Lane Walker Rudkin (LWR)

A man with 43 years service is one of 60 employees to be axed from LWR International's Christchurch factory. Roy Williams, 58, said the mood was grim, not just for himself as "the longest server", but for his workmates with young families and mortgages.

Some were eyeing Australia for jobs, he said. He remembers the "glory days" when the Rudkin family owners of clothing-based LWR would reward employees on a Saturday with fish and chips and drinks, and when "it was a joy to come to work".

Things had tightened considerably under successive owners of the Sydenham factory, including Brierley Investments, American David Teece and now Ken Anderson.

But yesterday things got considerably tighter for Williams, who was told he will finish in the textile operations two days before Christmas. His wife died a couple of years ago, leaving him to care for a daughter, now 10. "We all got our letters just five minutes ago with a termination date on it," he said at the site. "It's just sad. It's the young ones I feel sorry for." He had already explored other work options, but said younger skilled workers were considering moving to Australia. Fourteen staff finished yesterday.

LWR chief executive Malcolm Walkinshaw said the business case for merino, polyester and other textile-making to be based in Otara, Auckland, rather than Sydenham was compelling. "We simply couldn't afford to operate duplicate textile plants in both locations. In the end, we chose Auckland because of that site's greater throughput and its space for future expansion," he said.

While the move was not prompted by the financial climate, the recent world downturn had left business leaders around New Zealand worried about the economic outlook, Walkinshaw said.

Unions fear the LWR cuts could be the beginning of a series of redundancies at small to large firms around New Zealand, with Christchurch having already seen jobs lost at G.L. Bowron, Skellerup, Dynamic Controls, Click Clack, Tip Top and Feltex.

Walkinshaw said Christchurch would retain a major manufacturing presence.

LWR have about 240 employees in Christchurch after the 60 lay-offs that will be staggered through to the first quarter of next year.

National Distribution Union organiser Kaelene Churton said there were a few others with nearly the same length of LWR service as Williams, and many other reliable workers of 20 or 30 years. "The impact that it has on people's lives for them it's going to be life-changing."

Christchurch businessman Ken Anderson looks set to expand his Lane Walker Rudkin clothing manufacturing empire.

His takeover of Auckland textile manufacturer Pod is almost home and hosed. Anderson had secured 87 per cent of Pod shares by yesterday with only 3% left to reach the 90% threshold at which he can compulsorily acquire the rest of the shares. A key shareholder with 6.4%, Aucklander Hemat Lal Patel, who had considered the bid too low, told the New Zealand Exchange (NZX) yesterday he had sold to Lane Walker Rudkin.

Anderson, an accountant by training and chairman and chief executive of Lane Walker Rudkin Industries, has a week more up his sleeve with the 50c-a-share Pod takeover offer deadline next Thursday.

Anderson owned LWR and there were no other shareholders, he confirmed. He bought LWR in 2001 except for the Canterbury brand. He keeps a low profile and will only say the LWR business has a turnover of several hundred million dollars. Pod will add about another $65 million in sales and about 250 staff.

LWR Manufacturing has more than 1000 staff in New Zealand and Australia. About 600 staff are in Christchurch at LWR's site in Sydenham where it has a textile manufacturing and hosiery and underwear making plants. LWR manufactures hosiery and underwear for other companies including Pacific Brands.

LWR has two sock factories, one in Timaru and one in Melbourne, and three smaller hosiery and underwear factories in the central North Island, one in Greytown (135 employees), Levin (130) and Pahiatua (25).

In Brisbane, LWR owns a sport apparel factory which makes sports team uniforms under licence for Adidas. It also owns the Stirling Sports and Champions of the World sports clothing retail chains. He said he was confident of reaching 90% in the next week, because of indications from other shareholders that they would sell.

Since buying LWR six years ago when it had about 400 staff, he had about doubled the business. About 60% of sales are in New Zealand, 30% in Australia and about 10% in the United States and other countries, Anderson said. In its heyday the company employed about 4000 staff, he said.

