Godfrey Hirst: Feltex Will be Run in New Zealand

Wellington, New Zealand, August 21, 2006--The campaign to keep Feltex in Kiwi hands sticks in the craw of Tania Pauling, according to Stuff.co.nz. "Fact is, Feltex is being run out of Australia, and that has made things very difficult for the company," she said. The prospect of being able to run Feltex's New Zealand assets out of New Zealand for a change is what makes her believe Godfrey Hirst will be good for the failing "Kiwi" icon. "This will be a key difference between how Feltex is being run now, and how we would run it," she said. Pauling, general manager of the New Zealand operations of Godfrey Hirst, the privately-owned Australian carpet maker which has made a conditional 12 cents per share offer for Feltex, has spent a week touring Feltex facilities. The tour was planned before, but undertaken after Graeme and Craig Turner of Sleepyhead fame announced they may make a competing bid, and which is already plugging an unashamed populist line of stopping the fire-sale of another Kiwi company to the Australians. Besides being largely owned by 9000 mainly mum-and-dad Kiwi shareholders, Feltex is a heartland New Zealand employer with more than 500 staff in places like Feilding, Dannevirke and Foxton, as well as Auckland, Wellington and Christchurch. After touring Feltex plants and talking to staff, Pauling offers another perspective. "Feltex makes a fabulous product and there are a lot of good things about the company," she said. But after previous Feltex owner global investment bank Credit Suisse First Boston bought the carpet assets of Australian company Shaw Industries in 2000, Feltex head office switched from Auckland to Melbourne. Now Feltex product development for New Zealand emanates from Australia, or must get approval from there, she said. "That's crazy," said Pauling. "Australia is a different market. They don't know what sells here." Another problem for Feltex is that customers ringing the company get switched through to Australia. "That's not gone down well," she said. Feltex has been effectively Australian-run since its acquisition of Shaw Industries in 2000, with Shaw's CEO Sam Magill taking charge of the company. Magill left Feltex last year, and it has since been run by Australian director Peter Thomas out of Melbourne. Two of the four Feltex directors, apart from chairman Tim Saunders, are Australian. Three of Godfrey Hirst NZ's board (including Pauling) are New Zealanders. The fourth was Kim McKendrick, scion of the little-known New Zealand family which pioneered the local carpet industry before largely decamping to Australia in the mid-1960s. "And in my opinion, he also knows more about the Australasian carpet industry than anyone else," Pauling said. As important, Godfrey Hirst NZ is also a sister company of the Australian operation, not a subsidiary, even though ultimate ownership runs back across the Tasman. "It is run autonomously from New Zealand. The decisions are made here for the New Zealand market. There is no reporting back to Australia," Pauling said. "That is why the New Zealand campaign is galling for us. The reality is if Godfrey Hirst ends up buying Feltex it is going to be a much more Kiwi-based and orientated business than it is now." Pauling is not your run-of-the-mill company director. She was offered the job as Godfrey Hirst NZ general manager seven years ago while still a lawyer and young mother of a three-month-old child. For a decade previously she had done legal work for the McKendrick family, as well as Godfrey Hirst. "Kim took quite a leap of faith, but it has been magnificent," said Pauling, who revels in the switch from law to business. "As a lawyer I got to know the structures of the business, but until you really work in a business it's difficult to know just what is going on."

Related Topics:Shaw Industries Group, Inc.

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