Affco chief confirms more workers will go

By PHILIPPA STEVENSON agricultural editor

Affco executive chairman Sam Lewis says the troubled meat company will cut more staff as it strives for the understated style and profitability of South Island counterparts.

Mr Lewis yesterday gave his first interviews since the company, one of New Zealand's major exporters, signalled it was in major strife by announcing the sudden departure of chief executive Ross Townshend.

Four other management team members have also gone in the seven weeks since the February annual meeting.

On Monday, Mr Lewis said industry and Affco veterans Brian Cuff and Murray Roberts would become managers of, respectively, operations, and sales and marketing.

He also said his board had approved a review of costs in the Swanson St, Auckland, head office and the six processing plants.

Yesterday he said it was inevitable that more of Affco's 3000 staff would be cut, as would salaries and head office and plant overheads. His only consolation for staff uneasy about who was next was to tell them he had an open mind and would make cuts rationally.

"One thing that this does - with what has happened in this company - is that we've been able to draw breath and sit down and think about how we need to shape ourselves for the future," Mr Lewis said.

"It's quite a simple plan. We will look for people experienced in the meat industry," he said in apparent reference to Mr Townshend, who joined Affco from the dairy industry.

While he would not talk directly about the axed chief executive, Mr Lewis said he wanted Affco to be more like the publicity-shy southern companies, Alliance and PPCS.

In nearly two years at Affco, Mr Townshend attained a high profile, particularly for his "internationalisation" programme designed to turn the company into a year-round meat marketer.

"You've got to have a solid homebase to do the stuff overseas, and once you peel away the PR, did we actually achieve all that much?" Mr Lewis said.

Affco needed to accomplish more than the one-man office it set up last May in Buenos Aires, Argentina.

"We need some more solid achievements than that, and we won't get them as individual companies."

Models for overseas ventures would be based on the NZ Lamb Company, in North America, the marketing arm of four companies.

"Internationalisation meant we would look at demand overseas, and if we couldn't fill it in New Zealand we would meet it from elsewhere around the world.

"But if you haven't got your home base right, how do you finance it?

"I think [internationalisation] is still a worthy objective for New Zealand Incorporated, but we may be able to do it by cooperating with other companies."

Affco's joint-venture plant in China would continue as a lone operation and efforts would continue to solve stock procurement problems.

The Buenos Aires office would be relabelled South American to distance it from Argentina's foot-and-mouth outbreak, and to reflect its use of product from Brazil and Uruguay.

Mr Lewis defended his board against suggestions that it had waited too long to address problems.

"You rely on the reports management give you, and if they've been a little bit inaccurate, what do you do? Do you base your decisions on what you don't know, or what you know?"

He said he intended to remain as executive chairman for up to 12 months, but a new management structure would be announced within three weeks. Its goal would be cash-driven profitability.

There would be renewed emphasis on stock procurement, with Affco looking especially to win back beef it had lost to other operators.

Mr Lewis is confident farmers will support the company.

The high-profile resignations did not appear to shake the livestock market.

He said the week of Mr Townshend's departure coincided with Affco's gaining its greatest share of livestock in three years, and subsequent weeks had also been better than in previous years.

Director Arthur Young, who represents major shareholder Peter Spencer, said Mr Spencer supported the board's actions and Mr Lewis' role as executive chairman.