Pod would add more scale to the business. Savings existed in delisting Pod and in product rationalisation, he said. "There's a lot to be said for manufacturing close to the market," he said. About 90% of the firm's sales are from Australasia.

Christchurch's Lane Walker Rudkin Industries' offer for textile group Pod has experienced significant resistance from some shareholders.  Last week, LWR chairman Ken Anderson extended the offer from July 26 to August 9, by which date he expects a late flurry of acceptances.

But Christchurch sharebroker Grant Williamson, of Hamilton Hindin Greene, said he was telling smaller shareholders to hold on at least until closer to the closing date. The offer price of 50c was too low, given the company's assets and the potential to build value under strong management.  Williamson said he knew of shareholders who would not accept the offer "at this stage at that price".  "I'd imagine some of the other larger shareholders would feel exactly the same way."

While directors George Gould and Kevin Arscott had agreed to accepted the bid, which is conditional on 90% acceptance, that did not necessarily mean other shareholders would follow, Williamson said. He noted Gould had sold a large chunk of Mike Pero Mortgages, but with other shareholders holding on for a better takeover price.  Another big Pod shareholder said the offer was "not one I'm rushing to accept", a signal the person considers the bid is light.

Anderson said he expected to reach about 50% of Pod at the end of yesterday's trading. With another three key shareholders, ACC, Salvus Strategic Investments and Hemat Lal Patel, acceptance would rise to at least about 67%.  His representatives had spoken to these shareholders. They had not yet indicated whether they would accept.  But he "would expect them to" accept the offer given it had been recommended by the board with an independent appraisal report valuing the shares between 48c and 54c.

Anderson said Pod had a conditional agreement for the sale its Otara property for $9.5m, dependent on final due diligence. While a successful sale would be above book value of $1.15m, the price was less than an expected $12m, which would knock about 5c off Pod's share price, Anderson said.  "We were very careful when we put together our price."

Spokesmen for both ACC and Salvus said they did not want to comment yet. Patel was not available for comment.

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CAPTION:  Picture perfect: Lane Walker Rudkin Industries chairman Ken Anderson is confident of the takeover bid for Pod. Photo: Stacy Squires

Christchurch textile manufacturer LWR is inching towards control of fashion management company Pod, after a third major shareholder agreed to sell.

South Island businessman Allan Hubbard has accepted LWR's cash offer of 50c a share for his 3.3 per cent stake, held through Hubbard Churcher Trust Management.  Major shareholders George Gould and Kevin Arscott agreed to sell their 24.5 per cent and 5.7 per cent stakes in June. LWR now has just over 40 per cent of Pod shares, but needs to secure 90 per cent before its offer closes on July 26.

Pod independent directors, who include entrepreneur Sharon Hunter, have recommended shareholders accept LWR's offer, which values the company at $22 million.  Directors said the offer fell within the 48c to 54c a share value range assessed by Ferrier Hodgson, and that Pod's business model was not the best for the future.  Pod director Murray Clarke and chief executive Malcolm Walkinshaw have also agreed to sell their minor share interests.

LWR's June 25 offer was countered by an $8 million bid for Pod's biggest asset, Designer Textiles, from Australian firm The Merino Company.  LWR owner Ken Anderson, a Christchurch accountant, said the counter-offer was a "surprising change of direction" from the Australian wool firm.

Anderson said LWR, which he bought in 2001, could enhance Pod's business but he wouldn't go into detail.

Set up in 1904, LWR (formerly Lane Walker Rudkin) is Australasia's second biggest underwear and hosiery manufacturer behind Pacific Brands.  The company has more than 1000 staff and is licensed to make, distribute and sell adidas sportswear in New Zealand and Australia.  It owns the Stirling Sports clothing chain in conjunction with Anderson's son, Mark, and the Champions of the World, which sells rugby gear.

Pod has three main operations: Design Textiles International, which makes fabrics, Michele Ann, a clothes designer for retail chains including Farmers and Max Fashions, and Mollers Homewares.

