Kinleith to be mothballed?

Kinleith mill may be on borrowed time.

The Tokoroa mill's owners, Carter Holt Harvey (CHH), said it would take a "miracle" for it and striking workers to return to the negotiating table before the plant is mothballed in two weeks.

About 270 workers have been on strike for six weeks because an agreement could not be reached on their collective contract, which lapsed in 2001.

The workers say the company has failed to address health and safety concerns about new work it wants them to do, including fighting fires and cleaning chemical spills. They are also unhappy with CHH's proposal's for the promotion of staff.

Last night, CHH chief executive Brice Landman said he could not guarantee that the mill would stay open.

Workers said they had heard it from CHH before and would continue to strike.

Tokoroa residents were divided about the situation but South Waikato Mayor Gordon Blake said it was his worst nightmare come true.

Mr Landman said when the mill ran out of work in the next two weeks, it would be forced to look at putting it into an indefinite care and maintenance programme, he said.

It meant maintenance staff still working would be asked to take annual or unpaid leave until the mill was working again.

"But I hope that the proposed suspension is not a precursor to closure," Mr Landman said.

He said CHH believed it had done all it could to resolve the dispute.

It had increased its pay offer to the workers and agreed to negotiate on planned changes to the system of promotion.

Plans to change the current firefighting system were in line with other companies around New Zealand.

"We would love to be running, but we can't just give and give and give."

Mr Landman said the company was completing a financial impact study on the strike which would evaluate its cost both on and off site.

CHH chief executive Peter Springford said yesterday the group had brought forward maintenance work at the mill and would then look at further actions after that had been completed.

"We will review a suspension of all activities," he told a briefing after the group's first quarter in which the company, 51 per cent owned by US paper giant International Paper, posted a $51 million net profit.

The Kinleith mill has been idle since March 7.

Carter Holt said it the strike was costing CHH about $170,000 a day in pre-tax earnings.

"If the strike were to continue, the ebit (earnings before interest and tax) and cash flow impact would be $7 million to $10 million per month under existing conditions," the company said after it reported first quarter earnings rose to $51 million from $17 million in the March quarter last year.

The mill workers walked off the job on March 7 angry at "procrastination" over a new collective agreement, which expired 18 months ago.

The company said the strike showed reluctance by the Engineering, Manufacturing and Printing Union (EPMU) to see the economic realities facing the business.

Industrial relations at the plant have been difficult since Carter Holt in August laid off 390 of its 770 workforce as it outsourced much of the work. Some 190 new jobs were created by Swedish company ABB that has been contracted to take on maintenance work at the plant.

Mr Blake said CHH's majority owner, International Paper, the US company which is the largest pulp and paper manufacturer in the world, had a history of closing under-performing mills.

Forestry company analysts believe any mill closure is unlikely to be permanent as CHH recently completed a $300 million upgrade of the plant.

- NZPA