Rural Delivery: Report should knit up the future for wool

By RICHARD JANES*

The wool industry has waited since October for McKinsey and Company to deliver a strategic plan that will lead to an improvement in the profitability of wool production and so achieve commercial viability for wool growers.

Declining wool returns and the constant damaging public debate over industry structures and performance mean tomorrow's release of the McKinsey report is not a day too soon.

Wools of New Zealand believes the report will close the long-running debate on the industry structure.

McKinsey is likely to identify that a commercial framework will better provide wool growers with a way to capture the value Wools of New Zealand creates in the market.

Many would expect Wools of New Zealand to oppose a move away from compulsory levy funding. We will not.

It is for growers to decide whether compulsory levies fund international market development activity, or whether it should be commercial.

Whatever growers decide, Wools of New Zealand has built considerable assets that will logically be a key part of any future solution.

One of the most valuable is its staff. Their technical and marketing expertise in the international carpet and rug market is the world's best.

Most importantly, our staff have strong working relationships with the world's big wool customers - yarn spinners and manufacturers in the key carpet and rug markets of the US, Western Europe, Britain, Australasia and, now, China.

Since last year, Wools of New Zealand has concentrated its activity in these affluent markets because of their ability to pay premium prices.

Playing a key role in ensuring the flow of new product ideas into retail stores is the team at our Design and Development Centre in Britain. This is the most advanced wool product development facility in the world.

New Zealand wool-growers also own a valuable brand, Fernmark, now licensed to more than 180 spinners and carpet manufacturers.

About 30 per cent of New Zealand's strong wool is used in products carrying the Wools of New Zealand mark.

That volume is increasing every year, at an average 20 per cent premium over wools from other countries.

These are significant assets and capabilities, built up over several years, and owned by the wool growers of New Zealand.

Wools of New Zealand is concerned that these grower assets are protected.

It is vital for wool growers to read and understand the McKinsey report.

The vote on the future of the industry must be decisive. Wool growers need certainty and so do New Zealand's international wool customers.

Wools of New Zealand's assets provide the foundation on which wool-sector commercial viability can be based in the future.

* Richard Janes is chairman of Wools of New Zealand.