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Godfrey Hirst buys Oamaru plant, 192 staff on notice

Published: 6:08PM Thursday January 31, 2013 Source: BusinessDesk

  • Textile industry (Source: ONE News)
    Textile industry - Source: ONE News

Godfrey Hirst, the biggest carpet maker in Australia and New Zealand, has bought Oamaru's unprofitable yarn-spinning plant from Japan's Sumitomo Corp, effectively putting 192 staff on notice as it looks at ways to turn the operation around.

The company, which bought the Feltex business out of receivership, was granted Overseas Investment Office approval to buy the assets last month. It is reviewing the wool yarn spinning business to see how best to manage the loss-making plant, Godfrey Hirst said in a statement.

The plant has been on the market for the past two years, with Godfrey Hirst the only viable buyer, and ends a 21-year ownership by the Japanese group.

"This was driven by a number of factors affecting trading results including an unfavourable exchange rate and less local demand for wool carpets," Summit Wool Spinners managing director Harry Ogawa said in a statement.

Summit Wool Spinners was one of a handful of companies that participated in the government's "nine-day fortnight" scheme in 2009, which came out of the Jobs Summit at the start of the current National-led administration.

The scheme let companies cut staff hours by one day a fortnight to receive a subsidy on wages and saved a reported 377 jobs.

Summit Wool Spinners told staff the plant will be closed some time near the end of February, according to a joint statement by the Engineering, Printing and Manufacturing Union and First Union.

"Summit has been a very good employer and didn't want to make these redundancies," EPMU organiser John Gardner said.

"The government's refusal to act on the overvalued exchange rate or provide any kind of strategy for manufacturing means they were left with few options."

Union members were told of the decision this afternoon, and will receive redundancy compensation through their collective agreements, the unions said.

The proposed closure coincides with the Parliamentary inquiry into manufacturing job losses being run by Opposition parties, who claim nearly 40,000 jobs in the sector have been lost since 2008.

The wool carpet sector has been in disarray in the past couple of years as high wool prices and cheap synthetic alternatives have eroded their customer base and squeezed their margins.

NZX-listed Cavalier Corp, which left the stock exchange's top 50 index this month, shut a yarn spinning plant in Onehunga last year due to over-capacity in the sector.

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