F&P Appliances plans US manufacturing shift

Fisher and Paykel Appliances today announced plans to relocate part of its manufacturing operations to North America -- a move that will add $3.3 million to its annual earnings.

Fisher and Paykel -- an iconic brand for generations of New Zealanders -- said it will relocate an Australian Smart Drive clothes washer line and an Auckland motor manufacturing line to the United States to reduce costs of production, freight and working capital associated with supplying that market.

Once fully operational, the plants are expected to reduce working capital by around $15 million, leading to an earnings before interest and tax (ebit) improvement of $3.3 million per annum, at current sales levels.

Chief executive John Bongard said having plants in Australasia meant a sizable freight bill and tied up cash in finished goods.

"With the expected increase in washer sales in the USA, placing a plant closer to that market shortens lead times and means that we are better placed to capitalise on growing sales opportunities."

Mr Bongard said the high New Zealand and Australian currencies had also been reducing the company's competitive edge.

The new North American plant will also supply motors for Fisher and Paykel Appliance's US partner Whirlpool.

The work is expected to take place over 12 months at a cost of $5.5 million.

Around 15 jobs in Australia will be lost as a result of the relocation, with most diverted to increased production of refridgerators.

Mr Bongard said the New Zealand and Australian markets were still crucial, providing the design innovation and technology behind the company's US success.

Fisher and Paykel Appliances has seen rapid sales growth in North America since launching its brand six years ago. It sells DishDrawer dishwashers, wall ovens, cooktops, SmartLoad clothes dryers, Smart Drive clothes washers and refrigerators.

Shares in Fisher and Paykel Appliances closed yesterday at $3.28.

- NZPA