KAITAIA CO-OP. DAIRY CO.

Northern Advocate, 14 August 1935, Page 2

KAITAIA CO-OP. DAIRY CO.

YEAR’S WORK REVIEWED

SOME SHAREHOLDERS IN QUESTIONING MOOD

LESS SECRETIVE METHODS URGED ON DIRECTORS

COMPANY ESTABLISHES RECORD OUTPUT

The annual meeting of the Kaitaia Co-op. Dairy Company was held on Friday, and was attended by about 250 suppliers. Mr C. B. Michie, chairman of directors, presided. Mr Michie, in moving the adoption of the report and balance sheet, said the company had' had a record. 1 output, largely due to climatic conditions, together with the fact' that there had been a small addition to the number of suppliers. There had been considerable increases in prices, of which the company had taken advantage. They had for years followed' a consignment ‘ policy, but during' the past season the ? market position had been involved. ? Buying by the United States created ’ an unusual position in London, and caused 1 prices to. rise. The directors .decided to sell f.0.b., but not below certain figures. A consignment of butter forwarded! when the market was depreciated arrived to meet an improved market, so that the company gained both ways—consignment and f.o.b. sales. The financial position of the company was very sound. The assets were in a satisfactory position, full depreciation had been allowed for, and the bonus it was proposed to pay had not been provided at the expense of someth! hg required in connection with the running of the business. At the last annual meeting, he announced that owing to an accident with the big freezer, it would be necessary to install a new engine, boilers and additional plant in order to cope with the increased output. The work had been put in hand, arid though it had not yet been completed, the wheels were again turning at the factory. Much of ' the plant was at its new layout. Considerable extensions were necessary. To do the work piecemeal would only lead to confusion, so it had been de - elded to make drastic.'alterations .for the accommodation of the improved machinery. As the output increased, vats and churns would bemadded. Dairying Legislation.

Referring to changes in the administration of the industry, Mr Michie said he was not conscious of any assistance, except to the man who was down to bedrock, being available ijiv der the new legislation. Another feature was the. tendency to work away from the representation of the producers, and there was now little contact between the working farmer and those in control of the industry. Only those who had gone through the mill and knew the real condition® existing, were able to accurately size up the position.

Staff Changes.

Referring to staff changes, the chairman said that Mr McCarthy, the manager, had left to take up a position with the Te Puke Dairy Company, and was to be congratulated upon his definite promotion. Mr McCarthy had done everything he could to help the company in dealing with p-rolblems, and deserved his success. Mr Black, the first assistant, after having, beeh 18 years in the service of the company, had left to take up a position as manager at Mercury Bay, and took with him the best wishes of the director® and suppliers. Mr Craig had been- selected from 40 applicants as Mr McCarthy’s successor. The new manager dame at a very difficult time, but showed remarkable adaptability in his new [ position. They were looking forward to the corning year, continued Mr Michie, with confidence. They had a plant equal to their needs in output, and the climatic conditions were promising. It looked as if market prices would appreciate. It looked as if world suppies of butter would be rather below the average during the next few months. Mr Wallace seconded the motion. A Critical Note.

Mr Vernon Reed said the loans issued by the Agricultural Department were at 4 per cent., and l were not only for those in the direst financial straits. He agreed that the dairy company should hot guarantee loans, which should be left to the mortgagor and the Department. • What had been, done in regard to control was on the recommendation of the Dairy Commission., Shareholders Flouted.

Two years ago,, continued Mr Reed, a resolution was carried unanimously by the suppliers to the effect that no action be taken in furtherance of the scheme for extending the factory without the consent of a general meeting of the company. The resolution had been treated by the directors as so much waste paper. It was absolutely wrong that the wishes of the shareholders should have been flouted. There was no reason why the shareholders: should not know all that the directors were doing and prepared tb do. The directors were given a direct indication that they were not to proceed with the additions to the factory before the shareholders had

