NZ's biggest toilet paper supplier undertakes strategic review

Photo / Martin Sykes

New Zealand's biggest toilet paper supplier, SCA Hygiene Australasia - which makes tissues for brands including Sorbent, Purex, Handee and Treasures - says it is carrying out a strategic review of New Zealand operations.

SCA has 600 employees in New Zealand: 226 at Kawerau, and 197 at a Te Rapa toilet paper factory, with most of the rest in Auckland.

A company spokesman said the sole focus was on getting detail around three scenarios for further investigation and a preferred option to ensure the "future competitiveness and improved quality" of its tissue manufacturing.

It was looking at its tissue manufacturing footprint on both sides of the Tasman to determine how it could improve efficiency by introducing new systems and technology.

Its three scenarios include the current strategy of moderate investments across the factories, "significant" investment in those current sites, or a large capital spend on a "greenfields" mill.

SCA Hygiene Australasia president, Paul Thompson, said the study was progressing well and he hoped a preferred option would be identified by late November or early December.

No decision would be made until early next year.

"It's important to remember we are only investigating a range of options - no decision has been made," said Thompson.

He said the three scenarios being investigated involved varying degrees of capital investment that would require approval from SCA's Swedish senior management before the preferred option could become a formal proposal for change.

Last year the company announced it was closing its Auckland factory at Henderson, putting the jobs of 118 workers at risk, because that site was running at an annual loss of $3.5 million.

"We have considered a range of possible options that will allow us to continue manufacturing in New Zealand," he said at the time.

"We believe the best solution is to wind down our Auckland operation over the next year and consolidate production in our Te Rapa and Kawerau facilities."

SCA Hygiene Australasia is a subsidiary of Sweden's Svenska Cellulosa AB which has 52,000 employees in 60 countries.

It paid bought Carter Holt Harvey's (CHH) tissue business in 2004 - a year before billionaire Graeme Hart took control of CHH - and the purchase included a pulp factory in the Melbourne suburb of Box Hill.

New Zealanders each use about 10.5kg a year of tissue paper, and they spent $153m on toilet paper in the year to March.

But in recent years increasing proportions of the paper pulp the nation uses to produce toilet roll and tissue paper has been imported, particularly from Indonesia.

Department of Statistics' figures show volumes of raw paper imported from Indonesia to make toilet roll and other tissue products have risen sharply over the past few years, from 2200 tonnes in 2007 to 8000 tonnes in 2009 - 52 per cent of the total pulp used.

The three machines at SCA's Kawerau mill have capacity to produce 68,000 tonnes a year, while in Box Hill, it has two machines with a combined capacity of 57,000 tonnes.

- NZPA