ICONIC meat processor Harvey Beef is sending shockwaves through the South West for the second time this decade as its private equity owners grapple with the viability of the business. Big inventories, forced shut downs, difficult export markets, battles with suppliers, redundancies and a major showdown with its labour force have raised questions about whether the turnaround engineered after its earlier failure may also have been bungled. International investment funds Harmony Capital Partners and Stark Investments took control of Harvey Beef three years ago via Harvey Industries Group, paying a reported $27 million for the operations which had previously been owned by EG Green & Sons, a third generation 100-year-old family business. About 18 months later, rural group Elders joined them on the register taking a 20 per cent stake. In the interim, the news has mainly been upbeat, despite musical chairs at upper management level with the loss of three chief executives in that period - Scott Henderson, Mark Spurr and, most recently, Michael Rappatoni. During that period extensive investment was made in processing, distribution channels were changed and a number of big contracts were won. Last year, it is understood executives were boasting of multi-million profits and the consortium had extended its franchise to include the acquisition of meat processing operations of Fremantle City Processors. Just where things went wrong is the subject of much debate in the agribusiness sector. It is known that big inventories were built up as stock failed to move. Some suggest marketing initiatives failed, while others point to changes in distribution strategies that waxed and waned between direct selling and independent brokers. There is also the financial crisis, which caused big problems in export markets, even though Harvey Beef is understood to have attempted to reduce its reliance on offshore customers. A top-heavy management structure has also been blamed for saddling the company with high costs. Observers believe the management and the board lacked exposure to the realities of buying and selling meat. Harvey Beef was not prepared to comment on its management structure amid a review by executives from its sister operations in Queensland. Harvey Beef has claimed, though, that its cost structure is among the highest in Australia due to its blue collar workforce and an enterprise bargaining agreement it inherited with the purchase of the business. The company is also attempting to slice costs at the supply side, seeking a five per cent reduction in prices from feedlotters.
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