$20m revamp for Nuplex

Nuplex managing director John Hirst says the company has to be ready for new trends in Europe. Picture / Kenny Rodger

Nuplex will spend $20 million restructuring its overseas businesses to improve efficiency and make more environmentally friendly resins.

The changes will be made in the Netherlands, Australia and Britain, and are prompted by new technology and trends towards environmentally friendly resins - synthetic mixtures used in paints, printing inks, adhesives and fibreglass.

Managing director John Hirst said yesterday that the company had to prepare for this trend, particularly in Europe.

"We expect the market for conventional solvent-based coating resins will shrink a little and the new market will be in more environmentally acceptable material such as water-based coatings."

The restructuring costs would be more than offset by the $24.4 million made from the sale of Nuplex's environmental services group last year.

This would give a significant increase in working capital and help position the company for growth, Nuplex said.

The trend towards environmentally friendly resins required a new direction for its Coatings Resins company in Bergen op Zoom, Holland.

Staff would be lost in areas associated with the old technology, but Hirst would not say while discussions were being held with unions how many of the more than 750 employees would be affected.

"But overall, there will be a reasonably significant reduction in head count on that site, as there needs to be to face the requirements of the future market in Europe," he said.

Liquid resins operations at Nuplex's loss-making British plant in Silvertown would be closed and transferred to Holland where there was more capacity.

This would result in more job losses. But other UK operations, such as powder resin production would remain.

In Australia, a specialty products group in Seven Hills, supplying the food and beverage industries, would be moved to other Nuplex facilities, sold or closed during the next few months.

The company has forecast a full-year trading profit of nearly $100 million, compared with last year's $81.5 million profit.

Shares in Nuplex closed yesterday down 4c at $6.30. They have traded at between $3.93 and $6.70 in the past year.

Nuplex started in Auckland in 1956 as Floor Tiles and Parquet, and is now Australasia's largest producer of resins.

Buying Coatings Resins from chemicals giant Akzo Nobel opened to much larger markets beyond Australasia.

Plans to restructure and reduce staff in Holland and raise profit margins had been previously proposed, although details of the costs and savings had not been given.

Core resins operations account for about 80 per cent of Nuplex's business.

Other parts of the business include specialty products such as dyes, chemicals, rubber and plastic goods, and building products such as resin floorings.

Plans

* Bergen op Zoom, Holland: Job cuts, new management structure and reallocation of resources to meet new markets.

* Silvertown, UK: Job losses as liquid coating resins business moves to Holland. Powder resin production will stay, and additional investment is planned.

* Seven Hills, Australia: Specialty products group will be moved to other Nuplex sites, sold or closed in the next few months.