New Mair Group region’s second biggest firm

Press, 3 August 1985, Page 21

New Mair Group region’s second biggest firm

By

NEILL BIRSS

Canterbury’s second-larg-est company by sales and market capitalisation, the Mair Group, soon to become the Mair Astley Group, is bringing business south against the economic tide. With its recent acquisition of Colyer Watson, Ltd, and merger with Astley and Sons, Ltd, Mair will have annual sales of more than S4OOM, excluding intragroup sales. It will have more than 800 employees. The new group will have shareholders’ funds of ?40M to ?45M. The new group figures would have put it in the country’s top 20 listed companies by turnover in the last year. In Canterbury it is second in size (by sales) only to Waitaki N.Z. Refrigerating, Ltd. From the Mair expansion, the headquarters of Colyer Watson will come to Christchurch from Wellington. This is welcome in a city that has seen headquarters evaporate or drift north for years: Bunting and Company, Ltd, N.Z. Farmers’ Co-operative Association of Canterbury, Ltd, Andrews and Beaven, the Taylors Group and, in the next year or two, Whitcoulls. Mair is a trading company. The managing director, Mr Alan Shadwell, thinks of it as a small version of a great international trading house such as Mitsui, of Japan. Mair has trading branches or agents in may overseas countries. Executives in trading branches are on call 24 hours a day, often fielding telephone inquiries at home during the

night from overseas customers. The company is expanding its overseas representation with the Colyer Watson acquisition. The former Wellington company’s offices in Tokyo and Osaka will expand the international Mair representation and staff are in Sydney and Boston now establishing offices. In trading Mair works on high volume and low gross margin: 2 per cent is the target. Much business is done by telephone and telex. Decisions have to be made quickly, without fear of making a mistake. This says Mr Shadwell, has developed executives who are decisive and entrepreneurial. The firm now seeks young executive material, preferably with a university background in marketing or other fields of business administration. But, beyond this, they must have entrepreneurial skills, characterised by initiative and decision making flair. “We want the persons, who, if they see something needs to be done, get out and do it,” Mr Shadwell says. Mair executives, notably Messrs Richard Mercer and Michael Dwyer, were key figures in the recent closing of a sale of S3SM worth of wool to Iran by a consortium of New Zealand exporters. The group has diversified from its trader base, however. In Christchurch alone it is completing an SBM expansion of its fully owned subsidiary, Christchurch Carpet Yarns. “We have been international commodity traders and, like a lot of them, got into processing and manufacturing,” Mr Shadwell said yesterday. The policy in the last decade has been to market the end-users whenever we can. “We try to make one middleman between the

end-user and the product,” Mr Shadwell said. The firm largely buys and sells the commodities which it trades in as a merchant, but there is still a little commission trading. The first step into manufacturing was scoured wool. That was when Mr Shadwell came to the firm. He was a . lecturer at Massey University, in the wool department, when recruited to boost the first Mair scouring operation. He made it one of the most profitable sections of the firm in five years. Now 53, Mr Shadwell has been with Mair since 1962. From scoured wool, the company has moved into carpet-yarn production in Christchurch. The new group will be the country’s biggest tanner of bovine leather. Forty per cent of the group’s revenue will be from leather raw stock (another 40 per cent will come from wool). Other Mair products include tallow, grain, seeds, game, meats, fish, and industrial products, including chemicals, plastics, machinery, even glass. Futures trading is a natural adjunct of commodity dealing, and Mair helped pioneer the New Zealand Futures Exchange (Mr Shadwell is its chairman). The firm was an associate of the Sydney Futures Exchange 20 years ago, seeking then a hedge against fluctuations in wool prices. Manufacturing as well as trading have spread overseas. Mair has a 75 per cent share in a Hong Kong manufacturer, Glamma Leathers, which processes New Zealand lamb pelts to suede and nappa. Mair links its subsidiaries by a web of interlocking directorates. Communication is by talking rather than memos. “Not a lot of paper is exchanged, but we talk a lot. Also executives travel a lot round the world,” Mr Shadwell said. Such communications trim time needed for decision-making. “As a company, we are fast on our feet,” Mr Shadwell says. “We have to be as traders. Executives

” learn how to make decisions fast.” 1 Many of the senior staff i have some accounting or , business administration j qualification, but they do not regard themselves as accountants; they are product people. Mr Shadwell, 1 for example, gained his i A.C.A. by extra-mural study while a lecturer at Massey. The executives are given i budgets, and they help set their own standards. Central management sets a limit on ; the resources they may use [ and how much risk they ' may expose the group to. i With profit objectives, and once budgets are agreed : upon, they are turned loose, i “We put chaps in charge i and give them objectives, a range of responsibility and • a broad field within which they can operate and let them get on with the job.” i These key executives are paid a share of the profits in addition to their salaries. With the low gross margin in trading, Mair’s future profitability will depend on its traders. ; Mr Shadwell says management is a strong point of the group. He is well read in organisational theory, and puts into practice his knowledge. The company is run on profit centres, mainly as subsidiary companies. Mair has been a good

investment. A dollar invested in the company five years ago would now be worth $5.96. (During this time the Reserve Bank share index has risen 3.1 times.) "We believe the large institutional shareholders in Mair are happy with the enlarged group, and have no intention to quit their holdings because of ~ the changes,” Mr Shadwell says. Mair is based in Christchurch because the firm was founded in the city. An international trading firm could be run from Campbell Island if it had international jet flights, telephone, and telex links. But Mr Shadwell has often wondered whether Christchurch is a poor nurturer of entrepreneurs. Most of the key driving forces among Mair executives are from other parts of New Zealand, or from overseas. The company’s commitment to Christchurch is not in doubt, however. Apart from the SBM spent at Christchurch Carpet Yarns, it has spent millions of dollars over several years on the group’s wool scour at Belfast, and will build a new office block, in which it will initially take four floors, near the King Edward Barracks. The economic reforms of the Minister of Finance, Mr

Douglas, will make it easier to make money in international trading, but floating exchange rates and fluctuating interest rates add to the risks. Mr Shadwell does not argue with the intentions, but thinks the Government’s pace is too fast. He thinks it will take 10 more years for the country to complete the diversification made necessary by the E.E.C.’s swallowing up of the British market. “New Zealand has had 13 years of bad economic Government to the present Administration,” he says. “But I don’t think the Labour Government can get the country out of the mess in one term.” The changes were necessary, particularly the tax reforms, Mr Shadwell says, but he is sceptical whether the economy is large enough for the New Zealand dollar to float without undue fluctuations on a day-to-day basis, and is convinced that last year’s 20 per cent devaluation was too high after the dramatic reduction in the value of the dollar over the previous five years. The thing is, however, that the environment will be trickier for everyone. Mr Shadwell’s fast-on-their feet team should do better than most.