Interview with Mr Michael Dwyer

New Zealand Wool Services International Ltd (WSI) was formed in 1992, initially on behalf of the New Zealand Wool Growers. Today WSI is a publicly listed company, however still has a very large wool grower shareholding base.

WSI is the largest Wool Exporter in New Zealand owning two of the most advanced wool scours in existence. We account for 30 percent of all wool exported and 40 percent of the carpet type wools exported.

WSI is particularly active in the carpet wool sector, which accounts for approximately 85 percent of the type of wool grown in New Zealand.

The small amount of Merino and Mid Micron wool grown here are of a very high standard and easily compete with comparable wools from Australia. These wools account for 15% of our production and are considered a niche fibre within our market place attracting very strong international attention as well as relatively high prices.

In recent times the carpet wool types produced in New Zealand have struggled to make sufficient returns for the Wool Growers. A sustained period of low wool prices, high production costs for Growers as well as low meat prices have impacted significantly on our local industry. This has made many wool farmers turn to other options, such as Dairy, Deer, Beef and Cropping at the expense of our national sheep flock, which is anticipated to reduce from 39 million sheep to 35 million over the next 3 years.

If the current pressures continue to exert themselves, we anticipate this trend will continue resulting in a major reduction in wool production from New Zealand and stimulate some local participants to exit the industry.

WSI, however has invested in the future of the New Zealand wool industry by building innovative scouring plants, developing a wide client base and establishing close contacts with Wool Growers. We have launched a branded Supply Contract under the PURELANA brand aimed at giving surety of supply to our clients as well as sustainable returns to growers.

The global wool supply is also shrinking, as is reflected in the 2 percent share it now holds of all textiles world wide. This is down from around 4 percent just 10 years ago. The world sheep numbers have been reduced due to drought, disease and a lot of animals have been consumed as a food source and are not being replaced, especially in countries that have faced food shortages due to economics or conflict.

This rapid decline in sheep is now creating a supply/demand imbalance. Apparel wools have recovered significantly over the past season and look set to continue to be well sought after. Prices for carpet type wools, especially in New Zealand, are also starting to feel the benefits. In the past six months the value of New Zealand crossbreds has increased 23 percent over and above any currency adjusted advantages. However, though this is creating a price recovery, values are still well below sustainable levels.

New Zealand wool growers and exporters are concerned for - how be it, in a world becoming increasingly conscious of environmental issues, this a naturally grown, sustainable and environmentally friendly fibre like New Zealand carpet wool is struggling to survive!

It is prepared to a very high standard by farmers, has good colour, strength, low vegetable matter and physical characteristics which makes it suited to being a major component for carpets. The pride, commitment and integrity of the NZ woolgrower Is immense and is reflected in the continued attention to quality and preparation standards even in the face of these current hard economic times.

NZ Wool Services continues to capitalise on this good base of preparation. Through closer partnership with the wool growers, we are developing a branded purchasing and marketing approach under the Purelana brand to transform this wool into wider recognised consistent, traceability, high quality deliveries, and designed to meet our customers’ requirements all year round. WSl's advanced wool scours add considerable value to these natural characteristics through their technology, to create a superior scoured product, internationally recognised for it's consistency, quality, reliability and down stream processing ability. This recognition of being a top line deliverer has placed WSI at the leading edge of the New Zealand wool industry.

Competing fibres: both natural and artificial, impact on the wool market. As prices for these fibres increase either due to scarcity or the high cost of manufacture, we often see a corresponding movement in wool prices. In recent history the differential between these other fibres and New Zealand carpet wools has been eroded. It now appears, due to the many factors impacting on producing textiles of every type, that values are likely to rise. In the past 6 months, we have seen in New Zealand a base value increase of 23 percent over and above the normal price effecting factors. This maybe the beginning of the recovery for the NZ coarse wool industry so badly needed.

WSl's spread of markets includes over 30 different countries with a large range of clients within each. In recent times, the cost of production has seen a major shift of our client base into India and China in particular. These emerging processors are important manufacturing bases and are having an increasing influence on world textile markets. Each of these countries also grow significant amounts of both apparel and carpet wools, however, their farming, handling and preparation practices often mean that these wools struggle to compete with the wools from Australia and New Zealand in value.

Wool, from all origins, has its own place in the textile world and these wools often complement each other in finished products. As the overall demand for wool Increases, which we anticipate will happen, then all wool producing nations will benefit, especially as demand for natural fibres increases.

With the "greening" awareness of consumers, particularly in western cultures, and as the issue of global warming and humans impact on it become more high profile, environmental sustainability is becoming increasingly important. Wool is ideally positioned to capitalise on this awareness as a top quality, naturally grown, replenishable and low environmental impact product.

To ensure WSI meets it's environmental responsibilities, our scouring plants have the latest effluent control systems and extract the maximum amount of impurities possible during the scouring process. These are separated and recycled. The soil extracted is composed and used in high quality instant turf, the wool grease is converted to lanolin and the water is recycled through the scour plant several times prior to discharge. Our entire operation has ISO accreditation and we are targeting a policy of zero discharge in the future.

WSI's clients are the beneficiaries of our attention to these issues. This is reflected in the strong relationships that WSI has built up with our wide customer base as a result of delivering consistent, high quality products and our willingness to meet the industries requirements.