. The company also has a warehouse in Seattle, and China.

So far, all the company's growth has been funded from retained profits. "Since we've grown the business we've been able to lever it up as well, so it's been reasonably efficient."  Five years ago, Bendon's turnover was around $80 million, and the kiwi was hovering around US40c. Last year turnover was $154 million, and the kiwi was around US70c. More than two-thirds of its products are now exported, and that's all organic growth.  In the previous companies he's been asked to turn around, the task has been relatively straightforward, says Preston: "You replace most of the management team, fix up all the basic operating parameters, put a bit of leadership into it, think up some fairly basic ideas about how to market it, and off you go."

But Bendon has been much more interesting, he says, because the possibilities are almost endless. "The company is in an interesting position now because it's developed a global reputation, and it's done that on the back of successful retail, off the number one position on the floors of some of the top-level department stores in Europe and the US. There is no theoretical limit to how you want to grow it, because you can take on the whole world if you want to - the only limit being your creativity and ability to come up with products that are differentiated in a meaningful way."

But unlike some other local export success stories, such as Icebreaker clothing, there is actually nothing about Bendon that is intrinsically Kiwi, other than perhaps its design aesthetic and its attitude, he muses.  Its sales in Australasia are run from Melbourne, and its European sales are run from London. It also has a chain of retail stores in the Middle East, run by an Arab partner.  As a result of its latest licensing agreement, with top British fashion designer Stella McCartney, it will be exporting to 16 countries from the beginning of next year, including Italy, Germany, France and Russia. Only 200 of its 500 staff worldwide are based here.

Preston admits it has become increasingly difficult to find in New Zealand the skilled staff the company needs, simply because New Zealand no longer has any apparel industry of any note. "In New York I can hire the people I need just like that."

Which is ironic, given the company has been hailed as the future of manufacturing, whereby thousands of low-skilled workers would be replaced by high-skilled ones.  He insists that the country is still better off than when Bendon employed hundreds of machinists on low wages. "Now it's full of marketers and designers and product engineers, and the value per capita that we're generating is far greater."

But by the same token, he concedes he can already feel the centre of gravity in the company moving north, especially now that it is establishing a design team in New York.  Hence his desire to finally end his relationship with the London-based Watson, and find another local challenge in which to immerse himself.  "The one thing that would attract me to going overseas is a more interesting, more scalable, more remunerative business environment. But I love this country. I was born here and I just love living here. I love the outdoors, the sea and the fishing and the boating and the mountains and the hiking and skiing, and I think my children love it."

Between running Bendon, and keeping fit with various sporting activities, he is involved with New Zealand Trade and Enterprise's Beachheads programme, which helps exporters break into new markets, and also Better by Design, which is obviously design-focused. They are both fantastic programmes, he gushes, for companies wanting to grow.  While he has found the experience a little depressing, because of companies' conservatism and New Zealand's lack of commitment to exporting, he has also been encouraged by some "tremendously cool" examples of companies doing some "really amazing" things, like Icebreaker, Pumpkin Patch, and Phil and Ted's buggy company.

And it upsets him that New Zealand seems to lack role models for people who've been able to create intrinsic value and successfully export their wares.  "Our business heroes tend to be people who are just ripping off public assets, or rearranging the deckchairs on existing companies or whatever, and then taking the money and going overseas."

And he's even prepared to commit sacrilege and slag off 42Below.  "It's a good example of branding, but it doesn't make much money, and now it's gone so it doesn't help New Zealand any more.  "I think we need to have a bit more intellectual rigour about how we judge a business that's good for New Zealand or not."

What we need are more Icebreakers, he enthuses.  "I'm quite passionate about businesses like that and I think there are more businesses in New Zealand that could blaze that trail as well. But unfortunately many of them are stuck with owners who do not have the skills, experience, commitment or capital to take them any further than they have."

In the creative industries, in particular, there are many companies that hit $10-$15 million in revenue, then stop.  "I could name eight companies like that. Each one, I believe, could be turned into a $200 million business, but they've got the wrong owners, the wrong management ... "  At the risk of sounding a little like Linda Clark, he is keen for his next project to be working alongside people "who believe in the vision of New Zealand, of growing this country, and contributing to this country".

He is, after all, a cerebral fellow. While he was able to create the intellectual stimulation he needs through Bendon, "I don't see any reason why I couldn't create it through some other project, and I can afford to spend the time working on that - and who knows what will come of it?"  So far, he has nothing specific in mind. But he is also clearly ready for a new, uniquely New Zealand challenge.  "My passion is New Zealand and I look around and think, 'What if I had some spare time and I could go and look at solving some of those problems?'

