Whakatu closing ‘good business for Waitaki’

Press, 14 October 1986, Page 2

Whakatu closing ‘good business for Waitaki’

By

HUGH STRINGLEMAN

farm editor

The closing of six sheep and lamb chains arid a beef chain at Whakatu, Hastings, is very good business for Waitaki International, Ltd, New Zealand’s biggest meat company.

While so far managing to avoid closing any of its 14 fully owned works, Waitaki has precipitated the closing of a big slice of excess killing capacity in Hawke’s Bay. W. Richmond, Ltd, a private farmer-owned meat company, wants to pay $44 million for all the shares in Hawke’s Bay Farmers’ Meat Company and acquire two freezing works — Whakatu at Hastings and Takapau, only 77km to the south. In a separate deal it is buying Dawn Meats’ share of the Oringi (Dannevirke) single-chain plant and it. has negotiated a co-opera-tion agreement with Weddel Crown, owner of the neighbouring Tomoana works at Hastings. Waitaki received $26 million for its 56 per cent inherited share of H.8.F.M.C., and the removal of Whakatu’s killing space substantially relieves the pressure on other lower North Island

works owned by the giant meat processor. Waitaki has its headquarters in Christchurch and it will drop back to 14 freezing works, half in each island. The managing director of Waitaki, Mr Athol Hutton, said in Christchurch yesterday that his company was required to pay a share of redundancy costs arising out of the part-closing of Whakatu, with the loss of about 1500 jobs. But he agreed that the result of the rationalisation in Hawke’s Bay would be more stock for Waitaki’s works at Waingawa (Masterton), Longburn (Palmerston North), Feilding, Imlay (Wanganui), Waitara, Gisborne, and Wairoa. Hawke’s Bay had drawn stock from all over the North Island, said Mr Hutton, with up to 50 per cent of its total kill coming from outside the region. Whakatu has killed up to three million lambs in a season and the neighbouring Tomoana has a similar capacity, yet Hawke’s Bay will produce little more than 5.2 million lambs this season, it has been predicted.

Mr Hutton has denied, however, that the Rich-mond-fostered rationalisation was planned by Waitaki and its majority

shareholder, Wattie Industries, when both companies became involved in Hawke’s Bay Farmers’ Meat Company. The complicated share history goes back to late 1985 when Watties bought 33 per cent of H.B.M.C. (at $3.50 a share) and Advanced Meat bought 20 per cent. Mr Hutton claimed yesterday that Advanced sought the stake in H.B.F.M.C. to ensure continuity of supply from Whakatu and Takapau for its lamb roast plant at Waipukurau, a joint venture with the Meat Board. That plant takes trimmer and overfat lambs and reforms the meat into Bernard Matthews lamb roasts. At that time Watties owned 50 per cent of Mr Peter Egan’s Advanced Meat, but earlier this year it took complete control. Mr Egan joined the board of Waitaki International.

In March this year Watties also increased its holding in Waitaki to more than 50 per cent and the H.B.F.M.C. stakes were transferred to Waitaki.

The stage was set for what has now happened in Hawke’s Bay.

A firm of Australian consultants looked closely at the whole lower North

Island picture for WaitakiWatties, said Mr Hutton.

Under the arrangement worked out with Richmond, the Waitaki-Watties group will receive back what it paid for the share of H.B.F.M.C.

But why is Richmond so keen to help Waitaki? Mr Hutton said it was because of the prospect of bringing two Hawke’s Bay meat works back into full farmer ownership as well as being able to close the chains at Whakatu to make Takapau and Oringi more profitable. ‘‘Oringi would not have been profitable for Richmond unless they could get some rationalisation of the bigger works nearby,” he said. Waitaki’s excellent result from the rationalisation was commented upon by the secretary of the Whakatu Meat Workers’ Union, Mr Nick Tichborne, last week. “As far as Waitaki is concerned, it is good business sense for them to use the situation to meet their greater needs,” he said. “But I don’t know how to combat it.” Before he moved to Christchurch to head Waitaki, Mr Hutton was chief executive of Hawke’s Bay Farmers’ Co-operative Association.