Martha McKenzie-Minifie

Decades of acrid burning odours coming out of Fletcher Building's Penrose wood plant are about to come to an end to the relief of residents in the area.  Fletcher chief executive Jonathan Ling said on Friday the hardboard and softboard plant on O'Rorke Rd would be shut after an investigation found an upgrade to control the smell would cost between $2 million and $4 million.

The closure brings to an end many years of complaints from residents in the area running from Penrose to One Tree Hill.  Auckland Regional Council's air pollution team discussed taking legal action after advice that there were sufficient grounds for prosecution.  ARC experts said the plant had major ongoing issues.

A One Tree Hill resident has disliked the smell for the 30 years she has lived in the area.  "It used to be so bad, you couldn't have your windows open," she said, although it had been less offensive lately.  Other residents said the smell was so bad it had forced them to to sell houses and move.

In 2001, Fletcher said it would control the odour by installing a bio-filter but the ARC had doubts about the efficiency of the equipment.  Mr Ling said smell was not the only issue. The Laminex plant had been losing money for the past three to four years so any upgrade was out of the question. He cited discussions with the ARC about emission controls and said investigations of how to fix problems and reduce the smell had been central to the plant's future.

The high exchange rate and the plant's non-profitability were other reasons for the decision to close the production facility.  "The odour comes when they heat up the processed wood fibre. It's a burning smell," Mr Ling said.  The plant operated five days a week on 24-hour shifts and staff had tried to control the smells by making only hard boards on day shifts.

"You get an odour when you're making hardboard because of the higher temperatures, so we've tried not to make that board on the night shift. We've tried to manage the odour situation but have had no complaints from residents.  We've been in discussions with the ARC on the odour for some time. We had agreed a plan of approach as to how we'd tackle the issues and that has led us to understand how much it would cost us to fix it."

The plant, known by long-time locals as the NZ Forest Products plant, had been operating for many decades and had employed 65 people.  Ling said the company would try to place as many people as possible within Fletcher's other business units but he expected some people would consider redundancy.

About 60 per cent of the plant's product was exported to Australia, North America and Asia where it was used in furniture and building. The softboard had been used for display noticeboards. The hardboard was used among other furniture in cabinets.  But Mr Ling said demand for the materials had dropped considerably and the hardboard had been largely replaced by other products.

BIG STINK

• Air pollution problems at a Penrose plant partly forced closure.
• 50 complaints since 1999 prompted Auckland Regional Council action.
• ARC has issued seven infringement notices in the past eight years.
• Three abatement notices were issued during that time too.
• ARC demanded Fletcher improve emission controls at the plant.
• Prosecution was an option if offensive odours did not stop.

MEMORIES OF 'ASHY' SMELL GO BACK DECADES

Ana Ofa knows all too well the smells from Fletcher Building's Penrose factory - she's lived a couple of streets away all her life.  "It smells like an incinerator, ashy," says the 27-year-old, whose memories of the odour go back to when she was aged 3.  It hasn't been as strong during the past few years and her most recent memory of a truly pungent reek was the night Princess Diana died a decade ago.

Neighbours say the aroma is hard to describe, their accounts ranging from "dry and woody" to a chemical stench.  "It used to annoy me," says Rosemary Lyon. "It was irritating on my nostrils."

For Bill Berwan, news that the factory is shutting is welcome relief.  "I'm happy," says the Rockfield Rd resident of 25 years. Mr Berwan's four children cried out about the "gas" smell when they were younger but the family would not move house.

While others try not to open windows or dry washing on the line when the smell is at its worst, Ms Ofa "got over it" years ago. She said the factory had an upside for the suburb, providing jobs for many residents.  Her grandfather worked there, as did several other family members.  But the last, her cousin Casa Hala, was made redundant this year after more than a decade with the company.

Fisher & Paykel workers have been warned there could be more job losses after yesterday's shock announcement that 350 staff would be axed and washing machine production moved to Thailand.

