‘Corporate juggling’ for meat works

Press, 21 October 1986, Page 14

‘Corporate juggling’ for meat works

PA Wellington The Whakatu closing deals have redrawn the map of meat works control in the lower North Island in a year of corporate juggling which has seen Wattie Industries come out king of the industry. Hawke’s Bay Farmers Meat, the unlisted company that built Whakatu as a farmer co-operative back in 1915 and has run it since, has. proved pivotal to Wattle’s growth.

Wattie first moved into Hawke’s Bay Farmers Meat last November when Advanced Meat, a company 50 per cent owned by Wattie, took over 20 per cent of the private shareholding. Soon after Wattie itself acquired a further 33 per cent in Hawke’s Bay Farmers Meat, and the first takeover was complete. The next step came in March this year, when Wattie raised its share of Waitaki International from 40 to 51 per cent, wresting control of the South Island-based meat giant which was at the same time moving into the lower North Island by taking over Borthwicks’ works at Masterton (Waingawa), Palmerston North (Longburn), Fending (Aorangi), and New Plymouth (Waitara). Imlay, at Wanganui, and Wairoa were already in the Waitaki stable.

Having established control over 16 big freezing works and also Advanced Foods’ boneless roastplant at Waipukurau (Advanced Meat’s joint venture with the Meat Board), Wattie now took one step back.

The Hawke’s Bay Farmers Meat holding was transferred to Waitaki, and the other 50 per cent of Advanced Meat bought out in exchange for a seat (Advanced Meat’s Mr Peter Egan) on the Waitaki board.

Wattie-Waitaki emerged with by far the biggest chunk of the meat-pro-cessing industry. The Government, the Meat Board, the Meat Industry Association, Federated. Farmers, and the Meat Industry Council’s Australian consultants, Pappas Carter, were agreed that some works had to close to cope with a killing over-capacity of at least 10 million sheep and lambs. There was

also a need for better productivity and reduced killing charges.

The Meat Industry Council’s issue of its Pappas Carter report in May, 1985, said the industry would be compelled to close anything from 11 to

16 meat works from a

national total of 46, and pointed at the smaller, older and consistently unprofitable plants. But the emergence this year of the Wattie empire, with its geographical spread, opened new possibilities for the rationalising scalpel. Pappas Carter was hired again, working this time with a WattieWaitaki task force to devise a plan to streamline operations. When Affco closed its Shortland plant in South Auckland in July, Watties’ general manager for meat activities, Mr Barry Brill, warned that total or part closing of any of the Wattie works could not be ruled out. Then came the announcement that the profitable giant, Whakatu, apart from its age the antithesis of the type of works the original Pappas Carter report had targeted, was to close. At one stroke six sheep chains and one beef chain vyere gone, with much the same impact on national capacity as losing three or four of the smaller, consistent loss-making plants. For Hawke’s Bay, probably the worst centre of over-capacity with the Whakatu and nearby Tomoana (owned by Weddel Crown) works able to kill more than five million sheep and lambs a year, and two new three-chain works, Takapau (Hawke’s Bay Farmers Meat) and Oringi (Pacific) built in 1981, such a big closing will undoubtedly relieve a lot of pressure.

Also, because more than half the stock killed in Hawke’s Bay has been coming from outside the region, mainly from Wanganui, Manawatu and Wairarapa, it also means more stock for the wholly owned Wattie-Waitaki works that surround the province. The Prime Minister, Mr Lange, said recently that it was “one of those ironies” that workers at Wat-tie-Waitaki plants, Waingawa (Masterton), Wairoa, and Kaiti (Gisborne), would be relieved the knife had fallen at Whakatu, reducing the chances of their works being closed.

Of course clouds still hang over Waitaki’s Longburn and Feilding works, while in the South Island rumours that Islington (Christchurch), .Pukeuri, (Oamaru), or Burnside (Dunedin), will close are getting stronger.

The Meat Workers’ Union sub-branch secretary, Mr Nick Tichborne, said he suspected WattieWaitaki motives behind

the Whakatu closing. Waitaki’s managing director, Mr Athol Hutton, has agreed Waitaki stands to gain, but insists the initial Wattie move into Hawke’s Bay Farmers Meat was solely to ensure supply of product for the Advanced Foods bonelessroast plant at Waipukurau.

Now only Commerce Commission . approval is needed to see Waitaki sell out its 57 per cent controlling share in Hawke’s Bay Farmers Meat to W. Richmond, and a return to the traditional farmer-owned style of control, though Richmond has indicated it now wants to be listed on the Stock Exchange.

But the fact • remains that within one year Wattie International has bought into Hawke’s Bay Farmers Meat, cemented its control of the Waitaki group with a swap of Hawke’s Bay Farmers Meat shares, helped close down Hawke’s Bay Meat’s biggest works and Waitaki’s single biggest competitor, then pulled out with a $26 million pay-off for Waitaki Hawke’s Bay Farmers Meat shares. The other side to the Whakatu story is the establishment of W. Richmond’s own mini-empire on the Hawke’s Bay Meat and further processing

scene. There were two big deals.

The first saw W. Richmond buy out Dawn Meat’s share of Pacific Freezing, leaving Richmond with total control of a beef plant near Hastings (in fact just a stone’s throw from Whakatu) and the three-chain sheep and lamb plant at Oringi.

Richmond also took over Dawn’s Shannon fellmongery and its Hastings small-goods processing plant.

The second deal, subject to Commerce Commission approval, saw W. Richmond take over Hawke’s Bay Farmers Meat, giving it a second sheep and lamb plant at Takapau, 75km south of Hastings. Sheepskin pelts from Takapau will continue to be processed at a fellmongery at Whakatu, and Richmond has negotiated an arrangement with Weddel-Crown, owner of the nearby Tomoana works, to use Whakatu freezers and a second fellmongery for Tomoana products.

The Whakatu casings department will also stay open to deal with offcuts from the Takapau works, leaving altogether a workforce of 100 to 300 at Whakatu.