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Sorry Dick Smith – You’re not 100% correct

I was reading an article on a blog that appears to be a new outlet for Dick Smith called Australia What is the Real cost of Shopping at Costco & Aldi.  I have sat on this for the last couple of days just making sure I really thought about what to write before shooting my mouth off.

Now, don’t get me wrong, I am a big fan of Dick Smith Foods products.  I have been eating Bush Foods Breakfast for years and we always have had Dick Smith’s Crunchy Peanut Butter in the cupboard.  Just recently, we have been able to compliment our stash of 333 MightyMite with OzEmite (just a shame the jar is so small, any chance of a bulk pack?).Quote:

“You have to understand that the foreign companies like Costco and Aldi have no loyalty to Australia.  They have one objective only and that is to increase profits and dividends for their foreign shareholders.”

I don’t know of any public company that has any loyalty to a particular country, except maybe in philosophical sense.  All public companies have a duty to shareholders and provide return on investment, nothing more.

How does the general public know that there are not foreign shareholders that have Woolworths [WOW] or Wesfarmers [WES] stocks?  Just because a business is listed on the ASX doesn’t mean profits will be remaining in Australia, dividends are paid to shareholders, not state entities (unless government owned of course).  Holden (GM, USA) and Ford (Ford, USA) anyone?  It is amazing how many people think these are Australian companies, though never give it a second thought when they go about replacing the Holden badges with Chevrolet ones.  Maybe many years ago in the horse saddlery and early automotive industry era, but not any more.

Quote:

“At least with Woolworths, Coles and IGA the Boards include people who live here in Australia and who, as well as increasing the profits for Australians, raise their children and grandchildren here and are all part of what goes on in our everyday lives.”

I don’t know if Dick Smith is not up to speed with CEO remuneration packages or is getting confused that these packages are similarly aligned to his own personal wealth so it ‘looks normal’?  All I can say, even though my personal wage might be slightly higher than the average Australian wage, CEO and board member remuneration packages are no where near aligned with average Australian wage.  The average CEO wage of the top 50 Australian listed companies is around a 100 times ($6.4 million) [ACTU PayWatch 2010] the average Australian wage.  Everyday lives for CEOs does not equal everyday lives for a lot of Australians.

Australians might have superannuation that includes shares in these companies (or their parent companies) but will rarely enjoy the profits that are made through them.  Superannuation fees and charges basically suck the profits of these fund pools dry.  They will never really be enough to maintain current standards of living upon retirement.  Maybe Dick Smith should be attacking funds managers that are charging obscene fees to manage superannuation portfolios.  Yes, we can all buy stocks in these companies [Wesfarmers and Woolworths] and directly enjoy the dividend payments but most people are struggling to make ends meet as it is, do you really think they have fat in the household budget to spend on shares?

Also to note, in a globalised world, we are not restricted in purchasing shares solely in Australia, we can go the NASDAQ in the USA and buy CostCo [COST] shares.  Bad news for Aldi fans though, Aldi is still held in a private family trust to ensure future expansion – So Dick is pretty well spot on here.  A point to note though is that the founding brothers both allegedly donated large portions of their wealth to charity (however initial research cannot verify this or to whom).

Furthermore, management and staff of Aldi and CostCo in Australia are Australians, should we deny them a fair living because this issue doesn’t sit well with Dick Smith’s ideals?  They could go and work for Westfarmers and Woolworths but with limited competition as it is, would this be wise?

Quote:

“you can support the Costcos and Aldis who will take more and more profits overseas and will import more and more so they can maximise their profits, or you can support a company like Dick Smith Foods and the Australian-owned companies who have the interests of Australia at heart.”

I am a big fan of Dick Smith Food as I mentioned above, I do find the above quote from Dick very surprising to say the least.  I am not sure if Dick has ventured into the stores [Woolworths/Safeway, Coles or Aldi] he has mentioned in his blog post (I can’t comment on Costco because I can’t find one in regional Victoria), I am finding less and less shelf space in Woolworths and Coles dedicated to Australian made products and more space dedicated to home branded products that are manufactured mainly overseas using imported products (non-Australian products).  Aldi on the other hand, are more and more, sourcing the manufacturing and contents of their products from suppliers here, in Australia.  Ok, let me be more precise here, I am aiming at their [Aldi] food goods, not other products (TVs, clothing and homewares).  So stating Aldi “will import more and more so they can maximise their profits” is factually incorrect.

Supporting Australian companies like Woolworths and Coles, while they stock some of Dick Smith Foods, are more interested in either pressuring Australian producers for a cheaper price on products (to maximise profits), charge insane amounts for ‘best position’ shelf locations or place competing generic, home brands with a substantial price difference (and usually contents and manufacturing sourced from overseas) next to locally sourced products made by struggling local manufacturers employing Australian workers.  Also, it is questionable of Dick Smith’s motives here, Aldi and Costco do not stock his products, Woolworths and Coles do (be it an off and on again relationship).  Is there bias in his blog post?  Is he taking a methodical and skeptical approach?  Is the research for his post sound? –  I sort of expect sound evidence from Dick Smith considering his membership in the Australian Skeptics, not just an unjustified rant with no references to back up the claims listed.

Quote:

“Yes, it may cost a few more dollars in a year – not much when you weigh everything up – but at least there will be a future for our children and grandchildren.”

I totally agree with this.  I don’t have a problem with spending the few extra dollars (though it will be a few extra hundreds of dollars based on how much OzEmite I eat) a year to ensure that our local manufacturing stays here and doesn’t look for the cheap way out and head overseas.  Other individuals, couples and families are not so lucky so I think it is a bit unfair that Dick (being very well-off after selling Dick Smith Electronics [DSE] to Woolworths) assumes that everyone can afford to buy considerably more expensive products.  Though I would like to see Dick justify, say the cost of OzEmite versus the cost of 333 MightyMite dollar per gram, as both products are Australian owned and made.  People don’t expect locally manufactured goods to be as cheap as international products, though we don’t like to be taken for a ride while fattening someone else’s pockets.

Quote:

“The Chairman of Woolworths is James Strong – an Aussie who we have known for years and years.  I know that he has a real interest in Australia and making sure that our country thrives for the future.”

James Strong’s heart might be in the right place in ensuring the country thrives for the future.  A lot of people, professionals and volunteers, are striving to do their best to make this, the country that everyone wants to be a part of.  Problem is, it all comes back to money, profits and Strong’s legal requirement to ensure that he does the best for his shareholders will outweigh, most times, the philosophical drive in making this a thriving country.

In conclusion, I would like to reiterate that this is not an attack on Dick Smith, it is more an attack on a, not well thought out blog post.  Dick Smith’s heart and efforts are in the right place but attacking businesses just because the management and ownership structure is not the same as your ideals, really doesn’t keep this issue or debate constructive.