Engineering hub need reinforced

Milmeq engineering, in Strathallan St, Dunedin. Photo: Gregor Richardson
Milmeq engineering, in Strathallan St, Dunedin. Photo: Gregor Richardson
The shock closure and loss of 40 jobs at Dunedin engineering company Milmeq only reinforces the need to create an engineering hub in the city, according to one of its promoters.

Neither the Otago Chamber of Commerce, Enterprise Dunedin nor Farra Engineering were aware of the predicament Milmeq had found itself in, with an empty order book heading into Christmas.

Farra Engineering chief executive Gareth Evans is promoting the city engineering hub, which in September secured $200,000 government funding from the $3billion regional development fund to undertake a feasibility study, conclusions and recommendations of which are due in March.

While Milmeq was ''on the mailing list'', it was not otherwise a key driver of the hub concept, Mr Evans said.

Aside from the massive loss of jobs from the Hillside Engineering, companies have been sold or consolidated and foundries have closed around the city during the past decade.

''That's a bit of a shock. I'd heard things had been a bit slow,'' Mr Evans said when contacted yesterday.

''This reinforces the need for businesses to be collaborative and work together ... so that when a market slows they have got more than one [type of work] option,'' he said.

The New Zealand dollar had been low for the past four to five months, which had helped offset some of the decline, he said.

While smaller engineering companies were finding plenty of ''jobbing work'', the larger corporates with their overheads were facing ''more challenging times'', he said.

Farra's buffer from the challenges was maintaining orders from construction work in Australia.

Milmeq's chairman Ralph Marshall cited industry consolidation, Australian's drought and global trade tariff issues as being behind the lack of orders for Milmeq in Dunedin, which yesterday confirmed its closure in coming months.

Mr Evans said he was seeing a similar lack of reinvestment from companies.

The engineering hub of companies wants to target work from New Zealand and Australian defence contracts and sectors including rail, renewable energy and construction.

Otago chamber of Commerce chief executive Dougal McGowan said when contacted the closure announcement was a shock, especially since Milmeq was a multi-finalist in the two-yearly business awards just two years ago.

''They had a lot of work on and there was a really good vibe about Milmeq,'' Mr McGowan said.

He was also concerned about forward work orders, not just in engineering but several sectors, Residential and commercial consent numbers had declined along with larger infrastructure work,

''While they're are still making decisions, we're seeing less contracts,'' Mr McGowan said.

He, like Milmeq's management, hoped the high skill level of many of the specialist staff might be taken up by other Dunedin engineering companies.

''That is really tough at this time of the year,'' he said.

The Amalgamated Workers Union, union ETu and the Manufacturing and Construction Workers Union represent the Milmeq staff.

On behalf of them all, AWU's Stephen Scandrett said the closure appeared due to market forces external to New Zealand, and followed an earlier workforce reduction.

''The company has gone to considerable lengths to keep the business open for some time, but the inevitable has occurred,'' he said.

Having a new United States 25% steel tariff, which was not applied to Australia, the EU and five other countries, did not help New Zealand to be competitive, Mr Scandrett said.

Enterprise Dunedin director John Christie, contacted in Australia yesterday, said he had only just been made aware of the closure.

He said whenever a Dunedin manufacturing company was bought by out-of-town buyers, they invariably rationalised operations and staff - as had happened with Cadbury and Fisher & Paykel Appliances.

He believed there was enough depth in Dunedin's engineering sector to maintain capacity and that it could grow in the future.

simon.hartley@odt.co.nz

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