Mill layoffs blamed on 'killer' wool price

A delayed start to the Christchurch rebuild isn't helping the wool industry, says a union leader. Photo / APN

A union leader says a more than 100 per cent increase in the price of wool is partly to blame for a downturn in the carpet-making industry.

First Union, formerly known as the National Distribution Union, says listed yarn and carpet maker Cavalier Corporation has made about 22 workers, including those in management positions, redundant at its Wiri, Napier and Wanganui mills.

Norman Ellison Carpets, 70 per cent owned by Cavalier, will lay off another 20 workers at its yarn mill in Onehunga next week.

In August, Cavalier reported a profit after tax of $18.2 million for the year to June, a 60 per cent increase on the previous year's result.

Managing director Wayne Chung was unavailable for comment yesterday.

First Union general secretary Robert Reid said a lack of new housing construction and a delayed start to the Christchurch rebuild were having a negative impact on the carpet making industry.

But he said carpet and yarn makers were saying the jump in the price of wool from $3kg to $7kg was "the killer".

"While the increase in wool prices may be good for farmers it is making woollen carpets uncompetitive," Reid said.

"Some carpet makers are moving to synthetic carpets because of the price of wool."

He said both Cavalier and Norman Ellison Carpets had announced they were shutting down for a week around Labour Day this month.

"Other yarn makers in New Zealand have also notified the union that their orders are down and the union would not be surprised to see further job losses at other mills," Reid said.

He said the Government should be taking steps to deal with the volatility in the New Zealand dollar, which hit a post-float record of US83.43 against the greenback in early August, but has since fallen and was trading at US77c yesterday.

The currency situation was punishing exporters and adopting a strategic approach to procuring locally manufactured wood and textiles for the Christchurch rebuild was vital, Reid said.

ManufacturingNZ executive director Catherine Beard said retail conditions were tough across the board, which was having a negative impact on manufacturers.

The jump in the price of wool was "not unique", as rising input costs were affecting a range of sectors.