been given an opportunity to .discuss - the matter. “The directors have flouted us,” said Mr Reed. “I have seen a lot of bricks and mortar about the factory, arid that is all I know about the work. %e have been committed to an expenditure of £4500, and that. I believe, is only the beginning of a major scheme,” The Late Manager. This time last year, continued Mr Reed.'a resolution was passed at the annual meeting, recommending that the manager’s salary be increased by £9O, and what was the result? The shareholders had a suspicion that the manager was riot going to stay unless the position' was changed' very considerably. Mr McCarthy came to Kaitaia under a contract, and subsequently his salary was reduced. Though a resolution had. been passed by the shareholders without dissent, recommending the restoration of the cut, the directors decided not to give it effect, with the result that the manager left. The time had arrived when it should be clearly understood that when any important matters are to be dealt with, the directors would take the shareholders into their confidence. Too Much Secrecy, Mr D. Lewis agreed with Mr Reed that there was too much secrecy over the business of the company. The last manager did not get a fair spin from the board. There had been a gentlemen’s agreement, under which the manager was to start at £550, rising, if he made good, to £6OO. He did make good. At the end of the first

year, when this increase was due, the chairman proposed at a, directors meeting that the secretary’s salary be increased from £420 to £SOO. One director objected and said the manager should be considered first. They then raised the manager’s salary as promised, but as soon as the cuts were applied, the manager got the lion’s share. At the last directors’ meeting it was proposed, that the salaries of the whole secretarial staff be increased, and this on top of the treatment accorded Mr McCarthy. . To Mr H. Parker, the chairman said that at the last meeting it was: decided to put the factory staff on a different basis with regard to house rent. The only officer entitled to a free house was the manager. A sub-committee, consisting of Messrs. Bird, Puckey, and himself had been appointed to overhaul the salaries, and they made recommendations which were accepted 'by the board. Recommendations were also made with regard to office salaries, which were accepted as the board thought fit. The salaries of the office staff, as far as the junior members were concerned, were raised- • Why Was Salary Not Raised? Mr J. N. Berghan: “Why was not the recommendation of the suppliers that the manager’s salary be raised by £9O not adopted?” ' 'Mr Bird said the recommendation was carried at the last annual meeting, but not unanimously, and it was dealt with at the tail end of the meeting when the number present was not large. The directors, after taking all the factors into consideration, decided to take no action. Mr Bird said the price of dairy produce had dropped; by half, but no one was offering, to assist the farmer, who ; was staggering under an impossible burden. He had every sympathy with low-paid men, but when a salary reached £SOO his sympathy was with the working farmer. On relative salaries the manager had received fair treatment. The easiest course' for the directors would have been to follow the recommendation.

Mr Shirley Masters said the first year Mr McCarthy was in charge he saved the company £ 1200 and a further £IOOO by changing the system of carting cream to contract. If those figures were compared with the £9O, he failed to see where the argument about the struggling farmer came in. Mr Marsh said that under the articles of association, the directors were the sole arbiters' with regard to the staff, and they knew more than the suppliers. He had done what he could: to prevent a breach between Mr McCarthy and the board, and it was not the fault of the board that Mr McCarthy had left, but a clique of suppliers. Two or three years ago they were faced with a very difficult question—the enlargement of the factory and additions to plant, but a quota was threatened, arid the proposal was dropped. While the chairman was away, Mr McCarthy was asked by a deputation- for alternative plans. These he provided, but before they could be placed before the board, particulars were broadcasted among the suppliers. Various statements were made which. were refuted at a subsequent meeting. One was that the manager had been left out in the cold with , regard to the extensions. The position was that the suppliers had come between the manager and the- directors.

. Mr Shirley Masters: “Absolute nonsense.” Mr Marsh asked what there was in the balance sheet to suggest weakness on the part of the directors. Mr Bergban: “I was one of the deputation who called upon the manager. I was concerned as a shareholder oyer an expenditure of £16,500. We did not go by a back door, and we asked Mr McCarthy if there was anything he said which he did not wish reported, and the reply was ‘No.’ ” They asked that an extraordinary general meeting be called and it was at that meeting any statements were made. Mr Marsh: “Statements! were distorted in passing from one to the other.” Mr W. Rose: “When Mr McCarthy came, prices were very high, and later when they fell he had enough intelligence to know that salaries 1 would fall correspondingly. Mr McCarthy had never asked for a rise in salary, and his case was only used by certain members for the purpose of flogging the directors. The one man on the board who had caused Mr McCarthy more annoyance and embarrassment than all the other members together was Mr Lewis. ' Honoraria and Fees.