"It's just so exciting to me to think I could learn how to take some New Zealand company and learn how to make it a global business. What about the other ones out there that I could work on? I have just no idea what form that would take, but I think that's just an interesting thing, and I need a new project and something to get excited about."  Because frankly, stars in their bras no longer cuts it, it seems.

Bendon - a brief history
1947: Ray Hurley, a demobilised naval officer, joins forces with his pattern cutter brother Des to found Hurley Bendon. The new company offers lingerie that can literally "bend on" to the body, freeing women from heavy wire, steel and bone foundation garments.
1963: Introduces stretch strap bras and stretch bodyfashions.
1964: Sales top $1 million.
1966: Becomes the market leader in intimate apparel in New Zealand.
1977: Bendon range introduced to Australia.
1982: Publicly floated on the New Zealand stock exchange.
1986: Begins manufacturing in China.
1987: Merges with Ceramco Corporation.
1989: Strikes licensing agreement with Australian supermodel Elle Macpherson.
1999: Announces nearly 400 staff will be laid off as manufacturing moves to Asia.
2000: Buys the insolvent retail chain Bennett & Bain, as well as the Fayreform brand.
2001: Breaks into the United Kingdom.
2002: Management buyout fails. Acquired by Pacific Retail Group for $59 million.
2004: Revamps its retail stores as upmarket themed boutiques.
2005: Breaks into the United States, Canada, Middle East, and Hong Kong. Turnover reported to be $113 million.
2006: Auckland headquarters moves from East Tamaki to Mangere.
2007: Buys chain of independent retail stores in Australia. Strikes licensing agreement with UK fashion designer Stella McCartney. Turnover reaches $154 million.

Leila Harre's piece in defence of shop workers seemed to overlook a couple of critical factors.

Unfortunately, some occupations are going to be closer to the minimum wage than others, and without some form of job evaluation and ranking, this argument is always going to surface. Some unionists shout louder and have a greater ability to inconvenience the general public than others.

Pay rates ideally should be within a range dictated by many factors, including the amount of time spent getting qualified (and competent), the inherent danger of the job, antisocial hours, responsibility for the safety of others, the ability to generate extra income by bonuses or extra hours, supply and demand, integrity and the handling of cash. Or the physical demands of strength and agility, and the number of hours required per week. The list goes on.

Mostly, brain surgeons, police, prison staff, dentists, and so on are going to outrank shop assistants, road sweepers and office cleaners. That does not in any way decry the necessity or value of these jobs, but there is a hierarchy, whether we like it or not.

Opening hours should ideally be dictated by the business owner. But in shopping malls, the demands are set by the mall owners, not the shop or business owners, and this is an area that so far has escaped unscathed. It may well be one of the root causes for the loss of jobs in the clothing and footwear industries, for example.

Let's be realistic. Long working hours in New Zealand and productivity are not related. Long working hours are demanded by the shopping malls, and if a business is required to be open from 9am to midnight, then it has to pay wages for all staff for this time, regardless of the takings.

Any analysis of daily shop turnover over a year, particularly in the clothing or footwear industries, will show that on some days, it wasn't worth opening at all, and therefore the business would have made a substantial loss. Those losses can only be made up by some good trading days.

Using that analysis, shop owners could make the decision to close on Mondays for example, like many restaurants, except on the approach to Christmas or holiday times.

But can they close? The malls say "no". Can they close at 6pm if their figures show that opening until midnight is a waste of money? The malls say "no".

The malls also often have ratchet rent clauses linked to turnover (not profit), and having ratcheted them up, the mall owners then develop a mall further up the road and take much of the trade with them. Add to that compulsory six-figure refits after six years, and the shop owner is on a hiding to nothing, having to bank perhaps $300 a week just to pay for a refit that they probably don't want anyway.

What can the shopkeeper do? Probably dump all New Zealand-made goods - where manufacturers are also forced to pay for ACC levies, maternity leave, sick pay, over the top Occupational Safety and Health requirements and for an extra week's holiday. Not to mention a culture that virtually denies the employer the right to dismiss useless, unreliable staff.

So, the shopkeeper imports from low-cost countries and in many cases, the goods for sale to the consumer are no cheaper and no better than the New Zealand-made goods were. The difference is that the shopkeeper has a margin to pay the costs of running the business.

The cutters, pattern makers, sewing machinists and other technical staff leave the clothing trade for good. Many no doubt end up on some form of benefit.

When it comes to productivity, particularly in manufacturing, the majority of local businesses are totally untrained in the techniques of real productivity improvement. Accountants and advisers abound, but few really understand true product costing and production planning. And virtually none understand labour and management cost control, material utilisation and performance training - probably because tertiary institutes no longer offer adequate training in these areas.

