The Business Herald’s markets and banking reporter.

$60m toilet paper plant upgrade to fight Asian imports

SCA Hygiene president Peter Diplaris (right) and operations manager Mark Kennedy (left) with John Key at the reopening. Photo / Christine Cornege
SCA Hygiene president Peter Diplaris (right) and operations manager Mark Kennedy (left) with John Key at the reopening. Photo / Christine Cornege

New Zealand's biggest toilet paper supplier expects a $60 million upgrade of its Bay of Plenty manufacturing facility to fight competition from growing Asian imports.

SCA Hygiene Australasia's expanded Kawerau plant was officially opened by Prime Minister John Key yesterday.

The company, whose brands include Purex and Handee, is a joint venture between Sweden's SCA and Australia's Pacific Equity Partners and has a 30 per cent share of the local toilet tissue and paper towel market.

Its expansion at Kawerau includes a 13,000sq m tissue conversion hall, a 55m-long tissue-winding machine and robotic packing and dispatch technology.

The upgrade had created 10 new jobs at the plant, which employed 200 staff, said SCA Hygiene's president, Peter Diplaris.

He said the main pressure the company faced in New Zealand was competition from Asian tissue paper imports - mainly from China and Indonesia - and the Kawerau site's increased efficiency and product quality would make it more competitive.

"A high New Zealand dollar means a lot of imports have come into the market," Diplaris said.

"That's why it was important we got the business relatively fit and that meant having state-of-the-art equipment, better-quality products, improved productivity and basically securing our manufacturing footprint in Kawerau."

The NZ dollar was trading at US81.82c against the greenback at 5pm yesterday, down from US82.85c earlier in the day after the Reserve Bank announced it would hold the official cash rate steady at 2.5 per cent.

The Bay of Plenty's pulp and paper sector has been hit by lay-offs in recent years, including 110 job losses at Norwegian-owned Norske Skog's Kawerau Tasman Mill in early 2013, while the PSA outbreak dealt a blow to the kiwifruit industry, which is a major seasonal employer in the area.

Kawerau District Council Mayor Malcolm Campbell said SCA Hygiene's investment was good news for the entire eastern Bay of Plenty.

"The upside of this for the Kawerau district is the fact we've got a company that's digging in for the long haul," Campbell said. "You don't spend $60 million and then shut up shop after three or four years and move on."

Diplaris said the expansion secured a long-term future for the Kawerau plant.

"It also confirms the site's significant export role with an estimated 2600 containers of product exported through the Port of Tauranga each year."

The Kawerau expansion followed a 2010 review of SCA Hygiene's manufacturing operations on both sides of the Tasman which aimed to determine how the firm could improve efficiency through new systems and technology.

Diplaris said the company had decided to carry out the Kawerau upgrade because the site "ticked all the boxes", including access to raw materials and its proximity to the Port of Tauranga.

SCA Hygiene also manufactures the Treasures nappy brand at its plant in Te Rapa, Hamilton, where about 140 workers were laid off last year after serviette and tissue production lines were shifted to Kawerau.

In 2009 the company announced it was closing its plant in Henderson, Auckland, which it said was running at annual losses of more than $3 million.

- NZ Herald

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