Mr Holder referred to the chairman’s honorarium and directors’ fees. The total amount shown on the balance sheet was £329, whereas at Hikurangi the amount was £103; at Maungatapere £148; and at Whangarei, £258. They paid the manager, secretary and staff, and he saw no reason' why the chairman should attend at the office every Saturday. Mr Wallace: “Some explanations' can only be given by the chairman.” Bonus Question. Mr Archibald congratulated) the directors on having adopted an f.o.b. policy. He suggested that instead of holding £28,000 for a bonus at the end of the season, a few thousands Should be made available to suppliers during the season by the payment of an interim bonus. The chairman said he had been surprised at Mr Reed’s statement that the alterations at the factory had been put in hand without any reference to the suppliers. The decision of the directors was embodied in the report presented to the last annual meeting, and had been, referred to in the press. How, then, could Mr Reed say the matter had not been mentioned to the suppliers? Dealing with the criticism- of the treatment of the manager, Mr Michie said that at the lower rate, the manager was receiving, with allowances, £ll per week. The cause of Mr McCarthy leaving was to be found mere than anywhere else in those who i posed as his friends. With regard to the distribution of money in: hand, Mr Michie pointed out that most of the money from which the bonus was provided came in very late in the season, and it was not a sound policy to pay out before they had it. If small payments were made from time to time, the farmers would- be no better off, though no doubt somebody else would be, Mr Michie said- that those

who sold 'f.o.b. right through came out very badly in comparison with the Kaitaia company. Letter Raises Questions. Mr Berghan, dealing with the relationship between the late manager and the directorate, referred to a letter written by Mr McCarthy. The chairman; “Will you table the letter?” Mr Lewis, to whom the letter was written, shook his head. The chairman: “We have written! to Mr McCarthy asking him to say whether he had been persecuted by the j directors. The letter was sent three weeks ago, and a reply has not come back yet.” Mr Lambie: “It is only fair that the letter should be tabled.” Mr Rose; “What is the use of making wild statements? Either the letter should be produced, or what ha's been said should be withdrawn.” A supplier; “I would stand; any amount of persecution for £ll a week.” Mr Lewis: “Mr McCarthy stated' that he could not and would not submit to persecution any longer. He looked on me as a friend, who always tried to give him a fair deal.” The chairman: “Will you table the letter?” « Mr Lewis: “I will not.” The report and balance sheet were adopted. General Business. Mr W. H. Atkins and Messrs. Pinker and Boyd were nominated for the position of auditor, and it was decided to submit the names to a postal ballot. The fee was fixed at 20 guineas, including expenses. Company as General Trader. The memorandum of association of the company was adopted as placed before the meeting. An amendment by Mr V. Reed that clause "p,” giving the company the right to carry on business as general storekeepers, should only be exercised after the consent of the shareholders had been obtained, was lost by one vote, and the resolution was passed adopting the memorandum of association by 61 votes to 6. On the motion of Mr W. Parker, it I was agreed that a donation of 25 guineas be made to the fund for crippled ! children. j Owing to extra work and travelling j done by the chairman since the altera- j ticns to the factory commenced, he! was granted an addition to his honor- j arium for last year of £3O. ! It was- announced that in addition to ! the retiring directors, Messrs. Vernon j H. Reed. J. N. Berghan and E. Parker had been' nominated. ! On the motion of Mr Marsh, the dir- j ectcrs were requested to do all they i possibly could to have restored to sup- I pliers the right to vote for a repres-j entative on the Dairy Board. i A motion by Mr Lewis, seconded by | Mr Shirley Master's, that the press be allowed to attend directors’ meetings, j was defeated. j