Pacific Brands sackings/executive pay increases

[Buddy]

OK, let's have a chat about Pacific Brand. You know, the sackings and the Exec pay rise.

http://www.abc.net.au/news/stories/2009/02/27/2502698.htm?section=business


Maybe they should give the media liason officer in P.Brand a pay rise. How would you like that job, explaining this most immoral behaviour to the media and public?

Funny thing is, P Brand is a very badly run company. Too many piss weak brands that do not make money. If I were running that company I would get rid of the crap brands, limit the number of products made, concentrate on quality and the inevitable cost savings & profit increase resulting from rationalising the products. It strikes me as very strange, giving an obscene pay rise to Execs of a company that is probably going down the gurgler. But I guess thats the way companies are run these days by the execs - short term avarice and greed, and take as much dosh as you can before sticking it up the shareholders.

Maybe the board of PB should have a look at the way R.M. Williams is run.

As an aside, I wonder if the quality of their stuff made in China will be as good as the Aussie made stuf. Actually I have always bought some of their stuff (eg, Jocks & Yakka) because of the quality, not the price. If their Chinese made stuff matches other companies stuff made in China, ie generally it is crap, then I will be sticking their jocks up their bum. So to speak.

 

[vincent191]

Buddy, the Chinese are very capable of manufacturing top quality stuff but are the buyers willing to pay for quality?

People want cheap imports therefore you get lesser quality. I have inspected some of the Chinese textile factories and their equipment and manufacturing processes leave Australia far behind.

PB management like you still think of the Chinese factories as sweat shops with thousands of lowly paid workers working in third world conditions couldn't be further from the truth!!! They can produce first class goods if you are prepared to pay for it.

 

[Fatcat]

A step in the right direction would be canning the endorsement contract of that overrated / overexposed clown Michael Clarke.

 

[dalek]

Buddy, the Chinese are very capable of manufacturing top quality stuff but are the buyers willing to pay for quality?

People want cheap imports therefore you get lesser quality. I have inspected some of the Chinese textile factories and their equipment and manufacturing processes leave Australia far behind.

PB management like you still think of the Chinese factories as sweat shops with thousands of lowly paid workers working in third world conditions couldn't be further from the truth!!! They can produce first class goods if you are prepared to pay for it.

You are absolutely correct. The Chinese are more than capable of producing premium quality goods. They make according to the specifications of their customer. Unfortunately we Australian buyers go there only to buy the cheapest possible product. We get what we are prepared to pay for and conditioned to believe.
From my own experience the danger is often in paying too little and under specifying the manufacturing requirements.

 

[Buddy]

Buddy, the Chinese are very capable of manufacturing top quality stuff but are the buyers willing to pay for quality?

People want cheap imports therefore you get lesser quality. I have inspected some of the Chinese textile factories and their equipment and manufacturing processes leave Australia far behind.

PB management like you still think of the Chinese factories as sweat shops with thousands of lowly paid workers working in third world conditions couldn't be further from the truth!!! They can produce first class goods if you are prepared to pay for it.

Vince, you are probably correct. I just havn't seen any quality chinese made stuff. At least, that I know about. I have been known to go down to the local hardware store and buy cheap tools (generally chinese made) but they really are crap. I am quite happy to pay for quality when I need it (e.g. power tools that have a life greater than 5 hours use ).

But back on the topic............ I guess the media, unions, polies, blah blah, are all getting hot under the collar about the timing of the sackings and exec pay rises. I mean, if you were planning a public relations disaster, I think this would be a really good case study. Whether it has any lasting impact on the profitability of P.B., only time will tell. But if the exces continue managing this company same as they have been, then I would not like to be a shareholder.

 

[vivazebull]

Agreed. Take Ralph Lauren's Polo shirts for example.
Very high quality, and consequently highly priced garments from an American designer with, what a surprise, Made in China on the tags.
People still pay for a) brand recognition and wankyness and
b) Top quality manufacturing of the garment as opposed to the $10 tops one could buy from local chain stores, etc.

 

[Happy]

..
The Chinese are more than capable of producing premium quality goods. They make according to the specifications of their customer.
..

Correct and not so correct.

If you deal with company that produces your goods there is no guarantee that that particular company actually does it all the time.