Lane Walker Rudkin Industries says it is confident an offer for rival textile group Pod will reach 90 per cent acceptance by July 26 as investors realise the bid's real value.  Textile manufacturers were having to pay 30-40% more for wool than a year ago, just one factor that made the 50c a share offer for Pod look more attractive in hindsight, LWR chairman Ken Anderson said.

Textile and clothing exports were also being hit by a kiwi dollar hovering at US78c after hitting post-1985 float highs, a factor weighing on the value of Pod -- which has substantial Christchurch ownership. 

"We think there's no reason why people won't accept it. I'd be very surprised if they don't," Anderson said.  It was not his intention to increase the offer price, and he would be reluctant to extend the offer date. "As time drifts by, for those economic reasons ... it would have to be a bit of a worry if (the offer has to) sit on the shelf for too long."  Meanwhile, Anderson said LWR could yesterday confirm a new royalty-based licence agreement with Adidas, to produce branded sporting team wear for schools and clubs.

The three-year deal had been welcomed by Adidas New Zealand managing director Greig Bramwell who had noted LWR had high-profile customers including David Jones, Myer and Target in Australia.  That sporting arm was one of LWR's three business units with the others based around knitted textiles and hosiery and undergarments, including the Jockey brand, with the firm turning over hundreds of millions of dollars.

Anderson said LWR now had "towards" 50% of Pod, having gained around 3.6% of Pod through an acceptance by Timaru businessman Allan Hubbard.  He planned to this week talk to large shareholders, including ACC, TEA Custodians (Salvus Strategic Investments) and Hemat Lal Patel, which between them held about 17% of Pod. 

He added he was surprised the offer had not had immediate acceptance given that it was about a 50% premium on the 33c on Pod shares' price when the letter of intent was sent.  "Some people felt that it might have been too low, but to be honest it surprised me because previously it had been trading at 33c-34c and we came in at 50c which I felt was a substantial premium."

LWR gained initial traction for its offer by securing 30.5% from Christchurch-based Pod directors George Gould and Kevin Arscott. Neither had a "long-term focus" on Pod, whereas LWR had a history going back to 1904, Anderson said.

Anderson bought LWR from David Teece in 2001 after Brierley Investments delisted the company in 1989.

If successful with the Pod bid, LWR would look for cost savings through the scale of the combined trading, he said.
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CAPTION:
On the shopfloor: Lane Walker Rudkin Industries chairman Ken Anderson in the firm's Christchurch factory. Photo: Stacy Squires

Christchurch clothing maker LWR appears to have the inside running after key Pod shareholders - George Gould and Kevin Arscott - entered pre-bid lock-up deals to sell their shares at 50c each, giving LWR 30.5%.

Australian competitor the Merino Company has offered to buy Pod's core business, Designer Textiles International (DTI), for $8 million.

LWR says if its bid fails to reach 90% acceptance, triggering a compulsory acquisition, it would offer to buy DTI for the same price as the Merino Company's offer. Shoeshine expects Pod's minority shareholders won't be that happy with the way things have panned out. This is because they haven't had any time to weigh up the finer details of LWR's offer. LWR sent its 50c a share offer to all Pod shareholders this week.

But by yesterday they still hadn't received the target company statement or the full independent adviser's report from Ferrier Hodgson. Pod announced yesterday the documents were with the printer and it was intended they would be posted to shareholders by today. In the interim shareholders could review these documents via Pod's website.

Ferrier Hodgson completed its report last week and released its preliminary findings, including a valuation range for Pod of 48-54c per share. Ferrier Hodgson has also concluded that shareholders seeking to exit Pod would be better off rejecting the sale of DTI to the Merino Company and then accepting the LWR takeover offer. "In this scenario, even if the LWR offer does not succeed, Pod will still be able to consider a sale of DTI to LWR, at a price equivalent to that offered by TMC." For it's part, LWR says it will not increase its price.

