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Fisher & Paykel workers have been warned there could be more job losses after yesterday's shock announcement that 350 staff would be axed and washing machine production moved to Thailand.
Workers at the company's East Tamaki plant eagerly filed into a meeting yesterday expecting to be given a
bonus. Instead they were told the bad news.
"The mouths just dropped," said one employee.
After delivering the news, Chief executive John Bongard said there were no guarantees that more production lines would not be shifted abroad.
"So I can't stand up in front of you today ... and say, 'That's it', because I'd be lying to you," he said.
Today he ruled out another closure before the end of the year, but could not say if jobs would be safe from next year.
Council of Trade Unions (CTU) president Ross Wilson said the Fisher and Paykel moves "signal an exchange rate accelerated crisis for our manufacturing sector".
He said the CTU had expressed concern for years about the manufacturing sector.
"We can't blame Fisher and Paykel and we can't blame the cheap labour countries."
He said there needed to be a sense of urgency in developing a manufacturing sector strategy and an early response was required from the Government on a Manufacturing Vision report released late last year.
"There is something horribly wrong when bank profits are soaring while iconic manufacturers are shifting jobs offshore," Mr Wilson said.
Green Party economic development and employment spokesperson Sue Bradford said today: "Fisher & Paykel is seen as an iconic NZ manufacturing company.
"I am therefore very disturbed not only to hear today's announcement of 350 job losses, but also the statement of F&P managing director John Bongard when he says there are no guarantees the rest of the company's manufacturing jobs won't one day also be moved offshore.''
Overtime
Workers, who would not be named for fear it would hurt their future employment, said they had been doing overtime every week to meet targets.
Fisher & Paykel blamed the move on competition, the loss of a duty preference and a "crippling" environment at home.
The announcement came just hours after the Reserve Bank raised the cash rate by another 0.25 per cent in a move that is expected to push the New Zealand dollar up and put further pressure on exporters.
Bongard said production of washing machines and clothes dryers would be moved from Auckland to Thailand, costing about 350 people their jobs.
The business environment in New Zealand had deteriorated, thanks to high interest and exchange rates and some policies on trade and tariffs, Mr Bongard said.
"Exchange rates and high interest rates [are] crippling the whole productive sector in New Zealand in my view."
Margins in the washing machine business had suffered considerably over the past four to five years. Most of Fisher & Paykel's competitors supplied the Australasian market from low-cost Asian countries, he said
"Without this relocation to Thailand our continued future in laundry design and manufacture would be doubtful."
Plans by a competitor to move its production out of Australia would also cost the firm a 5 per cent duty preference under the Closer Economic Relations trade agreement. "I guess the loss of the CER duty preference into Australia early next year was kind of the straw that broke the camel's back," Mr Bongard said.
Free-trade agreements with countries such as India, China and Thailand being sought by the Government were also unhelpful to the manufacturing sector, he added.
The relocation to a purpose-built factory in Thailand would take a year and result in annual pre-tax savings of up to $15 million.
At present the company has a global workforce of more than 4000 people, with about 2100 in New Zealand (1600 in Auckland).
The company also has operations in Italy, the US and Australia. More than 80 per cent of its sales revenue is generated overseas.
Engineers' union secretary Andrew Little said F&P's margins had been squeezed by the high New Zealand dollar, adding, "This has got to be a wake-up call for the Government".
- additional reporting NZPA
