RED meat trader Sanger Australia is making some significant changes to its business, in the wake of senior meat trading staff departures.
Following the recent resignations of five senior Sanger meat traders, rumours were sweeping the red meat industry grapevine this morning that Bindaree Beef would close its Sanger trading division doors.
However paraphrasing the words of the late, great US author, Mark Twain, the “rumours of Sanger’s demise appear to be greatly exaggerated.”
Bindaree Beef’s group sales and marketing manager Andrew Simpson told Beef Central that as part of an ongoing strategic program, Bindaree would undertake a restructure of the Sanger trading division.
“This decision has been made with the intention of reducing operational costs and redirecting resources into alternate growth areas,” Mr Simpson said.
While Sanger works through its transition plan, it would continue to develop key trade relationships from its China and Korean trading offices, he said.
Mr Simpson acknowledged that several long-serving meat trader staff were departing the business ‘under mutually amicable terms’, and recruitment for new expertise was underway to support key trade activity.
Sanger veteran Paul Ibbotson, who has concentrated on Bindaree’s offal and by-products sales recently, will assume responsibility for meat trading out of the company’s Sydney office, Mr Simpson said.
“The trading business out of Sydney will continue to operate,” he confirmed.
“Because we now have overseas offices representing Bindaree/Sanger, we don’t necessarily see the need to have a centralised trading base in Sydney. It’s smarter for us to have a Sanger trading office in Shanghai, than have the overheads and resources allocated to basically duplicate the phone calls out of Sydney,” he said.
Asked whether the sequence of senior staff departures represented any sign of dissatisfaction or lack of confidence in the Sanger business, Mr Simpson said it did not.
“Sanger and Bindaree have clearly said for some time that it sees a need to better the return on its working capital. At the same time, a number of the individuals leaving the business have seen outside opportunities where they can apply their own particular skill-sets in areas where Sanger does not necessarily want to operate.
“The US market is an example. America is a low-margin trading business for Australian beef, where a trading company can end-up simply playing ‘banker’ for industry.”
He conceded that Sanger had had a long history in servicing the US market, but that did not mean it should not question the motives of being in a low-margin trade, when effectively all it was doing was “banking other peoples’ meat into an area that does not provide satisfactory returns.”
North American sales specialist Stewart Hanna, Michael Niblett (trade sales), Tim Sullivan (China and Asia) and Campbell Basnett (domestic trade) are four experienced traders who are leaving the Sanger business. Some have worked for Sanger for more than 30 years. More details on where they are headed in a separate article on Beef Central in coming days.
Mr Simpson said Sanger may well still do some business through Mr Hanna’s new business, for example.
“Instead of just going through Sanger, we now have the option to go through multiple traders into a market like the US,” he said.
Re-focus on value adding
In parallel with the Sanger developments, Bindaree Beef continued to further enhance its supply chain platform through ongoing expansion of its Bindaree Food Group (value-added and retail ready facility located at Burleigh Heads), Myola feedlot, the Inverell beef processing facility, and the Sanger China Import and Distribution division, Mr Simpson said.
Some important business developments in this space would be announced soon.
“It’s about where we see best return from our capital,” Mr Simpson said.
“To run a large trading business ties up tens of millions of dollars’ worth of capital, in what is a low-margin business. We’re saying, is that in our best interest to be doing that for other peoples’ product? Essentially we can re-direct that capital into our own internal chain, and grow that side of our business.”
“There’s no doubt in our mind that any company supply chain is enhanced and margins are bettered, if you further value-add – provided it is done properly,” he said.