Coronavirus fallout: 24 people lose their jobs at Patchell Group in Rotorua

There have been 24 jobs lost from the Patchell Group, in Rotorua. Photo / Getty Images

Two dozen people have lost their jobs at a Rotorua transport engineering company as a result of the financial pressures on the logging industry caused by the coronavirus pandemic.

Patchell Group chief executive Brent Whibley announced yesterday that 24 of the company's 250 employees would have their roles made redundant to help ease financial pressures stemming from Covid-19.

"The restructure is not something we ever wanted to do, as our staff have been critical in
maintaining our status as the number one trailer manufacturer in New Zealand," he said.

But if they did not react, it would be difficult to manage a wider downturn, he said.

"Especially if the full health impact of Covid-19 reaches the New Zealand workforce."

"We understand the impact this will have on the families involved and the flow-on effect into the local economy.

"The company prides itself in being a significant employer of Rotorua people. The ramifications of making such decisions have been well considered. "

Whibley said the actions the company needed to take were difficult but it was and would continue to be a strong and viable business.

Patchell Group recently celebrated maintaining the No 1 heavy transport trailer builder position for the 10th consecutive year.

He said a decline in workload in the forestry industry created the pressure for the company whose principal market was within the logging industry.

The company manufactures logging trailers and trucking equipment.

"The market was starting to ease anyway but this just absolutely shut down a heap of demand," Whibley said.

At the start of February, a survey was sent to forestry companies and Rotorua responses showed work had slowed.

The reduced demand on logs meant less work for forestry crews who either lost their jobs or were given reduced hours.

"This has meant less demand for our equipment," Whibley said.

"We've got to maintain cash and payroll ... it's just making sure we're a prudent operator and we are in a position in the future to be able to respond to the uptake."

In the lead-up to the announcement, the company's management team had implemented a number of cost-reduction strategies to reduce the impact of the downturn.

This included a review of all stock lines, discretionary spending, use of vehicles, as well as working with customers and suppliers on reducing stock levels.

The staff had also contributed a number of workable solutions which include reduced hours and working days.

"But we haven't implemented that yet," he said.

Those who lost their jobs were offered employee assistance if needed and help with CV writing had been offered.

Whibley said the company had also made contact with other suppliers, such as Rhino Manufacturing, which had offered two roles.

"What we haven't seen yet, and whether we will see it, is the health impacts of the virus. At the minute all we're seeing is the economic downturn."

"If New Zealand and Rotorua actually have increased cases of the virus that requires staff to go, that puts a different spin on it altogether."

He said customers requesting delays to upcoming builds or full cancellations was a daily task and they were also working through the cancellation of completed builds.

"This puts a huge strain on operational viability," he said.

Whibley could not confirm what the approach would be moving forward in terms of reducing costs because the situation was constantly evolving.

"Every day things are popping up," he said.

He said things such as sponsorships would need to be reviewed as it was more important to ensure their staff could put dinner on the table.

But amid all the challenges, Whibley said it was heartwarming to see the way staff, customers, the community and other industries were trying to help one another in the time of stress.

He said he was "positive that this cycle will be overcome and the markets will bounce back".

"Our challenge is to remain viable and be ready to respond to an economic uplift."

Road Transport New Zealand chief executive Nick Leggett said the best judge of real-time economic activity was through the transport system.

"The longer the export to China is non-functioning, the greater the risk of job loss," he said.

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He said the impact of international trade would affect the number of trucks on the road and eventually trickle down to smaller businesses who may not have as much of a security blanket as larger businesses.

"It's very concerning to us ... a lot of livelihoods are on the line," he said.

New Zealand Forest Owners Association chief executive Prue Younger said "more and more" people would be pressured into putting contractors off with the pressure on Chinese and New Zealand ports.

"So if there isn't any immediate return to business-as-usual in China, then those delays are just going to translate to New Zealand."

Younger said "realistically" there was not much anyone could do about the slowing of the economy and the loss of jobs in New Zealand.

"We're governed now by the international hype," she said.

"Once we do get going again, there's no indication of what the prices are going to be like, either."

This meant the industry would need to diversify, Younger said.

"There's going to be a need for the industry as a collective ... to work together to look forward to making some significant changes. Diversity is going to be one of the solutions."

The diversity would include both markets and where the products were going, which would likely mean more product would be processed domestically, she said.