Further mergers seen of wool companies

Press, 10 November 1986, Page 4

Further mergers seen of wool companies

PA Wellington Further mergers of wool exporting and processing companies can be expected in the next year or two, said the Council of Wool Exporters in its weekly market preview.

The council’s executive manager, Mr Bill Carter, said it was likely that a number of large corporate groupings would emerge.

These would complement the emergence in recent years of small-to-medium export houses which were geared to servicing speciality wools and markets.

Earlier this week, the planned merger of Maircom N.Z., Ltd, and the N.Z. Co-op Wool Marketing Association was an-

nounced. If approved by the Commerce Commission, the new group will be New Zealand’s largest scoured wool exporter and processor, buying wool through the auction system and direct from its farmer clients.

Other large wool exporters include the subsidiary companies of Elders International, which collectively form New Zealand’s largest wool exporting group. An associate company, Elders Pastoral, also has a growing woolbrokering business and owns Tucker’s wool scour in Hawke’s Bay. Wrightson-Dalgety is New Zealand’s largest wool-brokering business and is involved in several

wool scours. As yet this group is not involved in wool exporting.

The New Zealandowned companies are competing with a number of overseas-owned wool export houses, most of which are owners or partowners of wool scours in New Zealand.

“Of growing importance to the New Zealand wool industry has been the development of a large and sophisticated wool-scour-ing and manufacturing base, which ensures continuity of wool purchases at auction, even during periods when overseas demand is limited,” Mr Carter said.

“Between them, New Zealand woollen mills such as Alliance Textiles,

Cavalier Elco, Christchurch Carpet Yarns, Feltex and U.E.B. have the capacity to process more than 25 per cent of the New Zealand wool clip. Nearly 65 per cent of the clip is being scoured.” Mr Peter Marshall, of John Marshall and Company, Christchurch, said it was essential for the longterm future of the New Zealand wool industry that New Zealand exporters had the financial ability to service their customers properly.

"For the want of a better word, the New Zealand wool export industry is a service industry,” he said. “The overseas-owned export companies are well established with offices in our traditional western European markets and it is only in recent years that the New Zealandowned companies have had the resources to set up a permanent base in important markets.

“These offices are extremely beneficial, but it is not practical for every exporter to set up an office in every market to provide the service the customer needs — so it is logical for companies to come together to provide that representation.”

Mr Marshall said the merger of Maircom and N.Z.C.W.M.A. was a positive step for the wool industry. ’ Mr Patrick Desbonnets, acting chairman of the council, said farmers had no need to fear a lessening of competition for their wool as a result of mergers in the export industry. “Three major export commodity traders have bought into the New Zealand wool exporting industry in the last three years and a number of smaller specialty exporters have become successfully established,” he said. “Also the pattern of purchases by different companies changes from season to season. All these are signs of a vigorous competitive industry.” Unlike the meat industry, said Mr Desbonnets, these mergers were taking place at a time when demand for wool was strengthening.

At next week’s wool sale in Napier, 17,000 bales of crossbred wools will meet a ready demand from exporters and local mills. The sale volume is down by 4000 bales on the original rostered quantity. This, together with the imminent departure of a ship to the Soviet Union, could see a further firming of auction prices as exporters seek to cover their export contracts, i