Fisher & Paykel Appliances is to close production at its Cleveland factory in Brisbane, Dunedin and California plants within the next 12 to 18 months, in a move many observers say shows the company is having trouble competing with the razor thin margins in the whitegoods sector.
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Even though the company posted a profit after tax for the six months ended 30 September 2007 of 18.7 per cent up on the previous corresponding period at $32.305 million, it seems manufacturing costs in Australia, New Zealand and the US were just not as attractive as those in Mexico or Thailand.
The company said as much in a statement: “These [plant closures] savings will help ensure that Fisher & Paykel is both globally competitive and remains at the leading edge of technological innovation and appliance design”.
The overall financial cost benefits arising from the relocations of production is expected to be in the vicinity of NZ$50 million per annum and the estimated capital cost of the move – in the order of $100 million – will be funded in large part by the sale of the Brisbane and Dunedin properties.
The closure of the Cleveland plant is expected to result in some 310 job losses and the closure of the Dunedin plant will cost some 430 jobs.
“This is a very emotional day for the company,” said Mike Church, Chief Operating Officer, Fisher & Paykel Australia “It’s now time to ensure the future of the Company and its capacity to innovate is secured and that’s why we’ve had to make this very difficult but ultimately positive decision.”