They happily use sub-contractors and sometimes they cut corners themselves, after all if they produce something cheaper then there is bigger chop for them without renegotiating the final price.

 

[dalek]

Correct and not so correct.

If you deal with company that produces your goods there is no guarantee that that particular company actually does it all the time.

They happily use sub-contractors and sometimes they cut corners themselves, after all if they produce something cheaper then there is bigger chop for them without renegotiating the final price.

That's true, it's important in buying goods from China that you establish a proper ongoing Quality Control procedure and that fairly regular factory visits are made.

 

[sam76]

Apparently Chinese milk is the ducks guts.

 

[vincent191]

If you paid for a beer, don't expect a glass of champagne. But let us get back onto the topic. I guess the management in PB is not very good. In their latest report they have identified many areas whereby they can improve the profitability of the business.

My question is "why did they wait until they hit an iceberg before thay start building the lifeboats? what the hell were they doing all these years?"

One area PB management had identified is that they had too many brands (something like 600) and by consolidating the number of brands they can save significant costs.

Now surely they should have done this before the ship starting sinking. PB's style of management is what I call "management by disaster". I will be unloading my shareholdings. I have losted faith in this mob.

 

[Jikx]

One has to ask, how does one get these multi-million dollar director jobs? Pacific brands is the epitome of the badly run company, not so bad that they go completely broke, but bad enough that they've been on life support for a decade...

 

[Buddy]

Even Malcolm thinks it is poor form.....

http://www.theaustralian.news.com.au/story/0,25197,25114243-12377,00.html

Maybe a solution is to make shareholder voting on renumeration binding by law. That would certainly scatter a few cats amongst boardrooms, eh?

 

[Julia]

One has to ask, how does one get these multi-million dollar director jobs? Pacific brands is the epitome of the badly run company, not so bad that they go completely broke, but bad enough that they've been on life support for a decade...

That's right. They've had many millions apparently in taxpayer funds.
I don't often agree with Sharan Burrow from the ACTU but did today when she said: "Corporate Australia has lost its way".

 

[nomore4s]

Vince, you are probably correct. I just havn't seen any quality chinese made stuff. At least, that I know about. I have been known to go down to the local hardware store and buy cheap tools (generally chinese made) but they really are crap. I am quite happy to pay for quality when I need it (e.g. power tools that have a life greater than 5 hours use ).

Most of the higher quality brands are now made in China as well (I used to work for one of those brands and visted factories in China) and the quality is just as good as products out of any of the other factories around the world.

On the subject of PB, I find it amusing that they can justify sacking 1000's of people but still put the hand out for excessive pay packets, its not like they are doing a excellent job - slowly sending the company broke any mug could do that.

 

[Buddy]

That's right. They've had many millions apparently in taxpayer funds.
I don't often agree with Sharan Burrow from the ACTU but did today when she said: "Corporate Australia has lost its way".

More on the issue from Swan..................
http://www.theaustralian.news.com.au/story/0,25197,25114290-601,00.html

You, maybe it's about time the gummint made companies more accoutable for the funds in brown paper bags that they hand out. What's the point in giving money to a dog run company like P Brand, when all they do is pee it up against the wall? There should be performance indicators, etc, attached to the funds.... and accountability from the boards. That it, we cut off your goolies if you stuff up!

And.........this is particularly topical at the moment with all the money being dished out to car companies. And....whilst I am at it, how about some accountability from the great unwashed receiving their handouts.

 

[trading_rookie]

Funny thing is, P Brand is a very badly run company. Too many piss weak brands that do not make money. If I were running that company I would get rid of the crap brands, limit the number of products made, concentrate on quality and the inevitable cost savings & profit increase resulting from rationalising the products.

Sorry to bust your bubble Buddy – but isn’t that what PBG is doing? Selling or ceasing the existence of those brands that under perform? The irony is this too can result in job loses. For example, if they decide to cease the manufacturing of Dunlop foam for bedding.

Maybe the board of PB should have a look at the way R.M. Williams is run.

You mean, PBG should follow RM Williams?….