Pod, previously called Designer Textiles, has three underlying businesses: New Zealand merino garment and fabric manufacturer Designer Textiles International, Mollers Homewares and designer fashion garment manufacturer Michele Ann. It's shares were quoted at 48c at midday yesterday, having traded in the low 30s before the takeover activity.

In its interim results published in February, Pod announced a deficit after tax of $1.173 million for the six months ending December 2006. The firm said the result took into account foreign exchange losses of $1.035 million. The result was well down on its previous net surplus of $1.32 million for the six months ending December 2005, although the company said this had included a net after tax gain of $1.1 million following the sale of its Logan Textiles Brisbane property.

At the time Pod chairman George Gould said that the group was suffering from poor financial performance from merino exporter Designer Textiles International. "Despite our merino business exporting record volumes, the reality is that we are finding it difficult to profitably manufacture and export merino fabric and garments when the New Zealand dollar is at 70USc and the competition comes from lower cost manufacturers overseas." Mr Gould said the company hoped to fast-track offshore manufacturing plans to counter the loss.

How this is factored into LWR's plans for the business should its takeover bid be successful remains to be seen. LWR, owned by Christchurch's Anderson family, is part of the largest textiles business in New Zealand. Its parent is the well-known Kiwi company Lane Walker Rudkin. It makes clothing for a range of clients and has been keen to push its Kiwi history of manufacturing in New Zealand, as opposed to its competitors, many of which have outsourced to overseas countries such as China. Last year the company set up its own merino clothing brand to take on the likes of local success story Icebreaker.

After a century in business, Lane Walker Rudkin remains famous as the home of the Canterbury sportswear brand, despite that being split off and sold. The company has since developed its own rugby brand, Union, and Everest, a brand connected to Sir Edmund Hillary's first ascent of the world's highest mountain. It is also expanding the separately run Stirling Sports franchise, after quick success with its first mega-store at Tower Junction in Christchurch.

But Lane Walker made its name as a manufacturer of international underwear brand Jockey in the days of import substitution. Later it was associated with Liberty and Adidas. Like many South Island manufacturers, the high costs of transport regulation and servicing of its larger markets up north heavily affected it. Over the period, it employed a total of 100,000 staff. It still has a large site in south Christchurch where Sarah and Alfred Rudkin made their first socks. During its darkest years, LWR lost heavily in export markets and was asset stripped first by Brierley Investments and then by a US-based expatriate. Should LWR be successful in acquiring Pod, it will increase its dominance in the textile sector.

While lamenting the possible loss of another homegrown company from the stock exchange, Shoeshine would love to see some of the combined assets of Pod and LWR return to the NZX in the future.

NZX minnow Pod, a fashion management company with the likes of entrepreneur Sharon Hunter on its board, is in demand, yesterday announcing a second takeover offer in as many weeks.  Leading shareholder Christchurch-based apparel maker Lane Walker Rudkin is understood to have offered shareholders in Pod, which has a market capitalisation of $21 million, 50c a share for all ordinary shares.

Shares in Pod closed yesterday up 3c at 47c. Pod has three main operations: Design Textiles International, which makes fabrics including from fine merino wool; MicheleAnn, a garment designer for retail chains including Farmers, and Max Fashions; and Mollers Homewares.  Last week's offer was for one of them, but it was not made clear which. Pod chief executive Malcolm Walkinshaw was not available for comment.

In February, the company said Design Textiles International was finding it hard to profitably manufacture and export merino fabric with a strong kiwi dollar and intense competition from lower-cost overseas manufacturing.  Pod, which was Designer Textiles (also NZX-listed) until 2004, has been ramping up moves to take its manufacturing base overseas.

Although sales were strong, the company said in its interim report in February that profit contribution from Design Textiles was well down on previous years, a trend the company expected to continue through to the end of this financial year.  The subsidiary plans to sell and lease back its Otara property.

John Key has a history of using luck and hard work to thrust his way to the top, a recipe he has used again to take over as National Party leader.

