Feltex may up carpet imports

Feltex Carpets may increase its role as a synthetic carpet importer and is reviewing the extent of its presence in high-volume segments of the carpet-making market.

The fresh details of the company's widespread operational review now under way are contained in the annual report filed with the stock exchange yesterday.

Chairman Tim Saunders said in the report that the company became aware this year that its cost structures were too high, its average production cycle too long and many of its systems "too rigid".

He said Feltex hoped that the major initiatives arising from the operational review "will all be in place (albeit not fully implemented) by December".

Among the potential changes, Feltex is "reviewing the extent of our manufacturing participation in the high volume" segments.

Competition from imports, particularly in Australia, have hurt Feltex's lower price, high-volume carpet sales.

"They may come to impact us across the whole synthetic product profile," Saunders said.

As the Australian and New Zealand Governments were seeking free trade agreements with other countries, imports were likely to be a permanent feature of the market and could potentially increase further.

Saunders said Feltex was also assessing which segments of the synthetic carpet market it should "continue to service" and was looking at new technology which could strengthen its "niche position" in some markets.

It was also reviewing how much carpet it should import.

"We already import carpet tiles that are Feltex branded and we could increase our presence as a synthetic carpet importer in either the high-volume or the high-value end of the market, or both," Saunders said.

"If we do so, we would still manufacture carpet for those segments where we can best compete against international competition."

He said its plants were operating on reduced hours that would result in "an adverse manufacturing cost performance" in the first half of this financial year.

- NZPA