Decision a victory for commonsense

MEDIA RELEASE
February 16, 2009

Decision a victory for commonsense

Diversified investment firm Stevenson Group says the Commerce Commission’s decision to allow Firth Industries’ acquisition of its masonry business is a victory for commonsense.

Frank Janssen, CEO of Stevenson Building Products, said the Commerce Commission’s decision to allow Firth – owned by Fletcher Building – to take over the masonry operations in Drury and Whangarei is a pragmatic business decision.

“The masonry business had not been making a profit for a number of years and the Stevenson board decided late last year to exit the business, either through closure or a sale.

“We’ve tried for years to make the masonry business work. The rest of the business used to absorb the losses but in the current economic climate, it’s just not feasible to let that continue.

“Allowing the sale is the best outcome, as it means approximately 70 jobs are expected to be saved.”

The Stevenson board of four directors – two of which are descendants of company founder William Alfred Stevenson – made the decision to exit the loss-making masonry business last September.

Mr Janssen said the company had received other offers for the masonry business, but in the current economic climate, the proposal from Fletcher was the only deal that offered more than the masonry business’ closedown value. Staff, suppliers and customers were kept fully informed of developments.

“The commission had turned down a previous Fletcher bid for part of Stevenson’s building products division in 2005, on the basis that there may be other interested parties. In the four years since that decision, no genuine alternate bids have emerged and we’ve incurred ongoing losses in the masonry business despite our efforts to restructure and turn the business around.”

Mr Janssen said Stevenson’s experience in the masonry business has shown that it was not economically viable for two operators in a market of New Zealand’s unique size and geography.

The popularity of imported products and construction alternatives such as steel, timber and pre-cast concrete has only served to exacerbate this situation.

He said the board’s decision always meant that a sole operator was going to be the inevitable outcome, whether through a sale or closure.

The sale does not affect the rest of Stevenson Group, which includes readymix concrete, pre-cast, aggregate, engineering, framing and mining. These will continue to service and supply customers as normal.

ENDS

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