Morning Marcus: Youth rates; Fisher & Paykel; Goodman Fielder's NZ review

Bernard Hickey talks with Marcus Lush on Radio Live at 6.50 am about the youth rates debate; F&P Finance's manufacturing unit; Goodman's NZ review

29th Aug 11, 8:27pm by Bernard Hickey

<p> Bernard Hickey and Marcus Lush talk every weekday morning just after 6.50 am about business, economics, markets and personal finance.</p>

Every weekday morning just after 6.50 am I talk with Marcus Lush on Radio Live about the latest news in business, markets, economics and personal finance.

I usually send through suggestions the night before or earlier in the morning. Sometimes we veer off into other areas or pick up on things that happen overnight.

But here's my suggestions as of 7.30 pm the night before. I'll update later with a link to the audio.

Marcus,

1. I'm in two minds on the issue of youth rates. John Key doesn't want a bar of them. He says they're a type of neo-liberal ACT policy that would allow employers to drive wage rates down to NZ$2/hour. But then again, are we happy for a generation of youth to not be connected up with the rest of society through the disciplines and social structures of work?
I'm actually sympathetic on youth rates. We have a disaster brewing in youth unemployment. See more here in Alex Tarrant's article.

2. Fisher & Paykel Appliances is actually now a finance company with a manufacturing operation tacked on. Fisher & Paykel Finance is being tipped to produce all 100% of its whiteware making parent Fisher & Paykel Appliances' first-half year earnings before interest and tax (ebit). In a research report following F&P Appliances' update on its 2012 financial year outlook, UBS analyst Stephen Jancys predicts F&P Finance will contribute all the group's ebit in the six months to September 30 and 64% of ebit for the year to March 31, 2012. See more here in Gareth Vaughan's article.

3. Even bread makers are struggling in this economy. Goodman Fielder, which owns Vogels and Edmonds Baking Powder, has posted a 17% profit fall and a A$300 million writedown of its baking division. It is also reviewing Goodman Fielder's baking, dairy and home ingredients businesses in New Zealand, which include the Tararua, Chesdale, Meadowfresh and Puhoi Valley brands. The review also looks at Edmonds Baking Powder. See more here at Business Scoop.

cheers

Bernard

Click here to see all the frequencies for Radio Live in your area. Scroll to the bottom of the page. Auckland is 100.6 FM, Wellington is 98.9 FM and Christchurch is 99.3 FM.

(Updated with link to audio here.)

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

4 Comments

by David B | 29th Aug 11, 10:58pm 1314615509

I don’t think the woes at Goodman Fielder can entirely be placed on the state of the economy. Food after all is regarded as being largely recession proof.

No the problem is with management. When Peter and Pat Goodman mounted a coup at AS Patersons and began the long march of turning that company into what was eventually to become the Goodman Fielder we know today, their background was in baking. They were bakers from Motueka. Not accountants or lawyers or financiers or marketers with MBAs. Bakers. When they slowly begun to buy up all the independent bakeries in New Zealand, many of those bakers stayed on running their old businesses. Same same when they merged the company with Watties. The downfall began when they moved into Australia and merged with Fielders. The Aussie accountants the lawyers got the upper hand and moved a lot of the food people out. And the rest as they say is history.

So now in New Zealand, Goodman Feilder it run by MBA bureaucrats, who quite frankly, wouldn’t know sh*t from clay when it comes to running a food company. They have no feel for it. There is no what Warren Buffet is to investing, or what the Mad Butcher is to butcher shops, or Michael Hillis to jewellery, or Stephen Tindall to retailing or Steve Jobs to Apple computers, in the company. There’s only so much business theory you can learn at university that is relevant to baking and selling a loaf of bread.

by Bernard Hickey | 30th Aug 11, 8:11pm 1314691903

Cheers David B. Interesting background.

What did you think of Graeme Hart's tenure at Goodman Fielder? Did he leave it in better shape?

cheers

Bernard

by David B | 31st Aug 11, 1:34am 1314711294

No I don't think he helped it at all. But then I don’t think he harmed it either. He's too clever to do that. His entire business model was, at the end of the day, little to do with the manufacture and selling of food items as it was about asset stripping. Goodman Fielder is a specialist company that needs specialists (experts) in that type of business to run it in the long term. If Heart had sold it to, or gotten in gifted people with the right kind of food background in management and governance, then I think the company would be in much better shape than it is today. But now the company has returned to exactly the same comatose state it was in before he brought it and for exactly the same reasons. Management (and a board) with no flair for the business. Career business bureaucrats and corporate bean counters. Is that entirely his fault after all these years?

I see parallels here with the disappointment that Jeff Kindler the former CEO of Pfizer was to that company. Kindler was a trial lawyer who ends up running a large and complex pharmaceutical company. What does this company do? It invents/discovers/acquires and then sells biologically active chemicals that treat human diseases, and at a profit. Its tools of trade are biomedical research science, medicine and marketing. And a barrister is running it??? Does anybody really think that that is going to end up well?

To me the lesson is clear. Management and the board must have a flair for the business and the right background in it or it’s all going to end in tears. And while Heart certainly has a flair for his type of business, I don’t think that can be said for the folks at Goodman Fielder.

by Bernard Hickey | 30th Aug 11, 8:12pm 1314691930

Updated now with link to this morning's audio

http://www.radiolive.co.nz/Apple-and-the-worlds-markets/tabid/506/artic…

cheers

Bernard