IRL cutback could hurt relations with industry

Plans by state-owned Industrial Research (IRL) to halt scientific activity in Auckland and Christchurch could damage relations with industry, business leaders have warned.

Des Scott, chief executive of agricultural product manufacturer Tru-Test, said he was "astounded" research would be shut down in the country's industrial heartlands.

"I just think it's an unbelievable decision to take them away from their customers," he said. "If you were going to close anywhere it would be Wellington."

IRL is consulting unions on plans to centralise its research facilities in Wellington while maintaining commercial offices in Auckland and Christchurch - a move that will result in 41 redundancies among scientific and administrative staff, nearly 10 per cent of the workforce.

Scott said a commercial office was little gain compared with the lost opportunity for Tru-Test to work directly with IRL's Auckland-based scientists.

IRL, of which he was a founding director, had been set up to conduct applied research for the benefit of industry "and now they've adopted a much more commercial model whereby they are vertically integrating closer to the market".

"It's a research organisation. It's not a commercial organisation."

Employers and Manufacturers Association spokesman Gilbert Peterson said he was concerned about "the message this is sending in consolidating the IRL activity to Wellington away from the country's commercial hub".

The chief executive of IRL, Nigel Kirkpatrick, said restructuring was necessary to eliminate duplication of plant and equipment, cutting costs by about $4 million a year and thereby avoiding a repeat of last year's $5 million loss.

"What we are doing is about ensuring stability for IRL's future so we can do research and development, and we can create value."

Kirkpatrick said IRL's objective was not company ownership, but in sectors such as biotechnology it was helping set up a new industry. Two pharmaceutical manufacturing companies spun off by IRL, Biopharm and Glycosyn, returned a loss last year.

He said so-called "blue sky" research free from commercial restriction was important, but with the Government fronting up 40 per cent of IRL's revenue - about $25 million last year - there was a need to return value.

The restructure will lead to about 20 scientific staff being made redundant, although Kirkpatrick said no research projects would be cut.

Peter Maire, founder of navigation technology company Navman, said the closures came as no surprise.

"If you want to do research, then do research," he said. "If the Government wants this thing to be commercial, then what they should do is sell it off to somebody who'll put their own money at risk. You can't do both effectively."

Maire said the failure of research institutes to commercialise a larger number of ideas over recent years showed that IRL's closures were unlikely to greatly affect industry.

But he added IRL's own future was far from certain.