Sixty Putaruru sawmill staff lose jobs, told over Christmas break

Sixty staff who have lost their jobs at a Putaruru sawmill found out during their Christmas holidays.

However, hopes are high that staff will find new jobs, following the receivership of Putaruru's Pacific Pine Industries, said receiver Kenneth Brown of BDO.

The South Waikato sawmill and timber-processing operation was closed for the Christmas period and staff were on holiday when they were phoned with the news last week it would not be reopening.

The 30-year-old company, which exported finished timber to Australia and Europe, had been losing money, with one shareholder having injected a large amount of money to try to head off failure, Brown said.

The biggest shareholder has interests associated with the La Grouw family of Rotorua and Auckland. The family owns the Lockwood home-building company.

Brown said directors had decided against putting more money into the Putaruru operation and continuing with the prospect of another year of losses. It had been considered better to keep the operation closed rather than restart it and close within weeks, he said.

Ministry of Social Development staff had attended a meeting on Monday with staff and the receiver to help staff explore other job opportunities. Local employers had also sent representatives with application forms for affected staff and it was known that other South Waikato industries needed staff, he said.

Two parties interested in restarting the operation had approached the receiver.

"We've advised them they will have to move quickly because staff will find new jobs," Brown said.

Creditors are owed around $2 million to $3m, Brown said.

Wages were up to date with staff paid last week. However, holiday pay and some redundancy payments were owed. Creditors had all been paid up until the last month, however in the timber business a month's supply of logs could add up to hundreds of thousands of dollars, he said.

"We have told staff we are confident they will be able to be paid, but we have to sell stock (and assets) so we just can't tell them a date yet."

The company owns the land and buildings. The land is in two titles, totalling more than 6ha, Brown said. On the site is an office block, mill and timber drying sheds. All logs had been processed before the Christmas shutdown.

The directors had considered trying to sell the business but didn't believe they would find a market, he said.

"Some of the equipment is quite old. They had to draw a line in the sand somewhere."

The receivers had also considered reopening the plant and trying to sell it as a going concern with the receivers running it, Brown said.

"But that creates problems for us. There are health and safety issues to consider and I'm not a sawmiller. There was no guarantee that we wouldn't have run losses which we would have been liable for."

About six of the total 60 staff whose jobs had been terminated had been kept on to help close down the business, Brown said.

They included the chief executive. Some staff had been with the company for up to 30 years, he said.

In a statement about the closure, FIRST Union called on the Government to meet with industry stakeholders to intervene and co-ordinate the supply industry, from forest to construction, to ensure that sawmills are able to survive and provide the wood that New Zealand needs.

"This is becoming a pattern," said Robert Reid, FIRST Union president.

"It was just November last year that Claymark went into receivership. It highly counter-intuitive that, at a time where we have lots of wood and the need for an unprecedented number of homes, our sawmills are closing down."

The union is working with the receiver and the Ministry of Social Development to ensure the workers are supported, he said.