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The nation's second-biggest meat processor, Affco NZ, says it will axe its "added-value" operation processing sheep guts in Auckland, because it can make more money exporting the intestines unprocessed.
The Auckland casings plant has 20 staff at present and employs a further 15 to 20 seasonal staff during the lamb kill.
Known as Rapa Casings, it has been handling "green runners" (unprocessed lamb intestines used as sausage casings) from four of the company's five North Island sheep plants.
The main market for finished casings is in Europe where they are used as natural sausage skins.
Affco announced in 2000 a joint venture with one of the world's two biggest dealers in sausage casings. Raspe and Paschen, of Hamburg, to trade as Rapa United Casings (NZ) Ltd. It had big plans for the venture to go head-to-head with the other big global company, a Dutch operation.
Affco will in future collect and freeze casings at individual plants for direct export to companies servicing markets such as Japan.
Japan consumes 300,000 tonnes of sausages annually and is one of the largest users of sheep and lamb natural casings.
Affco chief executive Stuart Weston said the proposed closure was disappointing, "but the economic tide has well and truly turned against this plant".
The plant had added value to the casings by processing to an intermediate stage prior to exporting for the finishing work, which was done overseas.
"Because of a combination of factors completely beyond the control of the company or our staff, this value-add dimension has been severely reversed," he said.
These factors included the increased costs of operating in Auckland, such as water and wastewater and freight costs in transportation from the four plants supplying Wiri.
"Rather than adding value, our centralised processing facility incurs costs which are unsustainable."
Mr Weston said that with retraining, the business could absorb all affected staff if they were prepared to move to plants where there were jobs.
The outcome of consultation on the proposal will be announced to staff on August 29.
New Zealand once had the world's largest natural sausage casing company, the New Zealand Casing Company Ltd, with a $200 million turnover, but much of that operation was broken up or sold when it was taken over by Anzco Foods Ltd in 1997.
- NZPA
