Simplot

Simplot is in the news. This foreign-owned food-processing group is starting to look like the local car industry, bleating to the government to grant fund them (with our money!) so that they can compete against imports.

How does that work? They claim that their costs are higher because of our high labour costs and somehow that is the government’s fault. And they want a grant not a loan. Madness.

Clearly they need to get much bigger and invest in automation and supply chain management etc. But that investment should come from the private sector.

The minute any business resorts to getting money from a dumb source like the government it is doomed to fail in the near future because it is a clear sign that management simply has no idea or strategy, and therefore they have no plan that they can sell to private sector sources of investment.

Don’t believe me? Just think how much the former Labor government threw at Ford Australia – it has been hundreds of millions all based on the premise that Ford would keep manufacturing Falcons in Australia. Personally I would have made those loans, not grants, repayable with interest and immediately repayable in full if Ford pulled out, as they did. Governments really are financially quite silly when it comes to these things. In the worse case scenario the loans could always have converted to equity in the parent company at the government’s call.