R.M. Williams moves to China
Bootmaker and Australian icon R.M. Williams has broken with 60 years of tradition by shifting manufacturing offshore. But the outfitter to bushmen and the fashion-conscious alike stressed that it would import only lower-cost items such as logo-bearing T-shirts, a few other shirts, and baseball caps. Concerned about defending the brand identity of the 60-year-old company, chief executive Hamish Turner said all design and development would continue in Australia. He said the decision to move some manufacturing to China came down to the fact that "the prices of the offshore produced items will be more competitive". (Source: SMH).


Also, don't forget RM Williams rival Bludstone moved manufacting offshore not long ago.

If anything, both the RM Williams and Bludstone examples, solidifiy Morphett’s claims that PBG was one of the last Australian manufacturing companies to remain in Oz. And as RM Williams claims design and development will remain here in Oz…so too for PBG and why most of the job cuts are blue-collar and not white.

PB management like you still think of the Chinese factories as sweat shops with thousands of lowly paid workers working in third world conditions couldn't be further from the truth!!! They can produce first class goods if you are prepared to pay for it.

Considering PBG have ppl on the payroll in China and all over Asia and have distribution centres there, I’d say Vince that’s a pretty dumb statement to make. 75% of Bonds' products comes from China already.

The problem for PBG is their contracts are in US not AUD, and the AUD has slipped considerably. One wonders in hindsight if the acquistions of Yakka, Sheriden, and some of Globe International brands like Mossimo and Stussy were the right ones considering the debt it has put PBG in.

My question is "why did they wait until they hit an iceberg before thay start building the lifeboats? what the hell were they doing all these years?"

They didn’t, they’ve been planning to move manufacturing offshore for sometime. It’s just the governments have been giving them a handout to keep jobs here, and the economic crisis has intensified.

One area PB management had identified is that they had too many brands (something like 600) and by consolidating the number of brands they can save significant costs.

Not 600 – 200. They’re not consolidating, brands like Repco and Malvern bicycles, and Dunlop Sport are on the market for sale. Others will just cease production.

But if the exces continue managing this company same as they have been, then I would not like to be a shareholder.

As a peeved off shareholder, I find it sad, that Oz once a strong textile producing country is a shadow of it’s former self. I find it hilarious and amusing that both sides of government are having a go at PBG for sacking workers yet both will jump on their soapboxes and sing the praises of free markets….those same free markets that have seen textile, clothing, and footwear jobs over the last 40 years disappear to cheaper workers in Asia to keep margins increasing – afterall, there’s no such thing as a jock and sock bubble like there was in property that would see ppl paying $40 for a pack of socks.

One then can hardly blame PBG who accepted government handouts to keep ailing industry jobs afloat as long as they have in the name of politics - as in no job losses means happy unions and voters. Now they're the scape goats for wanting to try and become profitable again.

Blame free markets, If anything, PBG have themselves to blame for not getting rid of non-performing brands a long time ago rather than waiting to hear what their consultants reported.

Their business model, to dominate the market in low, middle, and high cost brackets of an industry worked well during the boom economic times…sadly, not now. For example, Grosby in the low-end market to Julius Marlow in the high-end of footwear industry.

Oh, and ask the banks if they want to provide credit to the textile, clothing, and footwear manufacturers in Oz. By all accounts, ANZ is the most hostile to the idea.

Take Ralph Lauren's Polo shirts for example.
Very high quality, and consequently highly priced garments from an American designer with, what a surprise, Made in China on the tags.
People still pay for a) brand recognition and wankyness and
b) Top quality manufacturing of the garment as opposed to the $10 tops one could buy from local chain stores, etc.

Spot on. Walk into a DJ’s and look at the polo shirts they sell and tell me there worth the $70- $80 they’re asking for? The quality looks no different to that found in Lowes or Best&Less. It’s just an embroided logo you’re paying extra for.

Recall the DVD player craze of the early noughties. I remember spending 3 months researching a $300 China model compared to that of the $700-$1K models from Sony, Panasonic, etc. And found to my amazement the $300 unit had the same OEM as Panasonic, yet was considerably cheaper. Infact, it was even region-free, Sony was asking an extra $100 to pop in a CD that would make their units region-free - the cheapies came packaged region-free!

