US branch latest to fall in Affco cost-cutting

By PHILIPPA STEVENSON

Affco's eight-member United States office is the latest to fall victim to the company's cost-cutting campaign.

Executive chairman Sam Lewis said the American subsidiary handling Affco's commodity beef trade would close soon.

The timing would depend on commitments to staff. Some might work in New Zealand.

Affco would instead use established US sales outlets and set up a North American service desk at its Auckland head office.

Mr Lewis, who is reputed to have made $9 million of savings, mostly in salaries, in the past seven months, said the level of service to American customers and suppliers would be maintained.

He could not explain why the company kept an office in the region for 10 years if it was not justified.

Work on developing the chilled beef trade would continue but in a more cost-efficient manner.

"After a thorough review, we concluded there were significant cost advantages in a new approach which would not compromise our key relationships in the US market," he said.

An industry source said Affco was likely to gain little by having American-based staff for the beef trade. It was simply reverting to the way most other New Zealand companies managed their business - through local agents.

"With lamb you need to be there, but beef's a commodity," the source said.

Mr Lewis said the US beef market was constrained by quota "so how efficiently you put it in there is important to us".