and tougher” - Turnbull
pp. 35-37 · Read in the full issue
trade winds
Burns Philp now “leaner and tougher” - Turnbull
Burns Philp (South Sea) Company, Ltd., has announced a con solidated operating profit after tax of $F1,762,000 ror the year ended June 30, 1984. This is a rise of $F594,000, or 52.5%, over the previous year and demons trates the considerable re structuring which has been car ried out in Burns Philp’s Pacific operations.
New chief executive, Andrew Turnbull said in Sydney recent ly that the reshaping, and streamlining process through out the whole Burns Philp Group had begun some time ago. “The company has to look logical before it is logical.
“We set out to look for those businesses which we knew we were good at, emphasise them, invest more in them, and try to drop off or further rationalise those in which we were not so successful. We are well down the track with it,” he said.
In Australia, he said, the company would bring some smaller units under the umbrel las of the hardware division, for some, and the food division for others.
The Australian side of the group was now in much better shape, leaner and tougher, he said, and the year’s results reflected that, although the bot tom line of the company had been affected by the setbacks suffered in Papua New Guinea and over the South Pacific Container Line which had now ceased operations.
The shipping line had been a fairly expensive effort to en courage inter-trade between the islands. “Philip Best and Hugh Reynolds could see that there was a strong prospect of
this trade, but that it had to be encouraged. You have to show people in the Solomons what they can export to Western Samoa; people in Papua New Guinea what American Samoa might buy. You have to deve lop markets and, if I might suggest it, I think we went into the shipping line before the markets were fully developed.
“Therefore, when the com pany began to look a lot harder at those things which are bleed ing, and South Pacific Con tainer Line was bleeding heavily, you have to make a
decision. It might have been a very noble contribution to the Islands, but when you face responsibilities to your share holders, you have to try and stop that bleeding. That’s what we did, 18 months after the line began, and we had lost a lot of money in that time - something like $1,500,000.
“We didn’t have the cargoes.
Before we set off on the opera tion we reckoned we had the support of the island govern ments. I am not saying it would not have been forthcoming, but it certainly wasn’t greatly forth
coming during the period when we most needed help. So I think we just lost a little bit of faith and decided that maybe there is a case for such a shipping line, but not now.
Let’s just withdraw, and that’s what we have done.
“We talked to the govern ments, including the Australian government, but we are not a government, with a govern ment’s resources. There might have been a way of pushing aid into the islands through the line, but there just wasn’t enough time, given the volumes of money we were losing. We got letters of disappointment when we closed down, but no car goes and no cheques.”
Burns Philp are still paying for the charter of the ship, but are looking to re-charter it or spot charter it, probably outside the island area, and thus reduce the continuing expense.
“We have got a pretty good shipping agency,” Mr Turnbull said. “That’s one of our successful Australian divisions.
They’ve been pushing out the ideas to handle this problem.”
The restructuring of Burns Philp in the Pacific involved moving away from the com pany’s traditional role of island trader and more into manufac turing, and industrial enter prises generally.
“In the old days, people were of a more pioneering nature,”
Mr Turnbull said. “They didn’t have to have a posh house, a big car, a lot of money. They had just the wish to get out there and pioneer. And in those days the company did very well, served by men who pushed back the frontiers of trading from Australia out into the islands.
Andrew Turnbull
“And as the company grew it got organisational. It got more disciplined and people with different standards. All of this might have made for a nice esprit de corps among the peo ple, but it also made for very high overhead cost. And over head costs, up there in the islands, are the things that can kill us.
“If you go anywhere in the islands you will see family retail shops which can knock spots off us in terms of return upon money invested simply because they have got a whole family working in there. They don’t have any big salaries to meet.
They just want to live and, in the course, of time, the family becomes wealthy. We cannot cope with that. ”So our trading company said, ’let’s face up to it, like Sir James did. He would try some thing, and if it didn’t work, he would just withdraw. We are being wise.” ’’This is not to say that we are selling up and leaving the Paci fic,” he said. ’’Quite the con trary. We are deploying our resources in areas where we can be of assistance to the Island economies through our world-wide network and our expertise, and make a decent return for our shareholders. ’’The company is genuinely committed to localising both the management and the owner ship in all emerging Pacific nations in which it operates.
This will take time and a great deal of patience, understan ding, and give-and-take be tween the local people, govern ments and Burns, Philp,” Mr Turnbull said. ’’Burns Philp has been around the Pacific a long time and I see it staying that way.
In countries like Fiji this pro cess has already begun with a move out of highly visible businesses like the BP chain of supermarkets, and into less publicly-noticed, but still large, areas like food processing, furn iture manufacturing, and others.
“I don’t have a great back ground in the islands,” said Mr Turnbull, “and on my first visit there I have to say I was not initially greatly impressed by what I saw. That was probably because I came from a different background, with different stan
dards. But, when one adjusted to the local scene, and looked at other factors, and other re lativities, I came to the conclu sion that Burns Philp was on the right track. ”
‘Knowing the time to move forward and when to withdraw ...'
Beyond the island region Burns Philp is expanding not only in Australia but also in several other parts of the world.
Queensland Insurance has just opened an office in Tokyo, they have growing interests, particu larly in the food, and food engineering, areas in Latin America and Europe.
“Bums Philp is moving into areas and investing most in areas where it will achieve maximum results. At present Australia is offering that maxi mum return. This does not mean we will not continue to be involved in the Pacific islands, but we will not be investing at such a frantic rate as we did in the old days.”