Feltex Carpets - Background - The Story of Feltex Carpets

The Story of Feltex Carpets

Formation, 1921

Sydney Felt and Textiles Ltd was established in 1921 to manufacture crude felts used to make blankets for shearers. It performed profitably, but was not notably successful. In 1924 the financer of the blanket venture, Mr J K Heydon, brought in a very colourful and energetic European wool buyer, Henri van de Velde. He was given the reins of the company (as Managing Director) and told to "make something of it". The company also saw a name change - it was now Felt and Textiles Australia Ltd.

The company became a successful manufacturer of simple felts, and in time, production was extended and the company began specialising in slipper felts. This was the first established footwear trade in Australia, and by 1929 van de Velde was ready to expand slipper manufacturing to New Zealand. Exports of slippers to New Zealand had already been established (all slippers were imported and regarded as luxury items) but van de Velde wanted to have better security on the slipper market.

Expansion to New Zealand, 1929

In early 1929 the first felt slippers began rolling off the production line of a small Courtney Place factory and New Zealand Slippers Ltd was born. With seven employees the company manufactured a product that at the time was considered a high priced, high value product. New Zealand Slippers brought an affordable alternative to the New Zealand consumer.

At that time another new company was trying to establish a name in the retail segment and New Zealand Slippers clinched its first contract order for 10,000 units from Woolworths (New Zealand) Ltd. By 1937 the New Zealand Slipper factory had relocated to Lower Hutt and on the back of strong market growth was planning to expand its footwear offerings. Successive acquisitions by Felt and Textiles Australia in New Zealand during the 1930s created greater demand for its Australian produced felt piece goods. This increased demand was also driven by a business that Felt and Textiles Australia had established in 1935, called John Grant & Co Ltd based in Auckland.

John Grant & Co Ltd had been established to supply flock and padding for the upholstering trade under the trade name Feltex. These operations were later extended to include underfelt manufacture. With the introduction of import controls limiting the level of material imports from Australia, van de Velde further expanded the operations of John Grant and Co to include the production of the felt piece products that had previously been imported.

Major expansion into felt production was undertaken in 1939 and continued through the war years until by the mid 1940’s the Felt and Textile operations were producing all types of felt as well as Wilton carpets.

In 1941 a newly formed company was incorporated in preparation to take over the administration of New Zealand Slippers and John Grant and Co. The new company was called Felt and Textiles of New Zealand Ltd By 1948 Felt and Textiles Australia Ltd operated manufacturing units in New Zealand and South Africa with the core business being the production and processing of felt and wool products. In New Zealand alone these activities translated to 17 branches, 21 manufacturing sites and 4 warehouses.

The name New Zealand Slippers had gone but the new company of Buchanan and Edwards continued with strong market growth. The new name was reportedly christened during an exchange between van de Velde and Mr Jake Edwards (the division’s manager). Enjoying a glass of Buchanans whiskey van de Velde remarked “Buchanans is damn good whiskey and Edwards is a damn good footwear man, and therefore Buchanan and Edwards will be the new name”.

At this time Felt and Textiles Australia Ltd was the eighth largest manufacturer in Australia employing 6,000 people. It operated 65 factories in Australia and was the largest individual consumer of wool in the commonwealth. The combined turnover for the company including its subsidiaries in New Zealand and Australia was 1 million pounds per month. The combined company processed 55 million pounds (25,000 t) weight of wool per year with the New Zealand operation accounting one-third of New Zealand wool production alone. The company was barely 30 years old.

The New Zealand company employed 1,400 people and produced 20% of all products derived from wool in New Zealand. New developments predicted in 1949 by then New Zealand Managing Director Mr H Rowden, was the establishment of a new company in Christchurch to be called The Carpet Manufacturing Co. (NZ) Ltd to produce Wilton and Axminster carpets. The business was a joint venture with The Carpet Manufacturing Company Limited of Kidderminster brokered by Henry van de Velde to establish Axminster production in New Zealand, Australia and South Africa. “This new plant in Riccarton will be furnished with 38 new Axminster looms”.

In fact, at the time of his statements the first Axminster carpet produced in New Zealand was already being completed. “The new Riccarton factory is a very fine industrial set-up. The factory site comprises 10 acres (40,000 m2) of land in ideal surroundings and the buildings at present erected cover an area of approximately 115,000 sq ft (10,700 m2). When the factory is in full production, it will employ approximately 300 hands…”

Another development was also underway during this period and this related to the wool scouring plant being established at Kakariki. The concerns of 1940s industrialists it seems did not extend to the environment. “There is ample water available from wells sunk on the banks of the Rangitiki River and drainage into the Rangitiki River basin is assured for the disposal of industrial effluents. These two factors are particularly important ones in the wool processing industry.”

Another interesting comment relates to the employee conditions. “It has always been part of the company’s policy to provide the best practicable facilities for employees, particularly in regard to cafeteria service.”

During the 1950s a new technology had evolved in carpet manufacture and in 1955 Felt and Textiles of New Zealand Limited signed an agreement with Cabin Craft U.S.A and purchased the first two tufted carpet looms in New Zealand.

