By LIAM DANN
Rivals Wrightson and Pyne Gould Guinness plan to merge their wool-handling and warehousing businesses into a joint venture company - New Zealand Wool Handlers.
The wool divisions of both rural-services companies have struggled with tough market conditions in the past year.
The companies said the merger was not an indicator
of any plans to merge other operations.
"We're both carrying very large infrastructure and capital costs," said Wrightson managing director Allan Freeth. "Where we want to compete is in the field, not necessarily the factory."
The pressure had been on for some years to find a way around the huge capital costs of the wool business, he said.
The merger was good news for farmers because there would still be competition for their wool but the inefficiencies in one part of the supply chain would be removed.
The agreement to set up the joint venture had taken hard work, Freeth said.
"This has been a transaction that has been long in the making. You spend a lot of time on documents you hope you'll never refer to. Pynes is a very upright company with good management. It's just making sure there are no grey areas."
Pyne Gould Guinness chief executive Hugh Martyn said wool was in a difficult part of an economic cycle. "The industry needs to be efficient."
All staff from both existing operations will transfer to the new company at first. The companies would not comment on the possibility of redundancies except to say that the new firm's management would make that decision when the business was operational.
It is understood the Pyne Gould Guinness warehouses in Christchurch, Dunedin and Invercargill may be closed because of duplication.
In the North Island there is not expected to be any overlap.
New Zealand Wool Handlers is due to commence operations this month following the appointment of a general manager.
The new company will initially handle and warehouse 470,000 bales of wool a year for Wrightson and Pyne Gould Guinness.
Williams and Kettle chief executive Paul Macfie said his company had no plans to get involved in the consolidation of the sector. He would not rule out future moves.
He said warehouse sharing arrangements were not new to the sector and were very common in Australia.
