Dairy Company Meeting.

Northland Age, Volume 2, Issue 24, 17 March 1933, Page 8

Dairy Company Meeting.

Owing to the Position of the Butter Industry, Additions to Awtinui Fadtory will not be built at present

The extraordinary general meeting of tlie suppliers to the Kaitaia Dairy Company, that was held in the A. and P. Hall yesterday, Thursday, was very largely attended, the hull being full to overflowing, a number having to stand as there was by no means sufficient seating accommodation for those present. There was quite a number of ladies who attended. The meeting had been called on the requisition of a number of shareholders and after hearing these gentlemen, and the position as explained by (lie Chairman of Directors, in which he concluded by stating that at a Directors' meeting held during the morning it had been unanimously decided, in view of the latest confidential information that was received, not to proceed with any additions to the factory, the meeting passed a resolution, recommending the Directors to take no further action with any scheme for additions without calling another meeting of shareholders.

Mr. O. Fisher, one of those who had been in the lead in connection with the petition that had been circulated asking that a meeting he called, was the first to address the meeting and his remarks were mainly dealing with prox.vs, with the request that those that had been handed in too late should he admitted. This the Chairman ruled out of order and stated that of the 22 proxys that were in order only nine were in the names of directors. Mr. Fisher also spoke of the Directors’ trip to the North last weekend as a propaganda tour, but this was denied by the Chairman, who said that at the invitation of a number of suppliers he and others of the directorate had met suppliers at Waiharara and Raio. -

Mr. J. N. Berghan then rose to move a resolution hut Mr. Michie asked that his explanation of the position he heard first. “Is this to he a fight between Directors and shareholders," asked Mr. Sanders at this point.

Continuing his remarks Mr. Michie said that Mr. Fisher and Mr. Sanders had implied that the Directors had tried to push their wishes through at the meeting. This was not correct, he was only trying to run the meeting as it should he and he was now going to put the full position before the shareholders. Until the suppliers had heard him, the Chairman contended that they would be in the dark as to the real position but he was in the hands of the meeting and if desired that Mr. Berghan’s motion he taken first he was quite prepared to do so.

On being put to the meeting it was decided to take the resolution. Mr. Berghan then moved and Mr. 0 Fisher seconded the following resolution:-

■That this meeting of Shareholders of Kaitaia Co-op Dairy Factory Co. Ltd proposes that in view of the demoralised and uncertain conditions prevailing in connection with the future of the butter market that the present is a most inopportune time to spend the huge sum of 1-16,500 in extentions to the Factory plant and recommends to the Directors that only necessary expenditure to enuble the Factory to carry on in the meantime, be made to cope with the increasing output.”

Speaking as mover of the resolution Mr. Berghan said, that when he first read the circular regarding tl-e expediture of £16,500 on additions to tiie Factory, he thought that it was a misprint and should read £6,500. Under normal conditions, the Directors’ scheme would have received his support but under present conditions he could not see his way clear to support suoh an expenditure.

Restriction of exports were being proposed and quota system was hovering over the butter industry. The majority of the suppliers were labouring under a burden of debt and were receiving very low prices for their produce. Although the major scheme may be very sound, the people of the district had one experience of how pretty figures could be made to look, that was the £54,000 road loan. The position now was that the farmers had to carry the burden and they would have to do the same with the suggested expenditure of £16,500 on the Factory. The industry was passing through dark days and lie thought that if the Directors consulted with the Manager they could evolve a scheme of extensions costing much less than the large figure named. In seconding the resolution, Mr. Fisher laid that the Shareholders were meetin g

to discuss an expendituae of £16,500 but under the present economic outlook, were they justified in such an expenditure? No one could say how the butter market was going, it was not known if low water had been reached yet and indications were that it would not raise to any extent for some time to come. In face of this could a large expenditure be justified? The speaker then referred to previous expenditure on the Factory and said that he thought in comparison with other Factories, quoting Ilikurangi, that the Company had been rather lavish in its expenditure.