They prefer to specialise in the popular bums-on-seats courses, catering for the dreams of wannabe designers instead of offering the technical and managerial skills required to survive in business.

Opening at Easter is not a major problem. Let the shop owners decide when to open and then maybe they will have extra money to pay their staff. But if people can't get all their shopping done between 9am and 7pm, then there is something wrong somewhere, and everyone deserves at least one day off a week. Even the owner of a small business.

* Ray Green is a former head of management services at Bendon and operations manager for Specialty Brands (Rodd & Gunn/Logan). He is also a qualified productivity specialist for the sewn products trades - with 30 years experience, including several years tutoring AIT/AUT fashion technology courses.

INVESTMENT

Worth: $350 million

ERIC WATSON continues to be well known as socialite Nicky Watson's ex-husband - his name hasn't appeared too often on business pages over the past year. His Pacific Retail Group has struggled with UK electrical goods retailer PowerHouse, which was taken to court this year for rent avoidance after closing more stores. PRG's local investments include Bendon and Living and Giving. Watson's wealth has been downgraded from last year because of the poor performance of Pacific Retail.

At press time PRG share trading had been suspended while the NZX awaits the company's annual report, held up while an audit of the $145 million sale of Pacific Retail Finance to GE Finance earlier this year proceeded.

The Warriors league team, which Watson has shares in through his company Cullen Sports, was docked competition points and faced financial losses this year when salary cap breaches were discovered. But Watson said he remained committed to the club.

On a more positive note, Hanover Finance, which Watson invests in alongside fellow Rich Lister Mark Hotchin, remains a very profitable business. Its 2005 profit was up 50% from the previous year at $17.4 million.

Watson now lives in London and is renting out his south Auckland homestead, Westbury Estate, for $6000 a night. The property includes a nine-hole golf course, a tennis court, helicopter pad, 15m heated pool and sauna among its many facilities.

2005: $400 million

Lights, action, champagne. When New Zealand's fashion wunderkinder unfurl their latest claims to world domination in Auckland next week, expect more hype, froth and backbiting than the skirt-lifting on an America's Cup boat.

But, as catwalk clotheshorses reveal the cutting edge creations at L'Oreal New Zealand Fashion Week, it's what lies behind the fabrics that will vex the industry.  Flattering words by visitors from London, New York and Sydney will open new doors for an industry already enjoying a huge profile. Limelight-stealing efforts at Australian Fashion Week since 1997 and the success of last year's NZ fashion week have positioned this country as a pocket of fashion creativity.

In an industry guided by buyers and media on the lookout for something fresh and different, labels like Trelise Cooper, Kate Sylvester, Carlson and Karen Walker are racking up the orders. Fashion Week gives more than 40 designers the opportunity to build on an export market now touching $40 million.  But as much as our fashion houses crave the attention from Australia, America and Europe, there's an undercurrent of realism at this year's show. As if our isolation from raw materials and markets isn't enough of a handbrake, high fashion is coming to terms with the need to cut its cloth to fit the industry's capacity.

A steady stream of designers with flair and creativity are launching forth from training institutes, but few know how to sew, cut or make patterns.  Skill shortages have emerged. With pay rates lagging and production needs highly seasonal, few school-leavers see sewing and cutting as career options.  The influx of Asian migrants in the past decade has brought new skills and a willingness to work around the clock, and sweatshops do exist. Unionists are showing interest in working hours and pay rates, but fashion houses with deadlines to meet are crying "flexibility".

Designers cite manufacturing capacity problems and quality concerns linked to their intricate designs. The small boutiques which now characterise the sector are having to wait for manufacturers to fit in their short runs. 

Even long-established firms like Sonny Elegant Knitwear and Lewis Design Company, which provide on-the-job training, report occasional problems finding staff.  "There's a definite shortage of people on the ground like sample machinists," says Lewis Design managing director Angela Hood. "There's plenty of CMT [cut, make and trim] people and people who can sit behind a computer, but you have to be able to put the garment together.  "The people who do the production are the heart of the business."

Sonny's Tony Milich says most design graduates need at least a couple of years' training.  "They've never made garments for commercial reasons."

Despite Government encouragement for high value export producers, fashion houses struggle to get finance, both to start and expand. In the fickle world of fashion, up-and-coming designers have trouble convincing bank managers to lend for raw materials when payment for the end product may be 18 months away. 

