The Press

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."

New Zealanders are radically changing their grocery shopping habits as they tighten their belts.

Foodstuffs South Island chief executive Steve Anderson said the co-operative chain, which has Pak'n Save, New World and Four Square, had seen a huge change in shopping behaviour. "It's like someone flicked a switch three months ago and as a result people are changing the way they shop," he said. "The trend is towards Pak'n Saves for the cheaper prices," Anderson said.

Rising fuel prices had also proved a blessing for smaller grocery stores in rural areas. Anderson said the trend was towards shopping in rural Four Squares and New Worlds, rather than coming into the city. "People have been calculating how much it costs to drive and as a result they're shopping locally," he said. "Prior to the fuel increases no-one seemed to think about it and now they do it's cost-effective to shop there rather than spend $25 to drive to supermarkets."

Anderson said the popularity of products had also changed, with house brands increasingly in demand. "Budget and Pam's are doing very well, which is an indication of tighter times."

Another noticeable change was the shift towards 500g blocks of cheese rather than the traditional 1kg block as prices rose. "People went from a situation where they were happy to live this lifestyle because of the value of property and their job is safe and then they started thinking these pillars are not there so they've gone from spenders to conservers."

Angus McNaughten, of the Kiwi Income Property Trust which owns malls including Northlands, said there had been a shift to the cheaper supermarkets. "It would be fair to say ... people are becoming a lot more cost-conscious," he said. "It's a sign of the times."

Progressive Enterprises spokeswoman Fiona Breen said Progressive's supermarkets, which include Woolworths and Countdown, had experienced strong growth in their in-house label, Homebrand. She said there had also been a change in where people shopped.

Petrol prices had changed people's habits and many preferred not to drive as far to shop, she said. "Convenience in location is becoming a big factor," she said. However, they had not seen a noticeable shift from Woolworths to Countdown, perhaps because the prices at the stores were now similar.

Shopper Irena Sutherland said she had recently changed to Pak'n Save Moorhouse in Christchurch because of the competitive prices. "I used to shop at New World in Opawa but I found it cheaper here, I have to confess," she said yesterday. "I also buy the house brands, why not? They serve the same purpose."

Sharon Lister said that although she had closer supermarkets, she travelled to Moorhouse Avenue because it was the cheapest option. However, Lister also went to other supermarkets for specific items when they had good deals. "I shop around, especially with the cheap brands," she said. "If they've got something on special I will go down and grab it."

Glen Steele, of Hanmer Four Square, said more residents of the North Canterbury town were shopping locally but business was suffering from a drop in tourist numbers.

New Zealand's transformation into a lean and competitive economy could be at the cost of the health of Kiwis when they should be in the prime of their life.

The University of Canterbury's Geohealth Laboratory contributed to a landmark international study, published this week in the British Medical Journal (BMJ), that found the gap between rich and poor was one of the most powerful indicators of the health of young adults.

The study is based on mortality and income figures for New Zealand and 125 other countries, covering nearly 95 per cent of the world's population. The link between income inequality and poor health was found to be true in both rich and poor nations. The study authors concluded that social inequality seems to have a "universal negative impact" on health, particularly in the ages from 15 to 39.

"Humans are social animals and are not well constructed physiologically to survive in uncooperative surroundings – particularly in the prime of life," it said. "Income inequality is associated with higher mortality rates in all nations worldwide, not just affluent ones. Although the direct mechanisms that operate are likely to be different between different countries, there does not seem to be a beneficial impact on health anywhere."

Rodney Routledge, chairman of the Community Employment Initiatives Group in Christchurch, said the study's findings matched his own anecdotal observations from dealing with the city's poor and disadvantaged in the wake of the radical restructuring of New Zealand's economy in the 1980s. He found the gap between rich and poor was widening, and that had a clear impact on health and well-being. "One of the observations is that social isolation has become a major problem right across the board," he said. "Families need two incomes to get by, and people don't socialise with neighbours like they used to. Time with their family is cut back. "But for all this Government's faults, they've done a lot to increase access to primary healthcare for low-income people. They've tried to make it a preventative community focus."

He said access to healthcare despite income had significant benefits to the wellbeing of the poor and disadvantaged. Low unemployment levels hid the reality of the hidden unemployed, who do not feature on Government statistics.