Mr. Michie, in placing the full position before the meeting, said in reference to the original scheme that had been placed before a meeting of shareholders in April of 1930, he, together with Mr. A. W. Masters, another director, had been opposed to that scheme on account of various objectionable features, notably the receiving of commissions by Mr. Curtin, who was then the Company’s consulting Engineer. For voicing these protests he had incurred the displeasure of the manager and some of the directors. That scheme, as it was pointed out then was the first step in a major scheme that was even then estimated by the Secretary to cost £14,500. Owing to a legal point the Company was unable to go ahead with that scheme but additions costing approximately £IOOO per annum have been made hut this expenditure could not keep pace with the increased supply. The scheme that had now been put forward was on the representations of the Manager who had stated that he could not carry on at the factory for long undei present conditions. In collaboration with Mr. Wallace Smith, the Government Factory Inspector, Mr. McCarthy took the first steps when they outlined a scheme and on their recommendation Mr. Cave had been engaged as architect. Mr. Kepple, an expert in dairy machinery had been lent by tho N.Z. Co-op. Dairy Company to advise the Kaitaia Company regarding the machinery required. In December of last year the first steps were taken. Mr. Kepple had pointed out that by the sale of electric current the cost of power to the Company would be materially reduced, and acting on this advice, lie, the Chairman, had opened negotiations with the Kaitaia Town Board. The next step, continued Mr. Michie, was when he, accompanied by the factory manager, went to Hamilton and discussed the matter fully with Mr. Kepple and inspected machinery. Mr. Kepple had outlined nine schemes but both he and the manager favouied the one costing £16,5000 as it showed the greatest saving in manufacturing costs. Right through there nad been no discordant note between the directors and the manager. After, the last shareholders’ meeting when the scheme was endorsed, continued Mr. Michie,, Mr. Kepple requested that he again visit Hamilton to finalise all details regarding the ordering of plant etc. For personal reasons Mr. McCarthy was not able to make the trip and as practically all the details in his department had been finalised it was not essential that he should do so, but to attend to all the clerical work entailed, the Secretary accompanied the Chairman. While they were away, said Mr. .Miohie, the position altered on account of the suggestion of restricted exports of butter and in view of this no definite orders were placed except for the purchase of second-hand boilers which • will cost approximately £450 landed at Awanui as against £3OOO if purchased new. These boilers are in first-class condition as certified by Government Inspectors and were remarkably cheap. The decision not to finalise any orders was reached on Sunday and a director, Mr. T. H. Kenny at Kaitaia, notified, so that he could inform others. In conversation with Mr. Parlane, Managing Director of the N.Z. Co-op. Dairy Company, he had said that he anticipated that there would be a come-back in butter prices next season.

When they returned to Kaitaia, continued Mr. Michie, the full position was placed before the directors and it was decided to defer going on with the scheme until fuller information was available regarding the situation of the butter market. The manager had then suggested a diesel engine he secured to help out with the power and Mr. C. S. Puckey had put the alternate suggestion that a steam engine be obtained as boilers had already been bought. The information had reached him that a movement was on foot among the suppliers to petition for a general meeting and the leaders of this movement were invited to meet the directors but the invitation was declined. At the next meeting of the directors no definite information was available from the Dairy Control Board although they had been frequently communicated with but the answers received were vague. The manager had meantime gone into a modified scheme, and he

placed this before the meeting. His original rough estimate was £3OOO hut on going into the plan more fully it was found that the cost would lie about £6OOO and the manufacturing costs were estimated at £1 3/10 per ton, an increase of 8/5 o,ver the major scheme, the scheme as finally outlined being as follows : New cool room and ammonia 1 coils £IOOO „ Anderson 20001 b churn 800 „ Cream vat 3050 gals. 800 Additions boiler house 1000 1 new boiler installed 1520 Additional chilled water vat (Temporary) 60 50h.p. Marshall Compound engine with fittings 350 Contingencies 470 £6OOO Comparative manufacturing costs a ton. Major Alternative Scheme Scheme Cost Power 4/9 14/Interesfc 6/8 3/Depreciation 4/- 2/6 Additional time freezing - /- „ pasteurizing—■ 3/4 Total costs 15/5 £1 3/10 Still no action was taken until that morning when confidential information regarding the butter situation was received from an official source and this was most disquieting. With this information, which we are not in a position to divulge, before the directorate at its meeting that morning it was recognised that the Company could not at present proceed with any scheme for additions and a reso'ution to that effect was carried by the directors.

