$125m glassmaking furnace has plenty of bottle

Products made at the O-I plant in Penrose use 60 per cent recycled glass. Photo / Supplied

Prime Minister John Key opened a $125 million glassmaking furnace in Auckland yesterday, which its owner says will increase the availability of locally made glass packaging.

Owens-Illinois (O-I) New Zealand says its new furnace - the third at its Great South Rd glass-packaging plant - will increase manufacturing output by 90,000 tonnes a year.

Before the new furnace was commissioned the company, which says it is New Zealand's only glass-packaging manufacturer, had to import a lot of product from its operations overseas to keep up with demand.

Products made at the facility use 60 per cent recycled glass - known as cullet - provided by recycling company Visy NZ, which has a sorting plant in nearby Onehunga.

The new furnace creates 38 jobs, boosting the number of staff at the site to about 230.

Al Stroucken, chief executive of the New York-listed, Ohio-based O-I, said New Zealand's beer- and wine-making industries would benefit from having a sure supply of locally produced glass packaging.

Export demand for locally made sauvignon blanc was driving demand for the bottles made at the Auckland plant, Stroucken said.

The Penrose glassmakers supply companies including Pernod Ricard, Villa Maria, Lion Nathan and DB Breweries.

Lion Nathan NZ operations director Simon Taylor said having shorter delivery times for its bottle orders would benefit the firm.

"We don't have to rely on shipping," Taylor said.

The Prime Minister said O-I's investment was a good example of how this country could "embrace the international world to produce product which is critical for the New Zealand economy" .

Asked how more foreign investment in local manufacturing could be secured, Key said it was a matter of working with international companies to show them what was on offer.

"One of the reasons we've lowered the company tax rate is to give [overseas companies] the right incentive. We're reforming the labour laws ... and generally trying to make New Zealand a more attractive place to invest," Key said.

Meanwhile, while the future may be looking bright for O-I's New Zealand operation, its business is looking more fraught in Latin America.

In late October, Venezuelan President Hugo Chavez announced the Government's intention to nationalise O-I's two plants there.

Stroucken said the facilities were now under state control.

"We would have liked to keep the operations because we have been in Venezuela for 70 years," he said. "We're now working with the [Venezuelan] Government to find a solution to this situation."

O-I has been in New Zealand since 1922.

HOT BUSINESS
* Owens-Illinois
* Formed in 1903.
* Headquartered in Perrysburg, Ohio, United States.
* 81 plants in 22 countries.
* Net sales of $7.1 billion in last year.

New furnace
* Will increase O-I New Zealand's manufacturing capacity by 90,000 tonnes of glass packaging annually.
* Created 38 jobs.
* Burns about 1371C.
* Powered by natural gas.