Undercover Boss NZ: Tony Ryall does his job

The fact that Health Minister Tony Ryall has been "secretly" visiting hospital emergency departments around the country shouldn't be seen as a negative thing as the nasty vile, left politicians and TV3 seem to think it is.

Former Labour Health Minister Annette King has accused him of sneaking into hospitals "to spy on staff".

This is the best way bosses can see how their operations are performing.

Multi national companies do this sort of thing all the time and are able to improve their businesses as a result.

In fact, for Ryall NOT to do this would be remiss in the extreme. I for one expect a hands on approach.

c Darren Rickard 2010

Sandcastles in the Air

Christchurch local body politician Gail Sheriff insists a ratepayer-funded trip to see a sandcastle competition in the United States was worth every cent.

mmmmm.

Hasn't this individual heard of the recession? Even in the good times this just aint acceptable.

Typical that the Mayor Bob (give me another ratepayer funded latte) Parker gave this the go ahead.

Who do these self important bureaucrats think they are, important?

Ratepayers don't think so and there has been a backlash.

Now I'm for other sorts of activities on the beach, especially when it involves as little body covering as possible but spending $4000 of ratepayer money on a holiday in San Diego and using the excuse that you are investigating sandcastle building because you think it maybe good for your city is stretching the realms of credibility tighter than Pamela Anderson's red swimsuit.

Nice work if you can get it.

c Darren Rickard 2010

Warehouse Group: Shares set to follow company fortunes

This ugly looking Warehouse Group Ltd [WHS.NZX] chart over the last year doesn't make for good reading and I don't think things are going to get much better for the company over the coming year. The whole retail sector is patchy and retailers like the Warehouse, who traditionally have done well during recessions are, well, not doing so well.

The share price is going to reflect this and as markets are forward looking they clearly don't see much recovery for the "red sheds " anytime soon either.

If 2008-2010 were tough years, 2011 doesn't look much better for this company either.

Few have discretionary funds and most are using those to retire corrosive debt levels.

The share is good buying now with a decent dividend level but investors wanting shares in the company may want to see a January 2011 sales release from the company to see how well the all important Christmas trading goes for the company.

I am guessing decorations might go up in one of their stores earlier than normal this year to make the most of the silly season.

Disc I own WHS shares in the Share Investor Portfolio


I am going to end the reader questions to the WHS CEO Ian Morrice in a couple of days. If you want to ask him a question for a "Share Investor Q & A" please do so here.


The Warehouse Group @ Share Investor

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Shop online at The Warehouse


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c Share Investor 2010

Fletcher Building: All eggs in one basket make for big risk

Fletcher Building Ltd [FBU.NZX] look to me to be in dire trouble. Mark Binns, chief executive of infrastructure and construction for FBU came out yesterday and confirmed what the market had been thinking for a long time that the reliance by the company on State spending was high.

It was higher than most thought at 84% of all work on their books:

"I like (PM) John (Key) spending money and if he stops, we're in trouble because the private sector has no gas in the tank. I think it will be quite a while before it changes. The Government will be dominant for the next two to three years. For that to change and the private sector to return, we need underlying demand in retail, residential housing, offices, commercial, industrial - and demand is on the floor at the moment". Mark Binns, NZ Herald

For Fletcher shareholders this figure should set off the alarm bells because clearly relying on one client to bolster your company fortunes in a depressed building market is a recipe for future financial calamity - especially when that client is a fickle, political, unplanned cash strapped one.

I do remember CEO Johnathon Lim trying to reassure shareholders a few years ago that the company was diversified in its income streams (he meant geographically as well as the residential and commercial sector) but having this much work coming from one client isn't wise at all.

Most of the big work for FBU is nearing the end and has largely been factored into the company's books: Mangere Bridge, Newmarket Viaduct, Eden Park and Dunedin Stadium and a whole host of other major State funded projects.

This leaves a big gap for FBU for 2011 and beyond and it will probably rely again on the State to fund its books in the future.

This of course means winning some of the big contracts up for grabs in the near to medium term.

The Waterview Tunnel (see animation of project)and associated road works, building a National Conference Centre in Auckland somewhere and a large number of national roading projects.

There is favouritism in the National Government for using private business more to do state projects and there has been much talk about future building work for many possible infrastructure projects in the future.

Fletcher Building's past has been built on State funding. From big state housing building projects starting in the 1930s (isn't that ironic) through to electricity infrastructure and everything in between, the taxpayer has kept the money rolling into the company.

The trick will be to win some of these big projects and also be ready to move when the private sector gets ready to spend money on building again. This is unlikely to be for many years to come so we are back full circle where the danger lies in having all your eggs in the State basket.

It isn't wise, should be pegged back from the current 84% of all projects if possible and leaves Fletcher's vulnerable for the medium term should the State either turn off the tap or put off work due to lack of money.

Fletcher Building @ Share Investor

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c Share Investor 2010