Burns, Philp may

trade winds

Burns, Philp may share islands assets

Small businesses in the Pacific may receive their biggest boost in years if a plan currently under con sideration by Bums Philp com es to fruition.

The famous islands trader that now looks to larger markets in the UK and the United States is closely examining its Pacific islands assets.

Chief Executive Andrew Turnbull may have been less than discreet back in March when he declared that his com pany was involved in “rubbish activities” in Fiji, but the head lines that the quote comman ded masked the fact that the Burns Philp rationalisation may well have a silver lining.

Earnings from island activities contributed less than 11 per cent to BP’s SA4O million result for the full year to June 30.

And but for an impressive turn around in PNG that figure would have been less.

Turnbull is particularly happy with the PNG result. From a A 54.5 million loss in 1984 the company produced a profit of A 54.5 million this year.

He told PIM that the man agement style applied in PNG would now be exported to the company’s other island activi ties “some of which performed disappointingly.”

Turnbull gave much of the credit for the PNG result to Burns Philp (PNG) Ltd chief executive David McLellan. “A couple of years ago, I sent David up there to run PNG,” he told PIM in an interview.

“David was one of the mana gers who had worked with me for the last few years down here

(Sydney).

“He had a new style of management which he applied

in PNG with some success. He has turned the thing around by attending to standards of performance, discipline and general management prin ciples.

“I’ve now appointed David to run the whole of our Pacific operations and the lessons we’ve learned in PNG can now be applied elsewhere.”

He said Fiji was giving cause for concern but, with a new team in place, he wanted to give it the same opportunity as PNG to “come good.”

“Fiji has always been profit able. It’s just that this year it’s been less so. In fact if it hadn’t been for contributions from the Samoas, Tonga, Niue and others, we would have come up with a very low result from the South Sea company this year,” said Turnbull.

Burns Philp (South Seas) Ltd is still down on last year, how ever, “and Fiji is the place that neds a lot of attention.”

Was this behind the infamous “rubbish” comment? “That’s the trouble with speaking to people such as yourself. If you’re even a little bit off the cuff you’re going to get a headline and that wasn’t really what was intended.

“What I was trying to say, and putting it rather poorly, was that we have taken a look at all the businesses that we are in and we’re trying to decide whether they are non-strategic or can be expanded and im proved.

“If the answer is no, they wouldn’t be favoured businesses for us to retain.

Similarly, we look at our poor performers and anything that

doesn’t look like making a decent return within two or three years is something that we tend to feel we should dispose of and give it to groups with more expertise in that field.”

And therein lie opportunities for islands entrepreneurs.

The company’s plantations are already out for tender and other less productive arms may follow.

“If I can get back to what I was trying to say about Fiji, we have a large number of businesses there of the light industrial variety where the market is limited. The export potential is also, unfortunately, limited and we, with our over

Andrew Turnbull: A change of emphasis in the Pacific. Pnoto: The Bulletin.

head structure, cannot compete with local groups.

“We feel that these people ought to be able to acquire what we’ve got there. And there’s a whole string of them that we could well sell off to local people. I certainly don’t feel that’s something people should be afraid of, in fact I rather think there will be no shortage of interested parties.”

Are BP’s about to pull out of the islands? “I can’t say that.

Our objective for the islands is to get a reasonable return on the investment we have got there. If we can get to a position where our returns can match what we can earn in Australia or overseas, then our future in the Pacific will be very much long term.

“We are not getting that return at present. But I feel that if we can just tidy up our operations, there will be no need or desire on our part to talk about leaving.”

But local businessmen may find rich pickings as the “tidying up” process takes place.

“There will be a change of emphasis in the Pacific, in my opinion,” he said. “For instance in our automotive interest which is Toyota distribution throughout the islands I’m hoping David McLellan will see an advantage in operating from a central point. In other words we would divisionalise.

“This would give us one management structure instead of many smaller ones on each island.

“We could possibly see the same thing happening in merchandising. It’s not some thing that’s going to happen very quickly. We need to talk to interested governments as well as shareholders first. At present I’m merely expounding a theory that shows some promise. ”

Franchising of Bums, Philp

branches is another possibility under consideration, he said.

“Take automotive again. Not only are we the distributors of Toyota, but we have 100 per cent of the islands dealerships as well. In our Queensland Nissan operation, we don’t operate that way. We are the

distributor and we teach the dealers, we franchise them, show them how to perform and do the marketing.

“But we don’t operate those

dealerships. I am very in terested indeed in looking at that for the Pacific. We’d also look at joint venture proposals in some of those areas too.”

Turnbull has already canvas sed the idea with several island governments who have shown a great deal of interest, he said.

Russell Hunter.