ORURU SUPPLIERS OBJECT

Northern Advocate, 24 March 1937, Page 9

ORURU SUPPLIERS OBJECT

Amalgamation With Kaitaia Recommended

About SOO suppliers and others interested in the Oruru Dairy Factory met in the Peria Hail on* Monday evening to consider the recommendations of the commission which sat at Kaikohe recently to deal with the zoning of factory territories. The meeting" had been convened by suppliers who acted apart from the directors. The chairman of directors, Mr J." W. Hosking, was in Wellington. No resolutions were passed, and the attitude of those present was in the first place one of inquiry into the reasons for the commission’s recommendations and their significance. The meeting was also a demonstration against the changes proposed. From the tenor of tie various speakers’ remarks and the manner in which they 'were received there can be no doubt of solid resistance to amalgamation when the question comes, before the supplies in a regular way on April 7. ,

Mr John Paterson, who was voted to the chair, said that certain resolutions had been carried at the conference at Kaikohe Df which the meeting had no knowledge. There had been some rumours and they resume' of what took place wanted the directors to give them a Commission’s Finding.

Mr Wilton read the finding of the commission, which was not prepared to allocate a zone to the Oruru company, for the following reasons: If an area was taken from Kaitaia and allotted to Oruru, the payout of Kaitaia would be reduced without a sufficiency compenisating benefit ■to the Oruru company. Such a diversion of supply could not be justified on the grounds of the conservation of quality, because the distance from the Kaitaia company’s factory to its more remote supply areas is insufficient to affect the quality of the crearfi. ■ . It would be difficult to allocate cream collection routes to the companies if the'' area were divided. The commission’s first duty is to the suppliers, and it is bound not to take any action on behalf of any dairy company if the effect of that action would be detrimental to the interests of the district as a whole. The commission • was thus of the opinion that the Kaitaia company purchase the assets of the Oruru company at a fair valuation, and that the two companies should amalgamate.

An agreement between the Kaitaia and Oruru company directors was as follows:

The Kaitaia company agrfeed to take over the whole of the assets and liabilities **to the bank and oh the machinery; of the Oruru company, but these liabilities are not to exceed £6300. The Oruru company is not to incur any further capital liabilities and it not to pay out to its suppliers for butterfat supplies more than the net return for their butter after making adequate provision for depreciation of plant and building. The directors of both companies further agreed to place these proposals for amalgamation before their shareholders, with the recommendation that they be adopted. “A Staggering Blow”

Mf J. Garton said the recommendations were a staggering blow. The business was not taken according to any definite plan and later in the day the Kaitaia and Oruru representatives were asked to meet and come if possible to some arrangement. On meeting, the position was found to be hopeless and nothing definite was reached. They went into the matter fairly fully before the commissioner the following day. The Oruru representatives made some suggestions, which were immediately challenged by the opposite side. The commissioner said, when it was stated that Oruru had made an application for a zone: “We can’t give you a zone when suppliers will receive a lower price at Oruru than they can get elsewhere.” Answer For Everything. Oruru accepted tentatively an arrangement that Hokianga take over the Mangamuka run, expecting to get something in return., , “I mentioned,” said Mr. Garton, “that we had a harbour and shipping facilities Kaitaia was not likely to have, but we were still told we could not get a zone, even to retain what we had.” “To whatever suggestions we put forward, there seemed Ck> be an answer ready beforehand. I am referring to the commission, and it did not matter what we wanted we could not get it.” On the question of amalgamation or absorption, it was suggested that Oruru agree to Kaitaia buying the former out, and, finding there was no chance of dealing with the commission in any other way, it seemed best to tentatively agree at a price that would mean the liquidation of all debts. “I think we told the commission that the shareholders would hit the roof over that. “We asked that the commission visit the district, but that was refused. If Kaitaia were to buy • the Oruru factory business, trucks would be run from Kaitaia to Oruru and the business would be conducted at one ■; factory. The suggestion came from Kaitaia that they did not want the whole district. Hokianga was to take part and there was to be some bargaining about Whangaroa, and where the boundary for that district should be. f The suppliers for Oruru. he said, could exercise their rights and say i whether the factory was to be closed down or not. Mr. D. Tracey said he had been very disappointed at the way in which the conference was conducted. Everything, he alleged, was cut and dried. He understood that, under the proposed agreement. Kaitaia was to take over the factory and machinery and that the buildings would remain the property of the defunct, company. Mr. Wilton said that certain matters I would be coming before the share- j holders at the meeting called for I April, and Mr. A. J. Murdoch would then probably be present. “Could Drag Along In Mud.” In arriving at the difference between the Kaitaia and Oruru payments, a deduction for capital expenditure was not considered in the case of Oruru, he said. When the j question was asked as to what would happen if Oruru shareholders refused to sell, they were told that they could drag along in the mud. Mr. Tracey

