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Liddell says there is unfinished business at Carter Holt Harvey


Wednesday 23rd October 2002

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Carter Holt Harvey's affable chief executive Chris Liddell admitted today he is stepping down with unfinished business in the transformation of the country's second largest list company.

He has been promoted to finance vice president at CHH's parent, Connecticut-based International Paper.

Mr Liddell, 44, the first New Zealander appointed boss at CHH since the world's biggest forest products company took charge in 1992, has instituted immense financial and cultural change.

That IP has appointed another kiwi, Peter Springford, to take over on December 1 is tacit acknowledgement that appointments of US managers in the past has resulted in cultural clash.

However, Mr Liddell, whose new position involves making global and regional strategic decisions, understandably downplays the cultural differences.

Kiwi and American styles differ less today than 20 years ago. He believes IP is getting the best of both worlds -- local management with global reach.

Apart from the obvious benefit of stabilising a shaky ship, the American influence has been positive in other respects. He cites the US demand to cut accidents, which have dropped 90 percent since IP took the helm.

But not all changes promoted by the American bosses were welcomed at CHH and Mr Liddell's appointment was recognition by IP that things were not all as they could be.

He declined to define his own cultural stamp other than to say: "Over the last 3-1/2 years I have certainly tried to promote innovation and differentiation as a key plant in the company."

He has also overseen transformation in almost every aspect.

CHH sold its 30 percent stake in Chile's Copec for $2.5 billion and slowly invested most of that in Australia and New Zealand. The company has cut $600 million of costs out of business through its Genesis programme.

Just over a year ago, Mr Liddell divvied the company's six groups up into 32 business units. It was based on the belief that New Zealanders and Australians work better in small to medium-sized units. Each had its own chief executive with staff from just a dozen up to 700.

At the same time, the company launched a new I-to-B (ideas to business) new ventures programme.

Last week, Mr Liddell pronounced the company in great financial shape.

It reported operating earnings of $251 million for the nine months to September 30, up 156 percent on the year ago period.

The wonder is that Mr Liddell has not lost his ever-ready smile when considering the transformation and improved financial performance with the share price performance.

CHH shares have lost nearly a quarter of their value since he took over in May 1999.

The stock tracks notoriously cyclical international wood commodity prices and IP's share price has lost the same value over that period while the NZSE-40 Capital Index has stood still.

As well, CHH is still returning less than its 10 percent cost of capital.

"It's still very much work in progress. It's a tough industry -- that's the reality and we can't hide from that."

Mr Liddell has long preached that for CHH to succeed, and the country, it needs to have "internationally competitive" cost structures.

If the "right" structure is achieved, then the billions needed to process the "wall of wood" coming on stream will be found.

To that end, CHH has slashed the workforce at its Kinleith pulp and paper plant by a third. Some of the jobs have been outsourced.

But despite the key Kinleith restructuring nearing completion, Mr Liddell is still not confident of the investment coming to New Zealand.

"I think we still have a big challenge when you consider the industry is not earning its cost of capital, and that's not just a Carter Holt phenomena.

"We don't have that world class infrastructure at the moment and we need to find a way of getting it."

Mr Liddell says New Zealand's recent relatively good economic performance is more due to fortuitous circumstances of its low exchange rate, high agricultural prices and consumer spending, than to getting things right.

"If you look at the underlying trends, then I think we have a large number of challenges if we really want to aspire to be in the top half of OECD, which I think we should.

"We need to do a lot more than we are currently doing. I'm not sure we have put in place the fundamentals to really change the economy over the long term."

He cites the need for free trade agreements, world class infrastructure, reviewing labour laws and tax structures.

"A number of these are more aspirational than where we are heading."

New Zealand's loss of Mr Liddell will become a double loss. Wife, Bridget Wickham, one of the country's top businesswomen and a leader in the knowledge wave movement, will be joining him in March.

She is currently chief executive of University of Auckland Developments, director of the Knowledgewave Trust, Industry New Zealand, Sky City Casino and Fisher and Paykel Appliances and was recently appointed a guardian of Finance Minister Michael Cullen's New Zealand Super Fund.

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