Click Clack

Two big exporters are laying off 140 workers, blaming a stubbornly high Kiwi dollar and cheaper Asian competition for the job losses.

Click Clack, a maker of plastic glasses and storage containers that it exports to 60 countries, will close its factory in Sydenham, Christchurch, at the end of June and lay off 70 employees.

Christchurch wool tanner GL Bowron also said it was cutting 70 jobs, shrinking its workforce to 110. The company has had several rounds of job cuts in the past five years since its workforce peaked at 700 in 2001.

Both companies blamed the high New Zealand currency reducing their returns from exports, and cheap competition from factories and labour in Asia.

The chief executive of the Canterbury Manufacturers Association, John Walley, predicted more manufacturing redundancies were looming.

Click Clack group chief executive John Heng said: "Other manufacturers are bleeding out there and they are bleeding for the same reason.

"We make and sell more product than we did four years ago and earn less."

Click Clack's exports were worth $30 million at present, compared with $40 million four years ago when the New Zealand dollar was US55c.

The dollar was about US71c yesterday.

Twenty technical staff and die-makers in Christchurch would be offered jobs at Levin. Some of the production there would be contracted to Chinese manufacturers already making wire brushes for the company.

Christchurch Click Clack staff said they were disappointed at the news but had suspected it was coming. Management had said for a couple of years that the factory was struggling. Click Clack is owned by the Malaysian Tiong family.

Mr Heng said shifting Click Clack manufacturing from Levin to China was not on the radar at present, but that could be done if necessary.

Exporter GL Bowron said the Woolston operation had also been hit by the departure of key executive staff over the years.

But engineering manager Neil Shewan said the factory would not close.

The New Zealand base had been assured of its survival by its Japanese owner, Maruhachi, which had pointed to technical and product development as the way forward for the large site, he said.

Bowron's plan was to simplify and reduce its operation, locating the finishing of salted and tanned sheepskin product to Thailand and perhaps selling and leasing part of the Woolston site, Mr Shewan said.

Managing director Sam Uuno said that in New Zealand the company wanted to focus on the production of smaller volumes of high quality "Star Grade" products for existing customers and new niche markets.

Production in overseas tanneries was being expanded.

New Zealand's high dollar will cause more redundancies in the Canterbury's manufacturing sector in coming months, manufacturers' representatives say.

Members of the Canterbury Manufacturers' Association (CMA) have warned of upcoming job cuts, and comments the kiwi could go to US80c were not helping, CMA chief executive John Walley said.

Christchurch yesterday was hit by the news of 140 job cuts by export-based firms G. L. Bowron & Co and Click Clack, following signalled factory closures by icecream maker Tip Top and carpetmaker Feltex.

The CMA's latest survey shows some firms and sectors doing better than others, but that meant that some were really suffering, Walley said.  Recent political comment and media stories that a high New Zealand dollar was here to stay were being met with disdain by the CMA's board and membership, he said.

National leader John Key yesterday said a higher currency was on the cards. "I think the exchange rate is going to US80c. It doesn't show any signs it wants to go down."
Key added the New Zealand economy could not work above US70c for any length of time. Something had to be done.

Walley said there needed to be a politically-led solution, and the kiwi dollar, even at this level, was trouble.  "We've had news from Click Clack and Bowron's today (but) there's going to be more," he said.

He could not add detail of those expected redundancies at this stage, but the exchange rate was seeing job losses "beginning to crystallise", Walley said.

"We have heard that exporters will get used to a high currency, perhaps, but this is a bit like getting used to a chronic terminal disease – you can deal with it for a for a while but the (negative) outcome remains certain," he said.

"There will be no point in asking about the level of sales activity, confidence or performance at US80c because if the dollar hits that point, activity will all but stop."

Political intervention to help manufacturers and the Reserve Bank cope with dollar and inflationary pressures would be a step in the right direction.  The economic framework should include an inflation control that did not "beat exports to death", he said.

"That means maybe capital controls on the banks, more aggressive application of existing tax rules with regard to speculative investments in property (plus) some real targeted support for the productive sector."

Without a strong export sector, New Zealand living standards would eventually suffer, he said.

UPDATED REPORT: Two Christchurch factories are blaming the continuing high value of the New Zealand dollar for their decsions to close, costing the city 140 jobs.

Sheep skin exporter GL Bowron is cutting 70 jobs and moving most of its production offshore, while plastic goods manufacturer Click Clack is to close its Christchurch plant at the end of June, with the loss of a further 70 jobs.

The Japanese-owned Bowron, which has operated a sheep skin tannery since 1881, has been through a series of restructurings in recent years and has been one of the highest profile victims of the Kiwi dollar, which has been trading above US70 cents.

GL Bowron's Woolston plant will continue to operate, concentrating on technical and product development and production of smaller volumes of high grade products.

The company said it was consulting with unions about its plans and would continue to utilise New Zealand sheep skins.

Click Clack chief executive John Heng said today the company planned to move production to its Levin factory, but some industrial lines made in Levin would be made offshore.

He said he could not rule out moving further manufacturing offshore if the New Zealand dollar and interest rates remained at high levels.

Of the 70 jobs hit by the Christchurch closure, up to 20 workers would be offered the opportunity to transfer to Levin.

The company, which produces a range of polycarbonate goods, including the popular Strahl beverageware, exports 85 per cent of its production to more than 60 countries worldwide from its Palmerston North base.

Mr Heng said Click Clack had struggled "long and hard" to combat the effects of the continuing high value of the New Zealand dollar over the past three or more years.

"A year ago in January, when we moved supplier contracts worth more than $3 million offshore, we warned that we couldn't go on forever with a New Zealand dollar that's so ridiculously over-valued.

"We've made many changes to the way we do business and cut our costs to the bone, with the result that we are a lean, finely honed operation."

Almost 80 jobs had been cut through attrition across the New Zealand group "over a period of time", Mr Heng said.

"Despite our best efforts, the Christchurch operation is becoming less profitable by the day due to the continual rise of the New Zealand currency."

Mr Heng said the company would work to help employees find new jobs.