In response to requests by shareholders and at the invitation of the Chairman, the Factory Manager, Mr. McCarthy gave a resume of the position as it affected him. When lie came back to the Factory about four years ago the output was 940 tons and the first year lie was there it increased to 1122 tons. He soon saw that to cope with the progressively increasing supply, the Factory and plant would have to be enlarged and he brought the matter before the Directors. When in Hamilton with the Chairman, Mr. W. Rose, he introduced Mr. Curtin to the Chairman and after a conversation it was agreed that Mr. Curtin could come North and go into the position of the Factory hut the Comyany was not bound in any way to Mr. Curtin. After a report had been made, this was placed before a meeting of shareholders and endsrse by them. Owing to various reasons this scheme was not proceeded with. In November or December of last year, I approached the Directors regarding additions to the Factory. The plant was working for 13 hours a day, starting at 3.30 in the morning and for those hours was carrying about a 50% overload even now the plant was running for 12 hours on an overload, engines and boilers could not stand up to this very long. The Chairman had outlined the various steps taken by the Company in obtaining reports on various schemes and the major scheme that was approved was supported by me” said Mr. McCarthy, “as it showed the greatest saving in manufacturing costs. I was in full accord with the Di. rectors. When restrictions and quotas were mooted it appeared to me that we would have to drop the major scheme and so I started to see if any scheme could be devised to enable us to carry on for a time. At this juncture I was approached by two suppliers and was asked if I could carry on with a smaller expenditure than the £16,500 suggested. To this my answer was that I could with an expenditure of about £3OOO. I had not then fully gone into the figures and requirements and when I did so I found that I could not with any margin of safety carry on with expenditure of only £3000.”

“Will Mr. McCarthy refute the statement that has been made that lie has been visited with odium and rebuke from the Directors for suggesting ways and means by which economy could be effected,” asked Mr, J. C. Marsh. “That statement is absolutely i correct” answered Mr. Me Carthy. A director Mr. T. H. Kenny, spoke of the telephonic communication lie had with the Chairman at Hamilton and of tlie information he had so received.

After Mr. Michie had again stressed the statement that the Directors had decided to do nothing for the present, Mr. D. Banks asked for an assurance that the Directors would not proceed with any scheme without the sanction of the shareholders and the assurance was given by the Chairman'

Mr. V. H. Reed then moved the following resolution, which was seconded by Mr. F. Reynolds: “That the Directors take no further action in regard to the schemes submitted for additions to the factory without first calling a meeting of shareholders."

Mr. J. N. Berghan withdrew his original resolution.

As an amendment Mr. W. R. Grigg moved “That the £6OOO should he gone oil with,” but although the Chairman seconded this pro forma, on being put to the vote it was overwhelmingly turned down. Asked if he could carry on at the factory without further additions, the manager said that in the light of the latest information, he would he able to curry on as lie did not think there would he such a load as there was at present. At this stage a number of suppliers voiced the view that they had come to the meeting to hear details of the various schemes and not the personal explanations that had taken up practically all the time of the meeting, and Mr. H. Lamb, on behalf of the Northern suppliers spoke of their confidence in the directorate and indignation at the attitude of some shareholders.

Mr. V. H. Reed, after saying that he thought that the directors had carried out theirduties remarkably well, qualified this by saying that they needed watching. There was no unfriendly spirit against tlie directorate but the shareholders should be given fuller information regarding factory matters. On being told that this information was available at the office, Mr. Reed wanted to know what would be tlie position if 500 suppliers walked into the office asking for these particulars. He realised, as had been stated by the Chairman that it was not possible to make p.ublic all the business of the Company hut he thought that the shareholders should have been tendered full information regarding the various schemes for additions to the factory.

On being put to tlie meeting Mr. Reed’s resolution was carried, as was one that the amount deposited by the petitioners be refunded them.