Fletcher unit aims for big savings

Mark Adamson says setting up the new unit in Asia could have driven costs down even further, but Fletcher opted to base it in Penrose. Photo / Steven McNicholl

Sharing services for Aussie and NZ is part of $100 million cost-saving drive

Fletcher Building has established a new Auckland business unit to run shared services for its Australian and New Zealand businesses, taking on new staff as part of a wider $100 million annual cost-saving drive.

Chief executive Mark Adamson said the new centre would yield cost savings across the business in this area of the world.

Staff costs could have been driven down further by establishing the centre in Asia but that was rejected in favour of Penrose, he said.

"There was the option to go to the Philippines or India but for the extra dollars, it was better to keep it local," Adamson said of the pilot base set up at the headquarters of Laminex on O'Rorke Rd, although the unit might not stay there.

A spokesman said a transformation of the wider business was under way, dubbed FBUnite, and the shared services function is part of that, with centralised property management and a programme of property rationalisation, centralised procurement, manufacturing and distribution improvements and increased digital capability.

"That is expected to result in [cost savings of] $75 million to $100 million annually once fully implemented. Benefits should become evident from 2015 on," he said.

Adamson said the shared services centre will handle many different functions across the group, including pay roll, debt collecting, legal shared services and IT services.

These functions are now being performed in a more expensive way, run by each division or business unit.

Adamson said about 200 staff would eventually work at the centre, many dealing directly with the Australasian businesses Fletcher owns. "For example, they'll be paying suppliers from Australia and New Zealand business units," he said.

Some new staff would be taken on, while others came from within Fletcher, he said. "Some of the people have been redeployed and there are some new staff. It's up and running, with a project office now with the management structure in place."

Geoff Cooper, Auckland Council's chief economist, told last week how unemployment was continuing to dog Auckland and hinder its economic recovery as employers expressed a reluctance to hire new staff. Auckland has 7.3 per cent unemployment, ahead of 6.1 per cent elsewhere and well above Auckland's 10-year trend of 5.4 per cent

The centre is part of Adamson's longer-term plan to bring cohesion to the way various Fletcher business units act and buy goods and services, in a bid to drive more efficiencies, cut costs and boost profits. When he was appointed last year, he said the business did not act as co-operatively as it could among its many different areas.

Fletcher's five divisions - Building Products, Construction, Distribution, Infrastructure Products and Laminates + Panels - hold a range of market leadership positions across a geographical and industry base.

The investment community has high expectations of Adamson's changes at Fletcher, which has a market capitalisation of about $5.8 billion.