Over the next 20 years Felt and Textiles of NZ Ltd continued its acquisition-based expansion that stood firmly on the initial business principles set down by H Rowden in 1948. “One, A young organisation in a young country—young and virile. Two, the company is built on the utilisation of primary products. Three, the organisation caters to the primary needs of the community, primary in the sense that they relate principally to housing and clothing”.

During the 1960s the company added the Tattersfield company to its family augmenting its already substantial product offering to include bedding, mattresses, commercial contract furniture as well as further carpet manufacturing capacity.

The carpet business was further augmented with the purchase of Kensington Carpets in 1976. The future takeover of the Stevens Bremner carpet group in 1980 and purchase of the woven (Marlin) operations from UEB in 1988 were to give strength to the future floor covering group. Perhaps one of the most significant changes for the company came in 1969 when Felt and Textiles of New Zealand Ltd changed its name to Feltex New Zealand Ltd and listed as a public company on the New Zealand stock exchange. This was the break away from the parent in Australia that led to even greater expansion.

In 1970 after a prolonged battle with B F Goodrich, Feltex acquired its first major rubber business in Reidrubber. This signaled an entry into the second of the three pillars that carried the new Feltex chevron. The Feltex rubber group penetrated a number of commercial and domestic market segments with the rubber group eventually contributing 8,000 different product categories including car tyres, milking equipment and rubber components for industry.

Further diversification during this time was achieved with acquisitions in the plastics industry. Feltex had maintained interests in plastics since the purchase of New Zealand’s first injection moulding machine in 19XX.

One of the more glamorous brands that have been part of the Feltex family included Gollins Sports that in the 1970s held the franchise for Spalding, a world recognised sports goods manufacturer. Gollins Sports produced tennis balls, golf clubs and skiing equipment; further evidence that Feltex, under its different guises touched the lives of every New Zealander.

One of the main drivers of growth for the company was the acquisition of a 60% interest in the Smith and Brown Maple Furnishing Ltd department stores in 1973. This company became a wholly owned subsidiary in 1980 and provided an outlet for the huge number of the household items that were produced by Feltex Industries. As the company entered the 1980s Feltex New Zealand Limited was standing tall among Australasian manufacturers leveraging expertise in textiles, rubber and plastics. The eighties ushered in a new era of competition for New Zealand companies as the erosion of import barriers, the floating New Zealand dollar and increased competition from overseas forced many businesses to re-think their strategies. These factors placed a heavy burden on the previously sheltered New Zealand manufacturers forcing many companies to restructure. As a manufacturing powerhouse with a highly diversified portfolio of business interests Feltex was vulnerable to an equity takeover. In 1985 Equiticorp Investments Ltd obtained a 47% controlling interest in Feltex (later expanding that shareholding to 77% in 1988) and set about restructuring the company selling assets to finance its investment interests offshore.

The manufacturing base of Feltex was mortgaged to provide the necessary capital to allow Equiticorp to increase its levels of off-shore investment. This strategy ultimately resulted in the sale and closure of many of the Feltex subsidiary enterprises.

Following the collapse of equity markets in 1987, many corporate restructuring and investment holding companies such as Equiticorp found that the financial strength of their core manufacturing businesses could not alleviate the debt burdens that had been run up during the investment frenzies of the mid-80s. Many of these holding companies were forced into receivership and Feltrax International Ltd as it had become known in 1988 was put up for sale.

This opened the door to offshore investment and BTR Nylex an Australian industrial conglomerate through its wholly owned subsidiary Australian Consolidated Industries Ltd stepped in and took ownership of the remaining core businesses of Feltrax. BTR installed new management to re-position the core business units of Feltrax within the corporate structure of the BTR Nylex family of companies.

The Feltrax International name still remains today as a BTR Operations holding company however, during the BTR period the Feltex name remained with respect to the carpet business allowing the company to leverage the strong brand recognition it enjoyed in the New Zealand and Australian carpet market.

During 1996 BTR Nylex Limited declared a restructuring of its global business interests and announced that it was to sell $4 Billion worth of assets around the world. Part of that restructure included the sale of the Feltex Carpets.

Two members of the senior management team Mr Chris Davis and Mr Allan Steedman signed a management buyout of the carpet operations in December 1996. The ANZ, the company’s bankers and a substantial investor in the form of C S First Boston Private Equities Ltd supported the buyout and the new company Feltex Carpets Limited was duly incorporated in January 1997.

From 1997 through to 2000 Feltex concentrated on improving its profitability by increasing operating efficiency while striving to re-build its export markets. Substantial investment was received from C S First Boston and as the company approached the 21st century the Feltex Chevron remained one of the most recognisable brands symbols in New Zealand.

Today, Feltex is New Zealand’s largest carpet manufacturer and has established an international reputation for the supply of woven and tufted floor-coverings. In addition to its home markets of New Zealand and Australia, Feltex also exports woven carpet for large commercial contracts to South East Asia, the Middle East and the Americas. Overseas contracts include the supply of specialty carpets to the airline industry as well as being an approved supplier to some of the most famous hotel chains in the world including the Ritz Carlton Group and Four Seasons Hotels.

In June 2000 Feltex announced the purchase of Shaw Carpets Australia one of the largest tufted carpet manufacturers in Australasia. The combined company will have a turnover in excess of 400 million dollars and is thought to be the second largest producer of woollen carpet in the World.