Claims that a Pakistani man trained as a terrorist was working as a chef in New Zealand have proved to be false, says Immigration Minister David Cunliffe.  Cunliffe ordered an official investigation last month after the allegations were made in the Right-wing Investigate magazine and latched on to by the National Party. 

The minister said yesterday that it appeared the allegations were made as the result of an employment dispute between the Pakistani man and a Waikato restaurant owner.  "Investigate got it wrong again. The whole story was based on, as I am advised, information from the employer and his two sons," Cunliffe told The Press.  "It would appear what we've got here is most probably a personal dispute between parties which Investigate has tried to drum up into a national security story." Asked about the magazine's claim that the man had spent time in a terrorist training camp in Afghanistan, Cunliffe said: "As I'm advised there is no substance to the allegations that were made."

The magazine article was headlined "Jihad in the kitchen" and claimed two Pakistani cousins, with links to Lashkar-i-Toiba, had been granted work permits in 2002 after arriving on false documents. The men were named as Jameel-ur-Rehman and Muhammed Anwar.  Investigate said Anwar had been deported but Rehman remained in New Zealand, something immigration officials later confirmed.

Lashkar-i-Toiba is one of the biggest groups fighting Indian control of Jammu and Kashmir.  Indian authorities blame it for the August 25 bombings in the city of Hyderabad that killed at least 40 people.  An 18-year insurgency in Jammu and Kashmir, India's only Muslim-majority state, has killed about 50,000 people.

Postie Plus's board has had no communication with Jan Cameron, founder of Kathmandu retail chain, who has taken an 8.6 per cent stake in the clothing company.

Cameron cashed up her highly successful Kathmandu retail chain last year for a reported price of $275 million.

Cameron taking a stake has left shareholders wondering if this is a signal she may have a takeover bid in mind.  Postie shares were thinly traded on Friday, closing steady at 80 cents, below their 2003 100c issue price.  She is New Zealand's richest woman, according to the National Business Review Rich List, worth $300m.  Postie Plus chairman Peter van Rij said: "We have had no communication with Jan Cameron."  Van Rij said if the company had it would probably have to disclose that to the New Zealand Exchange.

Cameron was probably the single largest shareholder now because the Dellaca family, which founded the company in Westport, had sold some shares to her.

Asked if the board was expecting Cameron to call, van Rij said: "Perhaps the answer is no because if she was she probably would have spoken to us by now.  "She may talk to us but she hasn't talked to us. Maybe it's just a passive investment that she's making," he said.  Richard Dellaca said he believed Cameron had bought about 1.1 million shares from family members.  The purchases were done through a broker. 

Postie Plus has 40 million shares on issue meaning the market capitalisation is $32m.

Pressure is mounting for an independent investigation into the demise of carpetmaker Feltex in the most spectacular collapse of a public company in New Zealand in recent years.

Groups representing laid-off workers and shareholders who lost thousands of dollars are also demanding the public release of all documents relating to the company's downfall late last year.  About 180 workers around the country, including 134 at Feltex's Christchurch factory, lost their jobs because of the firm's disintegration, which also left thousands of mum-and-dad shareholders an average of $29,400 out of pocket.

Australian carpet company Godfrey Hirst, whose chief executive and chairman, Rudyard (Kim) McKendrick, is an expatriate New Zealander, bought Feltex after the receivers were called in by the ANZ Bank in September last year.  The Press can now reveal that Godfrey Hirst bought Feltex for $A122 million ($NZ168m). The $A52m it paid for Feltex's New Zealand business and assets was accidentally disclosed in a reply to an Official Information Act request, and yesterday Godfrey Hirst told The Press it paid another $A70m for its overseas assets.

About 8500 shareholders are being mobilised to help fund a lawsuit to sue, for as much as $250m, directors, vendors, issuers and promoters involved in the public float of Feltex in 2004.  Liquidators are still trying to sort out Feltex's affairs. 

Auckland investment banker Tony Gavigan, who set up a shareholder group last December to help out-of-pocket shareholders recover their losses, said he believed the last four years of Feltex's existence needed scrutiny.  While his group was focusing on issues around the company's float in 2004, other matters needed to be looked at during the time of Feltex's receivership and liquidation, Gavigan said.  "We will be looking hard at what happened and we want as many others to be looking as hard as possible," he said. "We want all the documents in the public arena."  Christchurch lawyer Garry Wakefield, who has been advising on the shareholders' planned legal action, said a great deal of secrecy had surrounding the collapse of Feltex Carpets.