Workers at the company's East Tamaki plant eagerly filed into a meeting yesterday expecting to be given a bonus. Instead they were told the bad news. "The mouths just dropped," said one employee.

After delivering the news, Chief executive John Bongard said there were no guarantees that more production lines would not be shifted abroad. "So I can't stand up in front of you today ... and say, 'That's it', because I'd be lying to you," he said.

Today he ruled out another closure before the end of the year, but could not say if jobs would be safe from next year.

Green Party economic development and employment spokesperson Sue Bradford said today: "Fisher & Paykel is seen as an iconic NZ manufacturing company. "I am therefore very disturbed not only to hear today's announcement of 350 job losses, but also the statement of F&P managing director John Bongard when he says there are no guarantees the rest of the company's manufacturing jobs won't one day also be moved offshore.''

Overtime

Workers, who would not be named for fear it would hurt their future employment, said they had been doing overtime every week to meet targets. Fisher & Paykel blamed the move on competition, the loss of a duty preference and a "crippling" environment at home.

The announcement came just hours after the Reserve Bank raised the cash rate by another 0.25 per cent in a move that is expected to push the New Zealand dollar up and put further pressure on exporters.

Bongard said production of washing machines and clothes dryers would be moved from Auckland to Thailand, costing about 350 people their jobs. The business environment in New Zealand had deteriorated, thanks to high interest and exchange rates and some policies on trade and tariffs, Mr Bongard said. "Exchange rates and high interest rates [are] crippling the whole productive sector in New Zealand in my view."

Margins in the washing machine business had suffered considerably over the past four to five years. Most of Fisher & Paykel's competitors supplied the Australasian market from low-cost Asian countries, he said

"Without this relocation to Thailand our continued future in laundry design and manufacture would be doubtful."

Plans by a competitor to move its production out of Australia would also cost the firm a 5 per cent duty preference under the Closer Economic Relations trade agreement. "I guess the loss of the CER duty preference into Australia early next year was kind of the straw that broke the camel's back," Mr Bongard said.

Free-trade agreements with countries such as India, China and Thailand being sought by the Government were also unhelpful to the manufacturing sector, he added.

The relocation to a purpose-built factory in Thailand would take a year and result in annual pre-tax savings of up to $15 million. At present the company has a global workforce of more than 4000 people, with about 2100 in New Zealand (1600 in Auckland).

The company also has operations in Italy, the US and Australia. More than 80 per cent of its sales revenue is generated overseas. Engineers' union secretary Andrew Little said F&P's margins had been squeezed by the high New Zealand dollar, adding, "This has got to be a wake-up call for the Government".

Fisher & Paykel workers have been warned there could be more job losses after yesterday's shock announcement that 350 staff would be axed and washing machine production moved to Thailand.

Workers at the company's East Tamaki plant eagerly filed into a meeting yesterday expecting to be given a bonus. Instead they were told the bad news.  "The mouths just dropped," said one employee.

After delivering the news, Chief executive John Bongard said there were no guarantees that more production lines would not be shifted abroad.  "So I can't stand up in front of you today ... and say, 'That's it', because I'd be lying to you," he said.

Today he ruled out another closure before the end of the year, but could not say if jobs would be safe from next year.

Council of Trade Unions (CTU) president Ross Wilson said the Fisher and Paykel moves "signal an exchange rate accelerated crisis for our manufacturing sector".  He said the CTU had expressed concern for years about the manufacturing sector.

"We can't blame Fisher and Paykel and we can't blame the cheap labour countries."  He said there needed to be a sense of urgency in developing a manufacturing sector strategy and an early response was required from the Government on a Manufacturing Vision report released late last year.

"There is something horribly wrong when bank profits are soaring while iconic manufacturers are shifting jobs offshore," Mr Wilson said.

Green Party economic development and employment spokesperson Sue Bradford said today: "Fisher & Paykel is seen as an iconic NZ manufacturing company.

"I am therefore very disturbed not only to hear today's announcement of 350 job losses, but also the statement of F&P managing director John Bongard when he says there are no guarantees the rest of the company's manufacturing jobs won't one day also be moved offshore.''

