25 Sep 2012

Nuplex job cuts aimed at remaining viable

8:27 am on 25 September 2012

Listed resins and chemicals maker Nuplex says its restructure will ensure its manufacturing operations in New Zealand and Australia remain viable.

Nuplex will close its Onehunga plant and its high-temperature facility at Penrose, affecting up to 40 jobs over the next couple of years.

The listed company will also close another two sites in Australia - Canning Vale in Western Australia and Wangaratta in Victoria - costing another 40 jobs.

Nuplex will shift operations and invest more in its remaining sites - including Penrose - and the company says the investment in this facility will cover any growth that comes out of the rebuilding in Canterbury.

The company's Australasian regional president, Sam Bastounas, says the high New Zealand and Australian currencies have been a problem.

The firm has experienced very tough trading conditions in Australasia over the past 18 months, and at the same time the New Zealand and Australian dollars have hit high rates of exchange against key currencies.

"What we've done is look at our overall footprint across Australia and New Zealand and we've made the decision to streamline our operations and through that preserve manufacturing in Australia and and New Zealand," Mr Bastounas says.

The listed company makes products used in the paint, paper and textile industries, but has been particularly hurt by the downturn in construction markets on both sides of the Tasman.

Nuplex's profit is expected to fall by $17 million this financial year due to restructuring costs and writing down the value of plant, equipment and investments.

But Nuplex says the full benefit of the changes should result in pre-tax savings of about $5.6 million a year by 2015.

Craigs Investment Partners' head of private wealth research Mark Lister says the restructure is a sign of the times, particularly for manufacturers with global exposure.

The price of shares in Nuplex slumped 6.6%, a drop of 21 cents to $2.97, on Monday.