28 Jun 2012

Jobs lost with yarn mill closure may not be the last

6:47 am on 28 June 2012

Cavalier Corporation chief executive Colin McKenzie says the closure of one of his company's wool yarn spinning factories should mark a turnaround in its business - but he can't rule out further consolidation.

The listed company is closing the Onehunga factory of its subsidiary company Norman Ellison Carpets at the end of July, affecting 85 workers.

It says it hopes to relocate some workers to other plants, leaving about 70 staff without jobs.

"You can't rule out further rationalisation or consolidation in the future," he says. "The days of companies sitting on their hands and pretending the world hasn't changed are well and truly over".

"All businesses are expected to continually monitor their costs, and fine-tune - and where there's over-capacity or duplication, address those."

Mr McKenzie says falling sales forced the company to close one of the group's three woollen yarn spinning plants: the Onehunga mill will close on 26 July.

Mr McKenzie says the company has been over-capacity for some time, and the Auckland plant does not have the same long-term potential as its Napier and Whanganui plants.

Cavalier Corporation cut 18 jobs at the plant in October last year, and a further 26 jobs in April this year and made cut-backs last year at its Wiri, Napier and Whanganui mills.

Mr McKenzie hopes about 20 staff will be able to move to other plants or within different areas in the company.

He says the company will assist staff to find other jobs and fund a training allowance.

Mr McKenzie says the closure is part of a consolidation and business improvement programme that will cost the company up to $5 million this year in reduced earnings.

"But next year we will turn around the situation and we're looking at delivering a profit after tax of $10 - $12 million next year."

Huge blow for workers - union

The First Union, which represents a number of the workers, says the employees will struggle to find similar paying employment.

General secretary Robert Reid said the company had agreed to fund a training allowance of up to $250 per worker, and a redundancy support coordinator to assist workers to find new jobs.

However he says the redundancies are a huge blow for the workers, their families, and the South Auckland community.

Mr Reid says the high price of wool is affecting jobs across the whole manufacturing industry.

In the past two years, he says, since wool prices have doubled, about 400 people have lost their jobs.

A union delegate at the plant, Sylvia Sands, says workers knew the company was struggling, but they were still stunned to be told they would be made redundant.

She says some people have been there, their entire working lives, and brought their families in to work alongside them.

She says that means entire households have lost all their breadwinners.

The closure follows close on the heels of almost 50 redundancies last month at the Summit Wool Spinners mill in Oamaru, which produces yarn, mainly for carpets.

It blamed a down-turn in orders due to increased competition from synthetics, and the erosion of export returns by the high New Zealand dollar.