The Securities Commission was not releasing any information on its investigation.  "It's a bit like saying everything is squeaky clean, but we're not telling you why or how we came to that conclusion," Wakefield said.  "There should be a full inquiry, I think. I'd be 100 per cent behind that; $250 million is a hell of a lot of money for people to lose. With Feltex, it was a 100% loss for these people."

National Distribution Union (NDU) textiles sector secretary Maxine Gay said an independent inquiry would remove any doubts surrounding the acquisition.  "I would most certainly support that call. I think the union was expressing that at the time," she said.  "There's enough disquiet to say that it has got to be cleared up so that people do feel confident. Feltex was an iconic New Zealand company," Gay said.

The union had held some concerns about the timing of the sale to Godfrey Hirst.  NDU members' redundancy payouts had been capped at $15,000 each, but if the redundancies had been announced a week later the cap would have risen to $16,500, Gay said.

Christchurch accountant Alan Robb , who specialises in company accounts, has written a report on Feltex's initial public share offering in which he concludes the company's 2004 investment statement was "misleading and deceptive".  Robb said yesterday New Zealanders deserved answers about the downfall of Feltex.  "It is important to investors that the financial activities of public companies are clear and understandable. This is true of prospectuses, annual reports and liquidations and receiverships," he said.  "The media has a duty to be raising these questions and seeking answers."

Researchers believe they may have uncovered irregularities in a web of events surrounding the purchase and sale of land in the Manawatu after the collapse of carpetmaker Feltex.

University of Sydney accountancy academic Associate Professor Sue Newberry and economics researcher Dr Bill Rosenberg, of the Campaign Against Foreign Control of Aotearoa in Christchurch, are concerned about their findings.  They have been investigating the downfall of Feltex and links with Godfrey Hirst, the Australian carpet company that targeted it for acquisition.

They say special companies 100 per cent-owned by Godfrey Hirst chairman and chief executive Kim McKendrick actually bought the two Feltex sites, not the company itself.  McKendrick is an expatriate Kiwi living in Melbourne. Godfrey Hirst is owned by the McKendrick family. 

The spectacular collapse of the New Zealand Stock Exchange-listed Feltex in September last year is still having repercussions.  Thousands of out-of-pocket shareholders are planning to sue directors, vendors, issuers and promoters involved in the public float of the company in 2004 for as much as $250 million.  The latest liquidator's report shows shareholders and unsecured creditors are owed at least $21m.

Newberry and Rosenberg are demanding answers to what they believe are two major concerns raised by Companies Office records and material released under the Official Information Act.  The first is that the sale of two Feltex properties totalling 42ha in Marton and Foxton, which required Overseas Investment Office (OIO) clearance, was not to Godfrey Hirst – as publicly stated – but to McKendrick, through two companies, Kakariki Equities and Foxton Equities, which were set up in September last year, and are 100 per cent-owned by McKendrick.

Companies Office data shows both companies were established on September 7, the day after Feltex announced that Godfrey Hirst had pulled back for the time being from its $141.8m takeover offer.  The second is the price paid for the properties.  The OIO shows the sale to McKendrick's two companies was for $5,861,058, but the price of the planned re-sale of the larger, Marton, site to a company, Kakariki Industrial Park, established on December 15 last year, is unknown, as is the level of profit on it and where the money went.

Newberry and Rosenberg believe a third concern is the corporate ownership of Godfrey Hirst New Zealand through a Vanuatu company, Olympic Pacific, owned by the McKendrick family.  Vanuatu is a well-known South Pacific tax haven favoured by Australian corporates.

According to the OIO, the application by Kakariki Equities and Foxton Equities to buy the two sites was made on October 2, and said the applicants intended to close the Kakariki scouring plant at Marton.  The plant closed last October with the loss of 44 jobs, even though OIO approval was not granted until March 30 this year.

The Feltex deal was made by John Strowger and Andrew Jessop, of Chapman Tripp in Auckland.  Strowger, who was named New Zealand's dealmaker of the year at the 2007 Australasian Law Awards this year, did not answer questions emailed to him by The Press.

