F&P says US move will boost earnings

New Zealand's biggest home appliance maker, Fisher & Paykel Appliances, says shifting some of its washing machine production to North America will boost annual earnings by $3.3 million.

Production of its Smart Drive washers will shift from its factory in Cleveland, Australia, and a line of washing machines made in Auckland will also be moved to US.

Chief executive John Bongard said there would be no redundancies in New Zealand, although 10 to 15 workers would lose their jobs in Australia.

The move would reduce costs of production, freight and working capital associated with supplying the US, which has overtaken New Zealand as the company's second-largest market after Australia.

Shares in Fisher & Paykel Appliances closed up 11c yesterday at $3.39.

Bongard said the company was yet to decide on the location of its North American plant.

The shift is expected to take about 12 months and cost $5.5 million.

Most workers at the Cleveland plant in Queensland would be diverted to increased production of refrigerators.

Fisher & Paykel also has factories in Auckland and Dunedin.

Bongard said New Zealand was still the best place to produce appliances for the Australasian market.

The quality of engineering graduates, in particular, meant New Zealand would remain the company's base for innovation and new product development.

 

The company has enjoyed rapid sales growth in North America since launching there six years ago.

Last year it sold 150,000 appliances in the US - up 87 per cent on the previous year - and a good portion were its DishDrawer dishwashers.
 
Bongard said shipping to North America from the Australasian factories created hefty freight bills and tied up cash in finished goods.

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

The strong New Zealand and Australian currencies had been reducing Fisher & Paykel 's competitive edge in the United States, Bongard said.

The new North American plant will also supply motors for the company's US partner, Whirlpool.

- additional reporting NZPA