After 70 years the makers of a classic Kiwi biscuit are leaving Lower Hutt. Griffin's Foods Ltd announced today it would close its Lower Hutt factory – at a loss of 200 jobs – relocating production to its newly redeveloped Papakura site.
Chief executive Ron Vela said much of the factory's equipment was nearing its end date, and the company could not justify the investment needed to bring it up to scratch. Griffin's was committed to retaining its manufacturing base in New Zealand but could not do so without rationalisation of its operations, Mr Vela said.
The company was established in Nelson by John Griffin in the 1860s. The Lower Hutt factory was opened in 1938 and the Papakura factory in 1967. The company now has nearly 1000 employees – 228 in Lower Hutt – and operates four manufacturing sites in New Zealand.
Pacific Equity Partners bought Griffin's in June last year, and since then has invested more than $130 million into the business, Mr Vela said.
Griffin's turnover is in excess of $300 million and it produces more than 350 products, including toffee pops, gingernuts, snax, meal mates, cameo cremes, mallowpuffs, krispies and wine biscuits.
The Lower Hutt site is expected to close in October 2008. Mr Vela said Griffin's was the only major biscuit supplier in New Zealand that produced all its company branded product lines locally. Competition from imported products continued to be fierce and the company wanted to counter this competition by producing top quality products for the New Zealand market, and growing offshore market opportunities, he said. Mr Vela said the decision to close the Lower Hutt plant was extremely difficult, given the potential impact on staff. There would be a number of positions available for staff wishing to relocate to Auckland, and "generous" redundancy packages would be available, he said.
The Service and Food Workers Union (SFWU) said its 200 members at the site were "extremely disappointed" the decision had been made without consultation. SFWU national secretary John Ryall said the shock was compounded by the fact that in 2002 the company's former owners worked on a study with the union and the Lower Hutt City Council that concluded the plant should stay open and was a viable business.
"We think the company is under pressure from their investors to squeeze a bigger return from their investment," Mr Ryall said. "Private equity companies like PEP have a long, established history of breaking apart investments like food manufacturers and selling the parts off in exchange for larger shareholder returns. "This closure announcement comes hot on the heels of the announcement to close Avondale's Cadbury factory. "We have some very real concerns about the future of food manufacturing in New Zealand." Mr Ryall said.
