A run of factory closures and redundancies hitting manufacturing firms is the legacy of successive governments' neglect of the sector, says the head of an industry group.
Speciality chemicals maker Nuplex Industries yesterday said it would close four plants across Australasia, including two in Auckland.
The company said the closures were the result of its manufacturing customers shifting production overseas because of the strong New Zealand and Australian dollars, as well as the downturn in the construction sector.
About 80 of the firm's 800-strong Australasian workforce would lose their jobs, the company said.
New Zealand Manufacturers and Exporters Association president Brian Willoughby said Nuplex's decision would have come after all other options were exhausted. "Nuplex would have been working really hard to be as effective as it could, like the other companies that have announced these closures and layoffs. This is the end game - they can't make it work."
He said the Government, and past governments, clearly understood the reasons why manufacturers and exporters were facing such challenges.
"They have all operated with benign neglect and let it get to this," said Willoughby. "There are so many buttons that could be pushed."
He said the Reserve Bank could lower interest rates, which would help keep the New Zealand dollar's strength in check.
But earlier this month outgoing Reserve Bank Governor Alan Bollard said if the financial markets saw an OCR cut as a ploy to lower the dollar, they would anticipate the rate cut would have to be reversed and see it as a signal to buy the New Zealand dollar.
Catherine Beard, executive director of ManufacturingNZ, said industry was facing challenging times.
But other figures from Statistics New Zealand suggested the sector was holding up, Beard said.
She said measures the Government could take to address the strong dollar included reducing debt, to take the pressure off interest rates, and putting an end to "poor quality spending" such as Working for Families and student loans.
BT Funds Management portfolio manager Matt Goodson said Nuplex's announcement should not have come as a surprise.
"It is just another example of very strong currencies hollowing the old industrial sectors of the New Zealand and Australian economies," Goodson said.
One-off costs arising from the restructuring would reduce net profit by about $17 million in the current financial year, Nuplex said.
Nuplex shares closed down 6.6 per cent yesterday at $2.97.
JOB CUTS
September
• KiwiRail says it will cut 20 per cent of its infrastructure and engineering workforce, with the loss of 158 jobs, by the end of October.
• New Zealand Aluminium Smelters says 100 jobs will go at the Tiwai Point aluminium smelter near Bluff.
• Norske Skog announces up to 120 jobs at its Kawerau mill will go as a result of the Norwegian newsprint giant halving newsprint production.
August
• 36 staff at Wanganui engineering firm Axiam Metals made redundant due to "difficult economic conditions."
July
• Fisher & Paykel Appliances says 29 staff will be laid off at its East Tamaki plant as a result of manufacturing work being shifted to one of its lower-cost overseas factories.
• South Auckland engineering firm Flotech outsources manufacturing to North America and Europe, at the cost of 61 jobs at its Wiri plant.
• Goulds Fine Foods, a Petone food manufacturer, says 55 jobs will be lost as a result of the company closing down.
June
• Norman Ellison Carpets announces the closure of its Onehunga-based yarn-spinning plant, with the loss of around 70 jobs.
• Close to 50 jobs cut at Oamaru's Summit Wool Spinners.
May
• The EPMU says 55 jobs are lost at Auckland metal and wire product manufacturer Wire by Design as a result of the firm shutting down.
