28 July 2009
WPI International (WPI) Managing Director David Anderson today told the 65 staff at the Prime Sawmill in Gisborne that the company believed it was no longer possible to keep the mill running in the face of a downturn in international prices and a continued high New Zealand dollar.
“Only six months ago we undertook significant re-investment in the site that led to real gains in productivity. We believed the mill, which had previously struggled, was back on track to being viable. But the continued rise in the dollar all through this year, along with the fall in wood prices on international markets, has more than wiped out these gains,” he said.
“As a result the mill has been accumulating very high monthly losses, and unfortunately it cannot continue on that basis.
“This is a very disappointing point to have reached as we are aware of the impact of a closure on the workers at the mill and on the local community,” he said.
Wood Processors Association chief executive, Peter Bodeker said the announcement by WPI again highlights the devastating impact of New Zealand's volatile dollar.
“While the immediate impact is felt by the 65 mill staff, the wider community of contractors, loggers, truckies, and many others who rely on the Prime Sawmill for their livelihoods will also hurt,” he says.
“Our members are in an impossible business environment combining a high and very volatile kiwi dollar. Since March the value of our dollar has increased by 35%. This instability makes planning impossible.
He says the point needs to be made very clearly that the Prime mill is not a marginal operation. Investments were made to ensure that it remained modern, efficient and highly productive.
"This is a worrying development for the industry and shows how deep currency instability can cut. This is a real tragedy for the Gisborne community and marks a point of no return. Conditions may improve over the coming months, or they may not. All we can be certain of at the moment is that this level of currency instability has led to losses that this operation simply cannot sustain."
Mr Anderson said the company had invited further urgent input from staff over the next few days but realistically believed the scale of the rapidly accumulating losses would require the site to be closed almost immediately.WPI would provide redundancy payments and assistance to employees if the site closed.
“The high New Zealand dollar is threatening jobs right through the manufacturing export sector, and things won’t get any better for the sector until the problem of the high exchange rate is addressed,” Mr Anderson said.
Source: WPI and WPA media releases
