Jobs in doubt as wool handling operations rationalised

1.00pm

Long time rivals Pyne Gould Guinness (PGG) and Wrightson are marrying up their back-office wool operations but say they will remain fierce competitors in the marketplace.

The two companies said yesterday they were establishing a 50/50 joint venture to amalgamate their wool handling and warehousing businesses but will continue to compete in all other areas of their businesses - including the procurement, sales and marketing of wool.

The 93 affected staff from both companies will all be moved across to New Zealand Wool Handlers, the stand-alone nationwide wool handling and warehousing company -- uncertainty about their future remains.

Decisions on their jobs will be made by the new company's general manager, who has not yet been appointed.

"Wrightson and ourselves will continue to compete in the wool industry as much as ever but we have taken a step to rationalise the back office given that we have been replicating that," Pyne Gould Guinness chief executive Hugh Martyn said.

"It simply is a drive to increase efficiencies in our respective companies," Mr Martyn said. "The wool market is cyclical and at the moment it is going through the down side of that cycle. Back office working together is not unusual in other industries and we don't see it as being out of the ordinary."

Wrightson chief executive Allan Freeth said there was a positive future for wool: "This proposal is an important step towards greater efficiency in New Zealand's wool handling and warehousing, ensuring the long-term health of the industry.

Dr Freeth said logistics alliances like New Zealand Wool Handlers were common overseas in the wool and other sectors.

"Both (companies) have proven experience and a history of commitment to the wool industry, and those strengths will be carried forward into New Zealand Wool Handlers," he said.

The new company, which is expected to be up and running this month, would initially handle and warehouse 470,000 bales of wool each year for both companies.

Forsyth Barr investment adviser Garry Moore said the amalgamation was a sensible move for both companies.

"It makes a lot of sense to provide some synergies in operations that are not particularly profitable anyway," he said. "I would say that it is just a way of taking some cost out of a pretty low margin part of their overall rural operations."

PGG's shares closed unchanged at 133c yesterday while Wrightson's were up 3c at 123c.

- NZPA