Manawatu Knitting Mills: A Management Buy-Out Opportunity

By Cameron, Alan; Pech, Richard | Journal of the Australian and New Zealand Academy of Management, January 1, 2003 | Go to article overview

Manawatu Knitting Mills: A Management Buy-Out Opportunity


Cameron, Alan, Pech, Richard, Journal of the Australian and New Zealand Academy of Management


ABSTRACT

In skating over thin ice, our safety lies in speed (Ralph Waldo Emerson 1803-82)

PART A: STRUGGLING IN A DERUGULATED WORLD

Context and Environment

In the last few decades, the New Zealand textile, clothing and footwear (TCF) sector has experienced enormous restructuring and has downsized by 90 percent as a result of a rapidly changing business landscape. Manawatu Knitting Mills (MKM) is one of the few survivors. It is the oldest knitting company in New Zealand, having been founded in Palmerston North in 1884. The radical economic reforms of the 1980s had a greater impact on MKM than the Great Depression of the 1930s. MKM had to contend with both industry turmoil and the fallout from the 1987 stock market crash. These events badly affected MKM's parent company, resulting in potentially debilitating financial problems. It was all a huge mess. MKM's management was forced to change their thinking on how the company should be structured and managed. This caused John Hughes, MKM's long-suffering General Manager at that time, to state:

By 1997 it was obvious that there were problems at MKM, in spite of some significant restructuring in the previous three years. It was obvious that the model used was not working. We had to find some way to restructure, reinvent or re-engineer the company. The company had either to find a solution or close.

The Enterprise

The basis of MKM's business is natural fibres. MKM's CEO, John Hughes states that, Our main point of differentiation is that we are a knitwear manufacturer using natural fibres, supplying two specific markets, the tourist market and the sports market.' Possum, camel, alpaca, cashmere and angora fibres are used, but the main raw material is wool, including merino. This is in spite a trend away from wool in recent years. Wool has suffered badly in the consumer's eye outside New Zealand. It is seen as expensive, hard to take care of, scratchy and heavy. MKM has responded by making its woollen garments lighter and by making care easier. 'But we haven't tinkered with the price because we regard our products as having exclusivity qualities.'

The Manager: John Hughes

John Hughes, the current CEO of Manawatu Knitting Mills has been in the 'rag trade' for 30 years. In 1985, he moved to Manawatu Knitting Mills as General Manager. He subsequently became Managing Director of MKM's parent company. This was a family owned business with knitwear, property, and investment interests.

Problem of Being A Subsidiary

MKM's presence as a subsidiary in the group resulted in an undesirable 'ruggedness' in the industry landscape. As a purchaser of wool yarn MKM was paradoxically not only a customer of the parent company, which manufactured wool yarn, but also a competitor to its other customers. As a result, MKM was perceived as a thorn in the side of every parent company customer in Australasia. The problem arose mainly in the tourist market area because MKM was supplying the same products as the parent company's other customers. The issue of intellectual property also had to be considered. As part of the wool spinning process, the parent company was aware of its customers' fashions and seasonal colours. Although there was never an actual conflict of interest, the potential existed. This resulted in MKM being restricted to certain markets only, because of the sensitivity of the parent company trading arrangements. John comments, 'The problem was that if MKM competed on its own merits, our competitors would scream and the flak would come back to us via the parent company.' Every strategy that was employed had to be a compromise to keep the parent company happy.

In spite of these problems, MKM survived, albeit with difficulties in the protected markets of the early 1980s. However, when tariff barriers started coming down in the mid 1980s, the textile and garment industry was forced to undertake substantial restructuring. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Manawatu Knitting Mills: A Management Buy-Out Opportunity
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.