It's an issue even for industry leaders like Trelise Cooper, who won a New Zealand Export Award last month after building her offshore business to $5 million a year.  "I've just placed a huge forward order for fabric from Europe for next winter and drawn a deep breath. If people don't like what goes on the catwalk, I own that fabric. But if I don't do it, I can't make it in my delivery window."  Success brings the challenge of financing bigger orders and arranging production runs to meet deadlines. "My retailers in Australia are really strict about delivery."  Cooper says she's holding back from opportunities in New York and California partly because of the industry's growing pains.  "I have to consider how much more I can actually physically get made.  "There's a whole lot of issues to consider with America, but probably the biggest one is the lack of manufacturing capacity."  She's heartened, however, by Government and industry moves to address the issues, with initiatives such as incubators and mentoring for new entrants. "They've recognised that it's the creative industries that bring in the export dollars."

And while she welcomes the exposure offered by fashion week, she says it's vital the industry can deliver on its promises.  Sonny's flagship label, Sabatini, has virtually been adopted by Australians. But like Cooper, Milich is hesitant about broadening the company's horizons until the industry has firmer foundations.

"For the amount of business you do initially, the setting-up costs such as legal fees and insurance are enormous. You have to have someone in there, building relationships.  "We know we could sell easily into America and Britain but right now we are having a very good growth rate in Australia."

Capacity concerns are not confined to women's high fashion. Auckland label Huffer, which exports to Japan and Australia, switched some of its production to Fiji this year because of manufacturing delays and quality issues. The label, which has expanded from the skateboarder/snowboarder set to the wider urban streetwear market, prides itself on a quality, New Zealand-made product. "When more manufacturers can help us, we will be back in New Zealand."  It, too, has pulled back from launching in American stores.

Another flagbearer, Gaye Bartlett, says the industry's future remains at the top-end of fashion. Competition from low-wage countries means local manufacturers struggle to compete with big-run, mass-market clothing. But the industry's niche structure works against apprenticeships and other forms of training, says Bartlett, whose self-named label continues to enjoy steady growth in Australia.

She says cutting is uppermost for her "elegant, sophisticated" look.  "The problem here in New Zealand is we have lost the skills of full garment construction. People with the skills have been absorbed into the sample rooms and there's not enough new people coming through. Full garment construction has become a dying art."  Our isolation from fabric suppliers and markets adds to the difficulties and costs.  "Having to pay out [for materials] so far in advance of production and pay the CMT costs upfront, when the client is able to spread payments, makes financing quite difficult. A lot of us are very small businesses and there's really nowhere to go to get support."

And retailers don't want to know if the fabric ordered from the other side of the world arrives late or turns out to be the wrong colour.  "One of the things that does damage us is producing a beautiful range and then not delivering it.  "When you are young you come out with all these dreams. The practicality of the industry is another thing."

Paul Blomfield, executive director of Fashion Industry New Zealand (Finz), traces many of the problems to the 1980s, when the Labour Government began to hack at tariffs on clothing imports, and manufacturers switched production to Fiji.  An industry which employed over 30,000 was devastated. Closures of big plants by Bendon and Lane Walker Rudkin signalled not only job losses but the erosion of institutional knowledge, specialist skills and training.

While some older hands remain, the boutiques leading the recovery are mainly young entrepreneurs. Most firms are less than 10 years old and employ fewer than 10 staff. Many make no garments themselves and rely on CMT (cut, make and trim) contractors and outworkers.

Finz was launched last month to help form a united front in addressing the sector's concerns. Blomfield says the skill shortages are not yet severe but could hamper progress if not quickly addressed. And with growth averaging between 15 and 25 per cent a year, the potential is huge.  "I don't want to create unrealistic expectations, but we are seeing success stories in the fashion sector all the time. If the infrastructure is in place, we can go further and further."

Designer fashion is included in an ambitious strategy for the textile, clothing, footwear and carpet sector, thrashed out by the industry and Government. It sets growth targets averaging 12 per cent until exports reach $1 billion a year by 2008. Training and infrastructure are among issues identified.  Anne Chappaz, apparel sector manager for Trade New Zealand, says while all companies have problems managing rapid growth, the issues are more acute in apparel "where you may put downpayments for textiles 18 months before you see anything down the track".

Staff training and "upskilling" are included in the industry strategy but Chappaz says the problems should not be overstated.  "Finding cutters and machinists is an issue, but I haven't heard of anybody that's turned down an export order because they haven't got a pattern cutter.  "Skill shortages are a seasonal issue in fashion."

Milich agrees these are not bad problems to have, given the sector's position a decade ago. He says CER has been fantastic and the Australian market still has growth potential.  "We're doing very well in Melbourne because the colder climate lends itself to what our designers are making. But go to Queensland or Perth and there's not that many New Zealand labels."

New Zealand Fashion Week means "showtime" and the opportunity to grow in these markets - but Milich warns against getting caught up in the hype.  "Reality bites when you get back from the heady days of the show and have to start sourcing the raw materials, arranging the manufacturing and meeting deadlines.  "You have to keep your feet on the ground."