SCT - Scott Tech

[CatO'Tonic]

https://www.odt.co.nz/business/some-...w-unpaid-leave

[Snoopy]

https://www.odt.co.nz/business/some-...w-unpaid-leave

What can I say? Except that new CEO JK looks to have handled this in a sub-optimal way.

Perhaps JK needs to learn that a glib Covid 19, 19th March update which states:

"Scott’s first commitment is to the health and safety of its people."

is not consistent with sending some workers home with absolutely no pay, while saying that:

-----

"the executive and broader leadership team at Scott had agreed to a pay cut."

" "It comes at a time when we’re working very hard ... we just thought it was the right thing to do to show empathy and understanding with the group."

"He would not say how much the pay cut was but that it was a "meaningful number" and "an absolute sign that we’re all in this together"."

-------

Tell us what the 'meaningful number' is! Other companies have done this. It is up to others to judge whether that number is meaningful or not - not you JK!

Reading between the lines, it sounds like we shareholders will be taking a 'dividend cut' of 100%, just like the worker referred to in the article. What is the bet that the cut to executive salaries is quite a lot less than that?

This article is particularly worrying, because Dunedin is Scott's back yard. If they can't get it right 'at home', what does that say for what is happening in Scott's staff in the USA and Europe?

SNOOPY

[Sideshow Bob]

Back in the news again....

https://www.odt.co.nz/business/pay-unfair-scott-workers-claim?fbclid=IwAR0vUWtgia_35IAvjsGN9YQF1FQXxz5H7R-Y9ysITRiuqFjHPGSTGPRYKFE

[Snoopy]

Back in the news again....

https://www.odt.co.nz/business/pay-unfair-scott-workers-claim?fbclid=IwAR0vUWtgia_35IAvjsGN9YQF1FQXxz5H7R-Y9ysITRiuqFjHPGSTGPRYKFE

"Scott employed about 800 people around the world and most were doing no work at the moment, Mr Kippenberger said."

That is the key quote from the article. If you have debt (which Scotts do) and no money coming in to pay the interest on that debt then you are in trouble. The fact that Scott's have done 'well' over the last six months (something that has yet to be confirmed BTW) is not relevant.

Scott's have an important team of core workers, not all 'suits' and many of whom could be described as 'blue collar'. Nevertheless these workers are highly skilled, highly valued and consummately paid. The fact that their pay is (or was?) so far above the government subsidy is something to be celebrated. The human story of newly weds not being able to afford their mortgages (they can take a mortgage deferral option for now at least) is sad. But I do believe Scott's can come through the Covid era. Even if these hapless workers end up selling their homes in the next few months, they may still end up luckier than most.

I still think management should come clean on the pay cuts they have taken though. It isn't a good look.

SNOOPY

[Snoopy]

discl: Also interested in buying more, but will wait for the half year result now.

We shareholders are in for a longer wait! Scott's now need another month (May 3rd) before their situation becomes clear.

https://www.nzx.com/announcements/351926

"As previously advised, the impact of COVID-19, particularly travel restrictions and access to customer sites, has affected Scott’s ability to implement, progress and commission a number of projects."

" the company is engaging with landlords in New Zealand and Australia for rent relief."

"While revenue is expected to recover as regional lockdowns are lifted and work recommences, Scott expects FY20 earnings to be materially impacted, as previously advised and as customers take stock of their own capital situations under COVID-19 and the broader economic environment. The Board and management are currently undertaking a review of the structure of the business to ensure it is well positioned for the longer-term economic recovery."

A $1.6m wage subsidy has been accepted to help 784 NZ staff.

$1.6m / 784 = $2,040 each (assuming all full time)

$2,040 / $586 per week = 3.5 weeks

Yet the government subsidy is meant to be for twelve weeks. Mass sackings to be instituted in a month's time?

SNOOPY

[Oliver Mander]

wage subsidy only applies to staff in NZ Snoopy...that might explain it

[Oliver Mander]

wage subsidy only applies to staff in NZ Snoopy...that might explain it

just did a search.
they applied for 232 staff, presumably their NZ workforce.

[Snoopy]

just did a search.
they applied for 232 staff, presumably their NZ workforce.

$1.6m / 232 = $6900 per person

$6900m / $586 per week = 11.8 weeks

That is close enough to twelve weeks for me. One or two part time workers could have put the calculation out.

Thanks Sylvester.

SNOOPY

[Sideshow Bob]

Member of the extended family works at Scotts. Young fella and had a couple of weeks with no pay. Not impressed.

[Snoopy]

Member of the extended family works at Scotts. Young fella and had a couple of weeks with no pay. Not impressed.

Was some pay back dated when the subsidy came through? It does seem inexplicable that no-one at Scott's thought to apply for the wage subsidy in a timely manner.

SNOOPY