Overtime

Workers, who would not be named for fear it would hurt their future employment, said they had been doing overtime every week to meet targets.  Fisher & Paykel blamed the move on competition, the loss of a duty preference and a "crippling" environment at home.

The announcement came just hours after the Reserve Bank raised the cash rate by another 0.25 per cent in a move that is expected to push the New Zealand dollar up and put further pressure on exporters.

Bongard said production of washing machines and clothes dryers would be moved from Auckland to Thailand, costing about 350 people their jobs.  The business environment in New Zealand had deteriorated, thanks to high interest and exchange rates and some policies on trade and tariffs, Mr Bongard said.

"Exchange rates and high interest rates [are] crippling the whole productive sector in New Zealand in my view."

Margins in the washing machine business had suffered considerably over the past four to five years. Most of Fisher & Paykel's competitors supplied the Australasian market from low-cost Asian countries, he said  "Without this relocation to Thailand our continued future in laundry design and manufacture would be doubtful."

Plans by a competitor to move its production out of Australia would also cost the firm a 5 per cent duty preference under the Closer Economic Relations trade agreement. "I guess the loss of the CER duty preference into Australia early next year was kind of the straw that broke the camel's back," Mr Bongard said.

Free-trade agreements with countries such as India, China and Thailand being sought by the Government were also unhelpful to the manufacturing sector, he added.

The relocation to a purpose-built factory in Thailand would take a year and result in annual pre-tax savings of up to $15 million.

At present the company has a global workforce of more than 4000 people, with about 2100 in New Zealand (1600 in Auckland).  The company also has operations in Italy, the US and Australia. More than 80 per cent of its sales revenue is generated overseas.

Engineers' union secretary Andrew Little said F&P's margins had been squeezed by the high New Zealand dollar, adding, "This has got to be a wake-up call for the Government".

- additional reporting NZPA

Air New Zealand has turned away from big, bold brand advertising for its latest, low-cost campaign.

Word of the airline's Grab a Seat promotion - which sells daily, cut-price airfare specials online - is being spread almost purely by non-traditional marketing methods, such as encouraging staff to pass on a viral email to friends and family.

Some workers even covered themselves in Grab a Seat stickers and walked the streets of Auckland or stood, off-duty, beside busy streets with large Grab a Seat signs.

The company is one of a growing number trying alternative methods of communication for product launches. Tom Agee, a University of Auckland senior marketing lecturer, says alternative media such as text, email and online are increasingly a part of the marketing mix.

"I don't think there's any one answer," says Agee. "Today [the media environment] is highly fragmented and it takes more and more money to reach the same number of people. People are looking for newer and more direct ways."

He said developing a database of heavy users of a product was increasingly popular. Air NZ spokeswoman Pam Wong said the Grab a Seat fares were announced to the company's business and consumer customer database, supported by a week-long radio promotion and pop-up shops in malls, where customers could book an online flight.

The promotion's fares were so heavily discounted, an expensive marketing campaign was not an option. The alternative strategy worked so well that more than 70 per cent of offers were selling out. The company's website traffic also grew to 80,000 hits in a day, a record high.

Advertising agency Publicis Mojo is also using non-traditional methods to launch fast-moving consumer goods. It will launch a new variant of Goodman Fielder's MacKenzie Bread range later this year using the same channels employed for the product's main launch.

The bread went to market advertised by brown paper bag inserts in newspapers and magazines - plus direct marketing to mailboxes - in a departure from TV strategies usually used for fast moving consumer goods, said Steve Clark, head of channel planning for the media arm ZenithOptimedia.

"Ninety per cent of bread advertising is on TV," says Clark.

Using newspaper inserts rather than TV ads lets the brand get close to its target audience of older consumers with discerning tastes, the majority of whom read the paper before their weekend lunch.

The brown paper bag inserts look the same as the bread's packaging. Clark said the strategy was not particularly cheap - with low media spend but high production costs for the inserts - but was effective, with the premium bread range now the sixth-biggest brand in the market.