Fisher & Paykel Appliances Holdings

About 100 Aucklanders at Fisher & Paykel - some who have been with the company for more than 20 years - will lose their jobs in the latest exodus of manufacturing production to South Asia.

The move, announced yesterday, has renewed calls for the Government to improve the current business climate or risk seeing the slow death of manufacturing in New Zealand.  Other brands - including Icebreaker - have already moved production offshore.

Fisher & Paykel said that 96 jobs would be lost in moving the manufacturing of electronic circuit boards to Rayong, Thailand.  The relocation, to be completed by the end of next year, was expected to cost $5 million but would save the company $6 million a year.  The new facility would be completed by the end of next year and be at the same site of the new washing machine production plant, which was announced in April at a cost of 350 Auckland jobs.  Fisher & Paykel managing director John Bongard said the company had exhausted all other options and had little choice.

"Some of the workers have been here in excess of 20 years and telling them is heartbreaking.  We are fiercely Kiwi and we try our best to retain workers but there comes a breaking point.  The Government and the Opposition are in favour of pursuing free trade deals with China, Thailand and India, and there are no worse countries as far as we're concerned.  But that's the hand we've been dealt."

The company has resolved to re-employ as many workers as they can in other parts of the business, and help the rest find new jobs.

The Green Party and the Engineering, Print and Manufacturing Union said the decision was disappointing.  "We're now seeing a very serious and very desperate situation in manufacturing that will have flow-on effects for our economy and our society for years to come," said EPMU national secretary Andrew Little.  He joined the Employers' and Manufacturers' Association in calling on the Government to pursue policies to nurture local manufacturers.  "A quarter of a million Kiwi workers and their families are relying on it," Mr Little said.

"After the washing machines announcement it was not unpredictable that other parts of the business would follow, disappointing as that is."  Mr Bongard could not rule out further moves offshore.  The volatile and consistently high New Zealand dollar and interest rates had played a role in the decision, he said.

Association chief executive Alasdair Thompson said Fisher & Paykel had little choice but to make the shift after its main competitor in Australia moved its production overseas.  He said many factors - including compulsory employer contributions to KiwiSaver, four weeks' paid leave and a tight labour market - made for a business climate in New Zealand that struggled to compete with overseas opportunities.

On the move

• Fisher & Paykel are moving the manufacturing of electronic circuit boards to Thailand; 96 Auckland jobs will be lost.
• In April the company announced it would shift its washing machine production to Thailand, which would cost 350 Auckland jobs.
• Other N Z brands like Icebreaker have also moved production offshore.
• Unions and businesses have renewed calls for the Government to encourage and nurture local manufacturing.

Fisher & Paykel Appliances says the Government must take its share of the blame as the whiteware maker prepares to shift its electronics factory from Auckland to Thailand at the cost of 96 jobs.  F&P said yesterday production of electronic circuit boards used in its fridges, washing machines, driers and ovens would be relocated to Rayong - the same Thai location to which F&P moved the production of washing machines and clothes driers from Auckland in April at the cost of 350 jobs.

F&P managing director John Bongard said the "overvalued" Kiwi dollar and New Zealand's interest rates, which are the second highest among the 30 Organisation for Economic Cooperation and Development (OECD) countries, were again factors in the decision.

However, the usually apolitical F&P also blames government policies.  "We've got a trade policy that's just not helpful at all to manufacturers like us," Mr Bongard said.  The Government was "running around consummating free trade deals" with Thailand, China and India that would ultimately give duty free access to "extremely" low labour cost countries.  Free trade deals with the likes of Canada, the United States, the European Union and Japan, which had similar cost bases to New Zealand, would be more beneficial.

"I'd stack our people in New Zealand up against any of those guys any day of the week.  But when it comes to giving duty free access to China, India and Thailand we really are behind the eight ball. If that's in the national interest then so be it but it certainly is not in our interest."

F&P expects shifting its electronics factory to Thailand will save about $6 million a year before tax, mostly through cutting its wage bill.  Further savings are expected from buying electronic components from Thai vendors. The move will, however, come at a one-off pretax cost of $5 million.  The relocation will be completed by December 2008.

Mr Bongard said F&P would work with staff, the Engineering, Printing & Manufacturing Union (EPMU) and other employers to try to find alternative jobs for the 96 workers.

EPMU national secretary Andrew Little said there was a "very serious and desperate" situation in manufacturing.  It would have flow-on effects for the economy and society for years if something was not done to stem the flow of factory closures.  "The Government needs to understand that the incentives from other countries to entice New Zealand manufacturers are significant, and we need to do more as a country to encourage investment in high-end manufacturing.  "A quarter of a million Kiwi workers and their families are relying on it."

F&P's Thai operations will pay no tax for eight years.