Cavalier Corp, the carpet maker which is restructuring its business to boost profitability, will consolidate its manufacturing operations to Napier and Whanganui and close its Christchurch plant. The move is expected to cut a net 65 jobs, and cost between $4 million to $4.5 million in the 2015/16 financial year for employment payments, and the relocation of equipment, the Auckland-based company said.
Cavalier has changed its chief executive and chairman and rejuvenated its board in an attempt to restructure the business and return it to profit. In the latest restructure, Cavalier will consolidate its woollen yarn spinning operations in Napier and Whanganui to a single hub in Napier, and scale back its semi-worsted yarn spinning operation in Whanganui. It will also relocate its felted yarn operation from Christchurch to Whanganui and close the Christchurch plant.
Chief executive Paul Alston said "significant" benefits will flow through in the 2016/17 and 2017/18 years, with a payback from the restructuring of its yarn spinning operation expected in slightly over one year.
He didn't detail the benefits expected. The company has previously said normalised profit is expected to be in the range of $3 million-to-$5 million in the year ending June 30, ahead last year's normalised earnings of $1.1 million.
Southern secretary of the First Union, Paul Watson, said the move could result in a total of 104 redundancies, and comes just a week after Fisher & Paykel Appliances announced the closure of its Auckland plant, showing the government needed to do more to support the manufacturing industry in New Zealand.