The Press also put questions on the land deal to McKendrick through Godfrey Hirst's New Zealand public relations adviser, Senescall Akers, but McKendrick declined to comment.  PR spokesman Geoff Senescall said that was because Godfrey Hirst was a private company and under no obligation to answer or disclose the information.  To all intents and purposes, McKendrick and Godfrey Hirst were the same thing, Senescall said.

However, Newberry disagreed, and cited work by two Sydney University professors, Frank Clarke and Graeme Dean, which said "the notion that private companies' affairs are private, and public companies are public, is utter nonsense".  Newberry said: "Applied to this situation, it is worth noting that Feltex was a major public company and Feltex's shareholders and creditors have lost a considerable amount of money in this debacle.  "Godfrey Hirst might regard itself as a private company, but the matter is one of considerable public interest, as evidenced by the news reports and court cases."  Any suggestion that the company and McKendrick were one and the same in the land deal was flawed, Newberry said.

"It is not correct to say that McKendrick himself is Godfrey Hirst (GH), especially because the claims made before this buyout proceeded was that GH was buying Feltex as a going concern, suggesting that Feltex would continue in operation.  "Had it been disclosed that Feltex was being broken up in the buyout and that McKendrick himself was buying parts of it separately for on-selling, I suspect there would have been even greater public concern about what was happening.  "The reality is that at least these two properties were split off from the deal and McKendrick purchased them himself. McKendrick is a related party of GH, but he is not GH," Newberry said.

Rosenberg said there were questions over whether Feltex shareholders were given a "fair deal".  "The sales to McKendrick's two companies broke up Feltex's assets, apparently with McKendrick being the sole beneficiary.  "If the company was to be broken up, presumably because the assets were worth more individually than as a going concern, the receiver could have realised a greater return and the Feltex shareholders may well have been the beneficiaries.  "But there was considerable public interest in it not being broken up and it is disturbing to learn that, in fact, part of it was," Rosenberg said.

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.

Government departments are elitist and ignorant when it comes to helping small firms, one of New Zealand's leading small business experts says.  Massey University professor Claire Massey has criticised the Ministry of Economic Development (MED) and New Zealand Trade and Enterprise (NZTE) for ignoring most of New Zealand's small businesses.

Massey targeted the Government organisations' definitions and the policies they used to interact with small and medium enterprise (SME).  "They are using a construct -- the business life cycle -- which comes from large firms. If that is the only framework you use to look at small businesses, it misses the point," she said.

SMEs made up 99 per cent of New Zealand's business community, yet NZTE only dealt with the top 4% -- firms with at least 20% growth over five years.  "We love to see David beat Goliath, to see Icebreaker, Weta and Trade Me take New Zealand to the world. But most New Zealand firms are not like this," she said.  "We have to stop griping about lifestyle businesses and mom and pop firms as if they were a bad thing. They are not all embryonic multinationals, but they are just as valuable to the economy," Massey said.

The focus also missed the real force behind eight out of 10 businesses -- that of the owner.  A 2005 survey by Massey University showed less than 15% of small firms had got any help from MED or NZTE, and many knew little about what was available.  "They don't seem to mind being treated like second-class citizens, while we run around looking for the next Sam Morgan," Massey said.  While NZTE had $180 million a year mostly devoted to businesses with up to 100 staff, they blamed budget constraints for the fact they only interacted with the top echelon of those, Massey said.

But if that attitude was adopted within other Government responsibilities, such as education, it would be intolerable, she said.  "That's like dealing only with A students. It is easy to make a success out of A students."  New Zealand was not alone; most countries had an ill- thought out approach to small business development, she said.  "Countries just say `What should we be doing, let's focus on high growth.' There's not much sophisticated thinking going on there."  Taiwan -- "one of the development miracles of the world" -- had a bottom-up approach to development, putting the majority of their resources into small business, acknowledging that was where the growth potential was.  "That completely woke me up, they are doing the exact opposite of what we are doing," Massey said.

A MED report last month on structure and dynamics in SMEs showed that firms with 20 or less employees accounted for nearly 60% of new jobs in New Zealand from 2001 to 2006.  The findings showed firms with up to five workers comprised 87% of New Zealand enterprises, contributed 30% more new jobs than firms with 500 or more staff and made twice as much real profit per employee than any other sized grouping.

Encouraging the owners of "low-growth" businesses would have a massive effect on the economy, because even a small change in productivity over the large grouping would have a big upside, Massey said.

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