CHH plant to stay open - for now

The jobs of about 100 workers at a Tasmanian fibreboard plant have had a stay of execution after Tasmanian Government assistance and private deals led its New Zealand owner to keep the loss-making operation running.

Wood producer Carter Holt Harvey told employees at the Bell Bay facility near George Town yesterday it had decided not to close or mothball the plant but its long-term future was not yet secure.

Facility manager Ross Barlow said the Tasmanian Government had provided a "generous" assistance package and the company received temporary relief from local government charges.

He said in a two-month programme to revive the operation, CHH had also secured price increases from export customers, cost support on major manufacturing inputs and "innovative" supply agreements.

The company said for commercial reasons it would not make public details of the new arrangements.

Last month, Carter Holt said the Bell Bay plant was losing about A$1 million ($1.11 million) a month because of the strong Australian dollar and high oil and wood prices.

Yesterday, it said internal productivity gains had been delivered and identified while consultations with customers, suppliers and the Government sought to reduce the site's cost structure and increase operating margins.

"This is great news for our employees, the company, the George Town community and Tasmania," CHH chief operating officer Ian Unwin said.

"Like all export-focused facilities, the Bell Bay site must be able to compete on the world stage and your response has been extremely important in driving us towards that goal.

"Our employees know a lot of work still lies ahead to secure the site's long-term future, but we will tackle this with confidence knowing that the company and the wider Tasmanian community stands behind us."

He also announced A$250,000 additional spending on capital improvements, including an on-site wood chipping operation.

"This investment will help reduce the cost of wood fibre for the site and demonstrates our belief that Bell Bay can become a valuable contributor to the CHH wood products business."

The facility, bought by CHH for A$45 million in 2002, employs just over 100 people and produces 160,000 cubic metres a year of medium-density fibreboard, the majority for international markets.

- AAP