Throughout his life Mr Key has grabbed opportunities left open to him through vacancies or weak competition as well as being rewarded for his intelligence and achievements.  If his life remains on the course it has taken so far he could well be the next prime minister.

Today's opportunity arose after Don Brash resigned as leader on Thursday, before Nicky Hager's damning book was released on Friday.  Now at 45, Mr Key is one of the party's youngest leaders, although new deputy Bill English did hold the leadership before he was 40.

Mr Key's rags-to-riches story has been often told. He was raised by his Austrian-Jewish immigrant mother after his father died, leaving the family in debt.  A childhood in a Christchurch state house was a humble start but did not hold him back at Burnside High School then Canterbury University, where he graduated with a Bachelor of Commerce in 1982.  He subsequently studied management at Boston's prestigious Harvard University, in the United States.

His first job was project manager at Christchurch-based clothing manufacturer Lane Walker Rudkin for two years.

He then headed to Wellington to work for Elders Merchant Finance as a foreign exchange dealer, quickly rising to be head trader.  Head-hunted by Bankers Trust in Auckland, he stayed there for seven years before taking on head of foreign exchange for Merrill Lynch in London.  He also worked for Merrill Lynch in Singapore and Sydney and was a member of the Foreign Exchange Committee of the Federal Reserve Bank of New York.

After a successful career he returned to New Zealand a very wealthy man, with politics on his mind.  He settled into an $8 million mansion in Auckland with his wife Bronagh and their children Stephie and Max.  Mr Key had the midas touch in business and so far the same has happened in his political career.

Saunders and Unsworth's guide to the 2005 Parliament said Mr Key told his wife on their first date he wanted to be a National Party MP. He sent his Labourite mum a National rosette for a birthday present.

His rise through the ranks after winning the Helensville seat for National in 2002 was meteoric. By 2003 he was deputy finance spokesman. A year later he was finance spokesman.  He has raced up the ranks as well, from No 10 in 2002, to No 7 at the 2005 election.  He was promoted to No 4 by Dr Brash, in recognition of his skill at selling the party's tax package during the campaign.  Mr Key also kept the Helensville seat - with a 12,778 majority. 

In recent polls he scored well - a New Zealand Herald poll of 750 Aucklanders showed Mr Key on 17.3 per cent support as preferred prime minister, just behind Dr Brash's 18.8 per cent.  Now he is leader - one, as former cabinet minister Richard Prebble once put it, straight out of central casting.

But pundits are already questioning whether he has the political depth to perform.  Such questions will make National a little nervous, especially in the wake of the Nicky Hager book that showed Dr Brash's inexperience hurt the party.  Lack of political nous tripped up Dr Brash, a man who was accomplished and confident in his former role as Reserve Bank Governor.  In previous roles Mr Key has pulled it off and his friendly, upfront manner has won him inroads with those who matter.

Hager's book revealed Mr Key annoyed both Mr English - his new deputy - and Dr Brash's deputy Gerry Brownlee.  He upset Mr English by promising to support him against Dr Brash but then voting the other way.  He riled Mr Brownlee by making his leadership desires public at a bad time for the party.  He now appeared to have managed to get back into the good books with both.

In the House he has performed well taking on political veteran Michael Cullen, sometimes winning, and seldom struggling amid the bruising argy bargy.  He speaks well and despite his wealth is down to earth and approachable.

Jewish, he goes to church but is "relaxed" about religion. He voted against civil union legislation in 2004 and voted for raising the age at which young people could buy alcohol.

He has a reputation for pragmatism and though some - such as Hager - say his more centrist approach is a front.  He fronted National's change of position on dumping the superannuation fund and on keeping Kiwibank.

Whatever job he has held he has turned into a success.  Now time will tell if he can make his mark on National.

Christchurch's Anderson family -- owners of Lane Walker Rudkin (LWR) -- plan to expand the separately run Stirling Sports franchise, after quick success with its first megastore. The "big-box" format for the Stirling store at Tower Junction in Christchurch -- twice the size of existing stores -- would be followed at other sites around the country, LWR general manager Mark Anderson said.

