21 Mar 2011

Wool scouring firm says merger essential

6:45 am on 21 March 2011

New Zealand's largest wool scourer says the successful merger of its operations with those of Wool Services International (WSI) is essential to help restore profitability to the strong wool sector.

The Commerce Commission is considering an application by Cavalier Wool Holdings to acquire WSI's assets.

Cavalier chief operating officer Colin McKenzie says the supply chain for greasy wool from a farm to a wool scour is overly complex, wasteful and costly.

He says there is plenty of spare capacity, too many providers of services and it's very inefficient.

Mr McKenzie says a wool farmer in Geraldine, for example, may sell the wool in Christchurch, then send it to Timaru to be scoured and it's then sent to Dunedin to be exported by ship.

He says there are plenty of opportunities to introduce efficiencies by streamlining the process.

Mr McKenzie says there will be benefits to farmers because they pay freight generally from their farm to the private merchant or broker.

He says others to benefit will include brokers, merchants and transport industry.

Mr McKenzie says Cavalier understands the Commerce Commission will make a draft determination on the merger early next month.