Founders’ chemistry a recipe for success

Ron Anderson and Bob Foster have lived their personal ‘‘boy’s own adventure’’ over the past 30 years as they started and grew Arrow International from a small one-office operation to an  international company. But it was not all smooth sailing, as business editor Dene Mackenzie reports.

The first three decades of Arrow International have been documented in a  book called The Bushman and The Builder, and it really is a who’s who of New Zealand construction.

In the  foreword, Sir Eion Edgar writes  that the achievements and success of Ron Anderson and Bob Foster were, in his view, every bit as towering as the growth out of Dunedin of the likes of Fletcher Construction, National Mortgage and Fulton Hogan.

"This account of their unique approach to business — and to outdoor adventuring which their staff enthusiastically embraced with them — is a story of true grit.

"They never gave up.

"When people told them ‘it can’t be done’, as frequently happened, they went ahead and did it anyway. They were, and remain, true New Zealand business iconoclasts."

The book was written by Dave McKinnon and  published by Arrow International Group.

Although it probably does not include all of the dramas involved in the group’s growth it does give a broad picture of how driven Ron Anderson was in the pursuit of success.

Mr Foster comes across as more laidback.

It is impossible, however, to believe the chemistry between the two founders did not play an overarching role in the success of the group.

Messrs Anderson and Foster were not universally liked when they introduced a new approach to the way they conducted their business.

That is acknowledged in the book but the two men have significantly changed the way construction contracts are carried out in New Zealand — and to some extent in Australia.

Mr Foster recalled contracts were typically driven by architects who designed the projects "as monuments to themselves", appointed the contractors and oversaw the construction.  Everybody did well out of such situations — except the client.

Messrs Foster and Anderson had spent a lot of time observing this while they were at Fletcher Construction, asking themselves who was looking after the interests of the clients.

The men would go to clients whose  project budgets were blowing out by 25% and tell them they could bring them in on budget.

Arrow did not want to be weighed down with assets and Messrs Anderson and Foster did not want to own anything.

The antipathy they encountered from the industry would, early on, drive them off their ideal model in several respects.

They found they had to employ architects because those in the consulting sector were unwilling to offend their other clients by working for this "upstart outfit".

Because the larger construction companies openly vowed to throttle them by refusing to work on Arrow-led projects, Messrs Anderson and Foster had to form their own small construction company in partnership with a third party.

But this did not compromise the fundamental approach.

One of the most important boosts to the fortunes of Arrow came, as it often does in Otago, from people who know people.

In the early 1970s, DB decided to try its luck in the South Island.

A brewery was built at Washdyke in 1976 and, to secure outlets, DB took in as a 45% joint venture partner all of the licensing trusts in the South Island.

Soon after, DB went on a pub-buying spree, buying 126 in just two months.

Peter Thompson, who worked for Mr Anderson in Fletcher’s Dunedin base, joined DB as its South Island property manager in 1983 and was charged with upgrading the pubs.

He and DB’s Dunedin branch manager at the time, Neville Muntz, sat down in the  Arrow basement office on Clark St with Mr Anderson and plotted the upgrade strategy.

The urgent priority was the Captain Cook, the legendary student pub in Dunedin. Mr Anderson was told what DB wanted and they worked out a budget of $800,000.

The job was completed under budget and was so successful that four years later, the at-first reluctant lessees wanted to do it again: turnover had trebled.

That was the first of about 50 hotel projects Arrow went on to do for DB.

The experience with pubs in New Zealand made Arrow a "shoo-in" with Lion Australia and away went Messrs Anderson and Foster.

They ended up refurbishing beer delivery systems in about 250 pubs and clubs as well as recommending and executing other improvements.

Lion Australasia noticed, according to Mr Anderson, that outlets Arrow  upgraded drew  more customers and poured more beer.

As an aside, an Arrow company oversaw the installation of the beer delivery system for the Sydney Olympics, which was considered the most advanced of its kind in the world.

It was capable of delivering 3500 schooners per minute from 52 bars fed by 15km of beer and glycol lines out of 100 cool rooms.

The chapter about Mr Anderson’s relationship with businessman Sir John Davies, a former Queenstown mayor, is a highlight of the book.

Sir John’s foray into the tourism business provided Arrow with opportunities on the Milford Track through to the upgrade of The Hermitage, at Mt Cook. 

Kelly Tarlton’s Underwater World was one of Arrow’s toughest jobs and came through the relationship Arrow had with the The Helicopter Line, which became Tourism Holdings Ltd (THL), and Sir John.

Two things stand out from the accounts included in Mr McKinnon’s book.

Messrs Anderson and Foster place a high priority on "the team", as shown by the multi-sport events the company is famous for running or competing in.

Having interviewed Mr Anderson and Arrow staff over the years, the staff gatherings in the backblocks of New Zealand came across as an important part of the Arrow culture.

The culture seems macho and not many women are named in the book, except as family members.

It is apparent it is the Arrow way or the highway. People have been brought in for specific projects and, while some have lasted many years, others disappear quickly.

The harsh reality of a successful company is ensuring the right people are in place to carry through on projects in the prescribed way.

Arrow is one of this city’s most successful companies, no doubt about it.

If there was one disappointment it was the way the controversy surrounding the building of the Forsyth Barr Stadium was handled.

The chapter certainly gives the Arrow perspective of the debates, the funding challenges and the design and budget constraints.

However, it glances only superficially at the opposition to the stadium, the ongoing burden to ratepayers in the region — despite the success of hosting major entertainment events and rugby tests — and the deep divide the stadium’s construction caused in the community.

● Messrs Anderson and Foster are both included on the NBR Rich List with a net worth of $120million each.