had asked what would happen to the staff, and Mr. Jones had replied that provision would be made for them. Another question raised was about the carting contracts and the reply was that they could be terminated. Mr. Milton referred to comments by Mr. Mclntosh, who said the difference in the price paid for butterfat by the two companies showed slightly more than a halfpenny in favour of Kaitaia. The actual difference was .399 pence.

The commission considered the position only as it was at present and not as it was before the factory was built. When Kaitaia representatives wanted to bolster up the position, they produced a newspaper report which their own directors had supplied. “I stated,” said Mr Wilton, “that, whether provision was made for Oruru suppliers at Kaitaia or Oruru>, it would mean an additional cost of id per lb butterfat, but Mr Mclntosh had stated that, for an expenditure of £9OOO at Kaitaia, they had a factory capable of turning out 4000 tons of butter and he held that this had been done without any extra cost to the suppliers—a ridiculous statement. If Oruru suppliers had to go to Awanui, it would mean the same cost as if manufacturing were done at their own factory. Kate For New Wharf. The Oruru ratepayers would be saddled with a rate for their new wharf and would, have to change their produce over to a port which could only be made workable by dredging the river,” he continued. Mr'Wilton gave figures to show savings to Oruru suppliers by a reduction in costs and various services given by the company. It had been said that the Oruru output was too small for the economical running of the factory and yet a factory with a lower output had been given a zone.

Mr Wilton, making an appeal to local patriotism, said that the recommendations of the commission were not in the interests of the district and a man who had .no pride in his own community was a pretty poor specimen.

After referring to the necessity which had arisen for a new wharf at Marigonui, Mr Wilton said that, with amalgamation, Mangonui would become a dead end.

Mr J. B. Kennedy emphasised the advantages of Mangonui over Awanui as a port, and said the freight was 17/6 per ton in one case, against 32/6 in the ether. He understood there were only about 18 inches of water at Awanui at low tide and they would never get a 2000 or 3000-ton vessel into that port. Replying to Mr Mcllroy, Mr J. Garton said that if Kaitaia took over from Oruru it would take over the debts, but Oruru suppliers would share the responsibility for these debts. A shareholder: Is there any authority above the commission? Mr Wilton: The commission has very wide powers and could make a recommendation that a license be refused a factory. Sir Francis Fraser recognised that the commission could not compel in a matter of this kind and it would be absurd to give any body of men power to close a business. “Could Get a Zone.” If the Oruru shareholders turned down the proposition, he would say definitely that they would get a zone. Mr R. Wrathall dealt with the effect of bringing all cream from Oruru to Kaitaia on the roads and protested against carting 4000 tons to an uneconomic port. They should cling to the last real asset they had in the district in the dairy factory. Answering a question. Mr Wilton said that 26 per cent, of the shareholders could keep the factory where j it is. Mr Kennedy asked if a valuation could not be put to the meeting. ■ The chairman; I understand that is to be left to the meeting in April. | It was stated that the native suppliers at Mangamuka wished to remain ! with Oruru and had written to the I Native Department, but had not yet 1 received a reply. I