James to try to save Aerospace

Press, 13 February 1982, Page 19

James to try to save Aerospace

PA Hamilton N.Z. Aerospace Industries’ receiver. Mr John. Gaukrodger, has asked James Aviation, Ltd, to put forward its proposals to save the failed Hamilton aircraft manufacturing company. Mr Gaukrodger said he had had a preliminary meeting with the chairman of James Aviation (Mr’ O. G. James) and had invited Mr James to “come back with specific proposals on the future of the company.” Mr James said that every effort should be made to keep Aerospace alive. His company still intended to buy Air New Zealand’s 50 per cent shareholding in Aerospace, depending on marketing prospects. Mr Gaukrodger, who was appointed as receiver by the A.N.Z. Banking Group, said:

“I have emphasised to Mr James that the ball is in his court now. and I am interested in discussing - with him any proposals he may wish to put to me.” Mr Gaukrodger also emphasised the urgency of the matter, although no specific deadline had been made for Mr James’ proposals.

The Hamilton chartered accountant has carried out a review of Aerospace’s latest financial statements. He said a statement of affairs would be filed with the companies office within the next two or three weeks.

He was unable to give any further details on Aerospace's financial position but said that the company’s failure was. in his view, for three reasons:

• Firstly, adverse trading conditions in the New Zealand agricultural aviation industry led to a complete lack of demand for additional or replacement aircraft. • Then the company failed to secure markets for aircraft overseas, particularly in the United States, because of the worldwide aviation industry downturn. • “Excessive cost over-

runs” in developing the Cresco turbo-prop aircraft, and failure to find local or overseas markets for it. Mr Michael Cullen M.P. (Lab., St Kilda) said that Air New Zealand must shoulder some of the blame for the company’s collapse. He said “the collapse of Aerospace should not be seen as just a consequence of a decline in the market for topdressing aircraft. “It is crucial to remember that Air New Zealand, a Government-owned company, is the dominant shareholder in Aerospace. “Air New Zealand must share in the responsibility for the fact that Aerospace has tended to respond to short term problems by price increases which have led to further declines in sales." Mr Cullen said topdressing operators and farmers would be looking to the Government to ensure continuity of parts and maintenance of competition to help keep farm input costs down. And, he said, the Government should consider guaranteeing Aerospace’s debt so that the company can continue on a firmer basis.

While jobs at Aerospace were threatened by lack of a relatively small amount of money, “billions of dollars are going to be spent on a few risky projects" which may require huge subsidies.

The Minister of Civil Aviation (Mr Gair) said that Aerospace had been held up by Government support which “could not be justified on an indefinite basis.” Asked whether Air New Zealand’s current problems had contributed to the company’s failure. Mr Gair said: “1 don’t think it had any bearing at all.

"Air New Zealand's financial problems during the last year have arisen in areas that are not directly related to the problems of Aerospace."'

He said the decision to pass Aerospace into receivership was a responsible commercial decision in the circumstances.

“There has been close contact between the Government and the company for quite some time, and the nature of the problem has been appreciated by all those informed." he said.