New Zealand - Reborn Mill`S Yarns In Strong Demand
Dated- 28 Jun , 2012 - New Zealand
Farmer-owned Wool Equities, which represents more than 9500 wool farmers, has bought the old Quality Yarns mill building in South Otago which supplies Christchurch specialist knitwear manufacturers such as Weft Knitting Co and Shalimar Knitwear.
Wool Equities chairman Cliff Heath said the group had looked at buying the operating plant of Quality Yarns some time ago, but had not been confident it could make it work.
But after Quality Yarns shut in December, several mill customers had approached Wool Equities and asked if they would reconsider, he said.
"We said yes, if they would come in as partners."
They agreed and formed a consortium made up initially of 11 customers, and together with Wool Equities bought the operating plant for $450,000.
Wool Equities paid $300,000 and the consortium about $150,000.
The mill started producing yarn again in May.
Wool Equities owns 67 per cent and the consortium owns the balance of the business, which has been renamed Bruce Woollen Mill Ltd.
"The reason for the investors, or customers, wanting the company to survive or go forward was that it is capable of producing almost any type of yarn," Heath said.
If the business had not continued it would have put other businesses at risk in terms of their ability to source yarns and make fully-New Zealand made products, he said.
The mill supplied local businesses such as Weft Knitting Co, Shalimar Knitwear, Waimate Knitwear and Touch Yarns, as well as several boutique alpaca wool manufacturers.
It helped preserve local businesses' "made in New Zealand" brand.
If the mill had stopped operating those local businesses would have had to import yarns, from overseas, Heath said.
"For most of these businesses that was a critical selling point for their product, or point of differentiation."
Now Wool Equities has entered into a joint venture with Dunedin-based Remington Properties to buy the mill building itself.
Wool Equities and Remington Properties had each invested about $130,000 into the building, with the balance being funded by mortgage.
Heath said the purchase gave Bruce Woollen Mill Ltd security of tenure and also opened up opportunities for further use of the site for other activities.
Initially, Wool Equities had expected the mill to generate turnover of $2 million for its first year of operation, but after two months of operating it now expected that to double to $4m, such is the demand for truly New Zealand-made product.
"That surprised us."
The mill produced every kind of yarn other than carpet yarn, Heath said.
"The non-carpet wool textile business for the future looks relatively strong.
"The carpet sector looks seriously sick."
Wool Equities is also working to form an export consortium of New Zealand wool textile producers to market locally made woollen products overseas, particularly in the United States.