The 600sqm Tower Junction store opened last weekend. "We've had really rave reviews from everyone who has been through it ... we had the Canterbury Rams through we had the All Blacks in there signing items, and we're very pleased with the trade," he said.

There were 31 stores in the franchise-based group, including two new franchisee-owned stores in Auckland's Sylvia Park and Queensgate, in Wellington, and they had recently poached Simon Pratley from rival Rebel in a management role. "There have been seven stores in the group refitted to the new (design) format. We'll have the balance of the group fitted in the next 12 to 18 months. "(Expansionwise) we're thinking 30 mall sites, and about a dozen big boxes over the next two to three years."

LWR -- the nation's largest textile firm -- recently has started a merino clothing brand, Everest, to tackle such firms as Kathmandu and Icebreaker. The brand was going well, and was being carried in Australia's David Jones stores and a giant New York store Paragon Sports, plus Ballantynes and other South Island boutique stores, he said. Everest cashes in on the company's connection to Sir Edmund Hillary's 1953 ascent of the world's highest mountain.

LWR, with 1200 employees and approaching $200 million of annual revenues, also makes a large amount of clothing for a range of clients, with expectations of some key contracts. In Australia, LWR has contracts to manufacture teamwear for rugby league clubs and school sides on behalf of brands including Adidas.

Pacific Brands Clothing NZ has been manufacturing socks in Canterbury for more than 100 years.  Today, its impressive brand portfolio includes market leaders Jockey, Holeproof, Rio, Hanes, and Bonds.

The company has its origins in Lane Walker Rudkin Ltd and a strong commitment to Canterbury, and Christchurch in particular, has been a defining feature of Pacific Brands since the early days.  Always a significant local employer, it now has more than 100 staff at its manufacturing plant and head office in Montreal Street. 

"Our people are the company's greatest asset and we have invested in them accordingly," says New Zealand manufacturing manager Simon Hay of Pacific Brands Clothing.  He says the company's loyalty has been returned, and rewarded.  "The commitment of our experienced manufacturing staff -- whose average length of service is 20 years -- has enabled Pacific Brands to apply initiatives and strategies that have been vital to its survival, and local and global success.  "A willingness to scrutinise and reinvent our processes and our brands has been the key to our achievements. It has enabled Pacific Brands to innovate, specialise, and most importantly, differentiate its products in a fiercely competitive industry."

Pacific Brands' highly flexible manufacturing reflects this approach. Its factory specialises in short-run manufacturing, speed to market, the use of New Zealand fibres and its Christchurch- based design team is sensitive to the needs of New Zealand consumers.  "We consistently develop styles and ranges that play to the company's manufacturing abilities, while delivering a competitive advantage in-store."

Pacific Brands' enthusiasm for innovation has not just been confined to marketing, fabrics, products or styles. They have applied it with equal zeal when seeking to enhance and streamline business practices and management.  The company's quality differentiator programme came to the fore in focussing on the potential for specialising in natural New Zealand fibres, including merino and possum and adding value to local products.

"The Jockey Gold Top and ThermaTech high performance merino socks are prime examples of the successful application of this initiative," Hay says.

Pacific Brands maintains close partnerships with The New Zealand Merino Company and contract customers.  The company's successful management processes have also helped Pacific Brands become a competitive exporter with an international presence in Asia, Europe, South Africa and Canada.

Products such as Liberty's super fine merino, and ThermaTech's Nuyarn Merino performance range have gained good traction in recent years.  "We are extremely proud of the company's manufacturing success over the last 100 years, proof that New Zealand can compete and win on the global stage through building strong, consumer- focussed brands."

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Champion Producer/Manufacturer (medium/large): Nature's Flame, Pacific Brands Clothing Group (NZ), The New Zealand Merino Company Limited

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CAPTION:
Proactive approach: for more than 100 years, Pacific Brands Clothing has produced quality products and the company has made sure it has changed with the times. Photo: Carys Monteath