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Exporters chairman warns growers beware

Exporters chairman warns growers beware

WIN’S GAMBLE ON WOOL GROWERS’ FUTURE

The New Zealand Wool industry will be completely decimated if the Wool Industry Network (WIN) has got it wrong in its mission to restructure the industry and replace wool auctions.

A new wool company set up by WIN recently bought the PGG Wrightson wool business and has publicly stated they will restructure the industry and do away with wool auctions.

“There will be no going back or getting a second chance for growers once the present wool industry infrastructure and selling system is demolished,” the chairman of the Wool Exporters Council Mr Henderson said.

“When it’s gone, it’s gone and at present there are no hard facts out in the public arena around the deal the Wool Industry Network negotiated with PGG Wrightson or how growers’ wool will be sold once the auction no longer exists.”

Mr Henderson said the new wool company was attempting to garner public support for an end to wool auctions without publishing any financial facts and figures.

“It does not take into account years of relationship building that exporters have spent with end users and the investment of millions of dollar working sometimes months ahead to establish forward contracts.

“On the day, the auction is a snapshot of prices that represents a lot of hard work and financial commitment and risk taking. The WIN vision is to assume all of this risk with a grower-owned entity that will have to establish a price ‘on the day’ without the auction, which is presently used as a price indicator for all wool sales.

“The big difference will be a lack of pricing transparency. Growers won’t be able to compare their offerings and will be taking an enormous leap of faith when it comes to committing their wool for sale.

“Auctions work well in property, artwork, antiques or high value and sought after areas and it is a successful way of buying or selling for tens of thousands of people on TradeMe.

“Growers need to ask themselves ’does this new company have a capable pair of hands?’ because there is such a lack of hard facts and it is pure speculation that this is going to work,” Mr Henderson said.

“We’ve heard the newly appointed chairman of The Wool Company Theresa Gattung enthusiastically talking about a ’serendipitous’ time for wool and ’hot to trot’ manufacturers.

“But it wasn’t so long ago that Ms Gattung, as the former CEO of Telecom, told analysts that she used confusion as a marketing tool to maintain profit, Mr Henderson said.

Her exact quote in May 2006 was:

“Think about pricing. What has every Telco in the world done in the past? It’s used confusion as its chief marketing tool, and that’s fine. You could argue that’s helped all of us keep calling prices up and get those revenues, high margin businesses, keeping going for a lot longer than what would have been the case. But at some level, whether they are conscious of it or not, customers know that that’s what the game has been, they know we’re not being straight up.”

Mr Henderson said the way Ms Gattung has started her new career in the wool industry indicated wool growers could expect more of the same.

“This is a classic case of the growers being told ‘trust us we know what we’re doing’, but already the Wool Industry Network had missed critical deadlines it has published on its website.”

Mr Henderson said the wool industry has been waiting for WIN to publish its promised “robust economic impact” assessment but nothing had yet materialised.

“WIN claims to have a mandate for committing growers to this massive restructuring. The WIN website based their strategy on feedback from 45 growers, never mind the opinions of the other 15,000 who grow and sell wool and have had no say,” Mr Henderson said.

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ends

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