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Feltex Carpets Limited - CEO Speech

Sam Magill
Chief Executive Officer
Feltex Carpets Limited

Speech Notes
Bell Road, Lower Hutt, Expansion
12 November 2003

Let me begin by endorsing Ian’s comments and welcoming you all to this occasion. It certainly is a pleasure to see so many friends, and I look forward to catching up with you individually during the informal part of the programme.

As many of you will know, the expansions at Bell Road have been milestones in the recent history of Feltex. It isn’t every day that you install additional production capacity of this magnitude, and the effort required on the part of the organisation – especially the skills and commitment exercised by the people directly involved – is immense. Thank you to all involved.

The Bell Road expansions have been a key part of the growth phase in Feltex’s New Zealand operations. With the current performance of our business, and the strong consumer acceptance of our products, there is every possibility that the growth trend will continue.

Feltex is a New Zealand icon. That’s not really surprising, since our operating history in this country stretches back to 1929.

Feltex started in New Zealand as a manufacturer of felt slippers. In the early 1940s, 10 looms were installed here in Lower Hutt, and the company produced its first carpet. Later in the 1940s, a factory was built in Christchurch and wool scouring capacity was purchased in Kakariki.

The company grew, establishing further plants and making some fairly large acquisitions, including Kensington Carpets in the 1970s and Stevens Bremner in 1980. The key development of recent years has been the purchase of the Australian carpet operations of Shaw Industries, in 2000. This established Feltex as one of the two largest carpet manufacturers in Australasia, with a product range including both wool carpet and carpet made from man-made fibres. That purchase, and the subsequent merger of the two operations, created a range of new opportunities and challenges.

I think we can genuinely say that Feltex is a part of heartland New Zealand. We have a substantial and lasting involvement in both the rural and manufacturing sectors. The company buys 9 percent of New Zealand’s strong wool clip, and employs 1900 people of which 1000 are in New Zealand. You might be interested to know that about 55 percent of Feltex’s New Zealand carpet production is exported, including a large volume sold in Australia. As I have already noted, we have a brand that is widely recognised and approved – and, obviously, we have thousands of satisfied customers who purchase our products.

Nevertheless, those of you who know the carpet business know that it is very competitive, and there have been tough times for every participant over the past decade. The key attraction of the merger was the opportunity to advance the company’s competitiveness by capturing the benefits of increased scale. We have worked hard to achieve that – and to improve operational performance – through a reorganisation involving our manufacturing operations, marketing and other functions, and of course the product range. The benefits of that programme are now coming through, underpinning our current performance and our prospects for the future.

Our New Zealand operation has been a winner from this process. Particularly here at Bell Road .

This can be seen as a vote of confidence in the New Zealand part of the business. I believe that confidence is well founded. New Zealand has competitive advantages in, wool supply, currently in labour costs, making the manufacturing environment relatively efficient. Feltex New Zealand has an excellent management team and staff. I am confident that they will take up the opportunities before them and continue to perform at a high level.

Changing tack slightly… Feltex can be seen as a true trans-Tasman company. I believe the way this company works – with skilled management and operational teams on both sides of the Tasman working closely together, with integrated manufacturing and support functions across both countries, with sales not only in our region but growing strongly in export markets – is a good model for any trans-Tasman enterprise.

We have shown that this model can work well – those of you who follow the company will know that after a tough period financially we have put our results back on track and recently announced strong growth in our earnings. I expect the improvement in our performance to continue and I have great confidence in the ability and commitment of our people to drive that improvement.

It remains for me to thank you on behalf of Feltex for joining us on this important occasion. In particular, I want to acknowledge the presence of the Minister for Industry and Regional Development, the Hon. Jim Anderton, and the Mayor of Hutt City, Mr John Terris. Thank you gentlemen…. Your support is very much appreciated.

ENDS

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