Macpac packs in NZ production

Outdoor equipment and clothing manufacturer Macpac says the rising New Zealand dollar and the September 11 terrorist attacks on the United States are behind its decision to lay off 150 Christchurch staff.

Managing director Bruce McIntyre said the kiwi's 40 per cent rise in the past 17 months was crippling the company, which exports about 70 per cent of its products.

In the same period it had lost $1 million.

The attacks on the US, when hijacked planes were flown into the World Trade Centre in New York and the Pentagon in Washington, also had an impact on the company's trade, McIntyre said.

" ... at the time September 11 had a huge effect on the travel industry, and outdoors is largely travel-based so we've been hit by two things," he said.

Most of the company's exports go to Australia, Europe and Britain, all of which had experienced a downturn of tourist numbers following the attacks.

Ultimately, Macpac's decision to have the bulk of its manufacturing done in Asia could be pinned to dropping sales and rising costs, he said.

"The projections are that if we don't change tack then we are probably going to lose another $1 million in the next year or so.

" ... with the cost of manufacturing in New Zealand over the years we've been forced to cut our margin in order to remain competitive price wise."

McIntyre said Macpac's competitors were producing packs, clothing, tents and sleeping bags at a fraction of its labour overheads.

"New Zealand production has been priced out of the market," he said.

The 150 production-related jobs would go by the end of the year, leaving about 60 people involved in designing, testing and marketing its high-performance clothing and equipment.

Staff, customers and suppliers were informed of the decision at meetings this week. It is the largest single loss of jobs in the city in the past five years. From next year, the company's backpacks will be made in the Philippines, and its clothing in China.

This year, Macpac shifted the manufacture of its tents to Vietnam and its sleeping bags to China, both attempts to improve financial efficiency.

McIntyre, who founded Macpac 30 years ago, made the decision to move remaining manufacturing overseas two weeks ago.

"Emotionally it was a hard decision to make, but with losing $1 million in the last year and a half, there is no option," he said.

"For a company that has put so much effort into looking after our staff, this has been a very, very hard decision to make."

National Distribution Union regional secretary Paul Watson said the announcement had come as "quite a surprise" to the union.

In fact, an employment agreement with some Macpac workers had only just been settled.

He was a little sceptical about the company's argument about the level of the New Zealand dollar.

"If companies are hedging their profitability on the exchange rates, that's a bit of a concern."

- NZPA