Years later someone who worked for Strathfield Car Radios told me how on a trip to Taiwan he went to the factory that produced the DVD players for all the competing brands – the well known and not so well known, and they were basically all on the same production line, just that the branding and casings were different…so then, why would you pay hundreds of dollars for a Sony when an Omni (at the time) was a better alternative. My reason for going down this path, was because I got burnt buying supposed best brand home entertainment technology that ended up being crap.

 

[Julia]

And.........this is particularly topical at the moment with all the money being dished out to car companies. And....whilst I am at it, how about some accountability from the great unwashed receiving their handouts.

Oh Buddy! Wash your mouth out!! You cannot possibly be suggesting any "infringement of individual rights". Just say that anywhere near the Left and be prepared to be crucified for being judgmental and elitist.
Maybe just buy some shares in Aristocrat Leisure et al or whoever makes the poker machines.

 

[johenmo]

Does anyone truly think that (as a general rule) that senior execs & boards have the shareholders in mind? A few execs/boardmembers do have shareholders in mind, but they are employees doing a job and getting paid (often with incentives) and #1 priority is to maximise return to themselves. Sounds cynical but is close to the truth.

The company I work for is doing OK. Profits are down but still relatively healthy but we are doing all the things others are doing - freezing staff numbers, zero overhead growth etc etc. And the directors have forgone salary increases (more of a directive than by choice, I think). And I don't believe the rest of us are immune from a freeze. WE'll see how 2009 goes.

PB just wanted to squeeze something out before it gets worse - may not be able to get a rise in 1 - 2 years!!!

 

[Aussiejeff]

Does anyone truly think that (as a general rule) that senior execs & boards have the shareholders in mind? A few execs/boardmembers do have shareholders in mind, but they are employees doing a job and getting paid (often with incentives) and #1 priority is to maximise return to themselves. Sounds cynical but is close to the truth.

The company I work for is doing OK. Profits are down but still relatively healthy but we are doing all the things others are doing - freezing staff numbers, zero overhead growth etc etc. And the directors have forgone salary increases (more of a directive than by choice, I think). And I don't believe the rest of us are immune from a freeze. WE'll see how 2009 goes.

PB just wanted to squeeze something out before it gets worse - may not be able to get a rise in 1 - 2 years!!!

IMO I suspect you are spot on, johenmo.

The board of Pac Brands have simply "sucker played" the gummint into forking out about $17 Million to them so they could give themselves a big pay rise. Why not? The stoopid gummint rules allow it to happen, so who wouldn't vote themselves a massive pay rise if everyone else is doing it?

On top of that, they have obviously seen a big opportunity to cut and run to China, where once they are behind the Great Wall and paying peanuts for near-as-damn-it slave labour, they can cut the wages bill by a massive amount and consequently vote themselves yet another huge pay rise. Why not? THE RULES ALLOW IT. Every other capitalistic company in competition with Chinese manufacturing probably wants to do the same if they have half the chance!

The gummint has to alter Australian company rules and regulation or the game won't stop.

I agree with Tony Abbott. The KRudd gummint could easily change shareholder voting power rules to "binding" - currently, shareholder votes are "non-binding" on directors remuneration, which has led to this ridiculous mess in the first place.

I know, I know - often the greatest percentage of shareholders in companies ARE the very same directors - who are voting for themselves! But surely the gummint could introduce rules whereby board members & directors votes DON'T COUNT when company directors / ceo's remuneration votes are taken?


aj

 

[johenmo]

I know, I know - often the greatest percentage of shareholders in companies ARE the very same directors - who are voting for themselves! But surely the gummint could introduce rules whereby board members & directors votes DON'T COUNT when company directors / ceo's remuneration votes are taken?aj

Agree Aussiejeff. Smells like conflict of interest if you can vote on yr own pay rise. I know mine would have been higher over the years if I'd had a say!!

In an ideal world, bonuses shouldn't be needed as people should be remunerated and doing their best anyway. That's the basic of doing a job. But since people are inherently selfish (read the book "When customers think we don't care" by Richard Buchanan to understand what I mean, rather than take it at face value) it's a fantasy to think some won't. (DISC: I am on an incentive scheme, but tend to disregard it as it is influenced by many things beyond my control).

And if PB goes under, I bet some of the faces will pop back to the surface in some other company, ready to wield the mighty sword of shareholder wealth destruction.

Wow - I do sound bitter and twisted!! Must need breakfast.