Fisher & Paykel Appliances is moving part of its laundry manufacturing to Thailand, with the loss of 350 positions, as the company battles competition and pressure on margins.
Production facilities for the Smart Drive and AquaSmart washing machines and clothes dryers, both currently in Auckland, are to be moved to a purpose-built facility in Thailand.
The move, which will take about 12 months, is expected to produce benefits of between $10 million and $15 million a year, at a one-off cost of about $20m to $25m, before tax.
The job losses were unlikely to occur before December 2007, and the company would try to accommodate as many staff as possible as vacancies arose, managing director John Bongard said.
"The decision to move the laundry plant out of New Zealand wasn't one that was taken lightly," Mr Bongard said.
Competition and pressure on margins for laundry products were factors behind the decision, the fourth time F&P Appliances has moved production offshore.
"Most of our competitors supplying the Australasian market do so from facilities in low cost Asian countries which offer generous manufacturing incentives," he said.
Margins for laundry products had also been under increasing pressure for a number of years.
F&P Appliances was also hoping to cut costs by sourcing some raw materials and parts from local vendors in Thailand.
The ongoing research and development for laundry products will continue to be based in New Zealand, Mr Bongard said.
"If we don't continue to innovate, we won't survive, but in order to do this, we also need competitive manufacturing facilities. This is what this move is addressing."
The Engineering, Printing and Manufacturing Union (EPMU) national secretary Andrew Little said the closure is a wake up call to the government to start taking manufacturing in this country seriously.
"Fisher & Paykel is one of New Zealand's premier brands with a strong commitment to manufacturing in New Zealand, so when they decide manufacturing is no longer viable in this country it's clear there is something seriously wrong.
"A good start would be for the government to stop relying solely on manipulating interest rates to control inflation and instead look at more targeted policies that don't put New Zealand manufacturing and the jobs it provides at risk," Little said.
In recent years, F&P has bought DCS in the United States and Elba SpA in Italy, and relocated the in-house laundry and motor production facility to the US.
Shares in F&P Appliances rose 19c, or 5 per cent, to $3.71.
The manufacturing sector employs 235,000 New Zealanders and accounts for more than 60 per cent of New Zealand's exports.
- NZPA, NZ HERALD STAFF