shepparton will be wiped off the map, page-64

The biggest elephant in the room regarding SPC is management.

I don't know who sold SPC to CCA, but it was a great business decision as they had some foresight. They seemed to see SPC needed new technology and the canned market was in decline.

My take on the situation is:

1. CCA bought SPC. I guess it was bought as a "brand" name, which was a cash cow and the market leader in canned fruits.

2. The plant and work practices were old, but that didn't matter as long as the cash came in. I heard, but cannot confirm, some of the boiler technology is 100 years old.

3. The local demand for canned fruit has been in steady decline for over a decade, as consumers buy more fresh fruit, frozen fruit, soft pack fruit and fruit bars.

4. SPC still continued it old practices and did not take up on the new consumer trends domestically.

5. Private labels came in and eroded SPC market share in a market that was declining. No action by SPC to find new markets or products (a few new products recently). Also no major action to increase productivity (work practices and technology) to reduce price point.

6. Brand names have struggled recently and do not hold the same market value as they once did(eg billabong and pacific brands)

6. When exports collapsed under hig AUD it could not be supplemented by new domestic products, as the technology was too old.

7. Now SPC wants government assistance to build a new plant, so it can make new products (eg. ice cream and soft packs) that consumers actually want.

8. CCA apparently has an 81% dividend paypout ratio.

9. With a bit a foresight SPC and CCA would have responed to market trends earlier (while profitable), invested in new technology to improve productivity and product range with the ultimate aim of protecting and enhancing brand value and reach. This action would go some way to ensuring future profitability.

10. Instead they took the cash without reinvesting it IMO. They were lazy with regard to management including work practices, allowing the brand to diminish over time. They were not innovative, responsive to changing markets and did not future proof the business.

11. IMO the above happens when short term incentives contradict a long-term strategic approach.

12. The Australian taxpayer has no responsibility to fund bad management practices. It is the management and shareholders with the 81% payout ratio who wear the responsibility. Bad business should not be rewarded with subsidy as it leads to more bad business IMO.

13. My take is SPC wants cash to build a new plant and make different products to supplement its cannery business and improve productivity. To my mind all these issues were forseeable and action could have been taken earlier, as one would expect of innovative and proactive management. It is not the taxpayer, but shareholders who will benefit from the new plant and products, so the investment is their cost.

14. The message missed by most here by the Government decision, is that Australian business management needs to lift its game. The message is loud in business circles.

15. Simplot faced with similar issues and found innovative solutions. See article linked below. It is over to SPC management now to see if their up to the job or fold like Heinz.

"SPC can survive without handouts

Robert Gottliebsen27 Dec 2013, 11:03 AM "

http://www.businessspectator.com.au/article/2013/12/27/retail/spc-can-survive-without-handouts