High NZ dollar blamed for mill closures

The high New Zealand dollar has been blamed for the closure of timber mills in Northland, Tirau and the Coromandel Peninsula with the loss of around 150 jobs.

About 60 workers at Tanner Group Ltd's Kaitaia Timber Co, in Kaitaia, were yesterday told by the owners that the site would close down.

TGL, which also owns mills in Tirau and on the Coromandel Peninsula, told the workers the company was facing liquidation as a result of the high New Zealand dollar and infrastructural costs of production.

The company makes timber framing, decking and other products for the building industry and exports most of it to Australia and the United States.

Mr Turner told the workers that the company had no other alternative to a managed wind-down and closure over four months, which was not a receivership or liquidation imposed on the company by a third party.

"It is the board taking a responsible position in the interest of the staff, bankers and creditors to ensure responsibilities are met in a timely and cost-effective manner while working in a hostile trading environment," he said.

"Having assessed the options and obtained the very best advice, I see no other way forward."

Timber Federation executive director Wayne Coffey told Radio New Zealand that soaring compliance costs and the high New Zealand dollar were reducing profits in the industry.

The high exchange rate was causing businesses to lose hard-won export markets and customers.

Mr Coffey blamed accused the Government of over-heating the economy with pre-election pump priming.

Last year, Mr Coffey took a counter view to most commentators, saying the Reserve Bank should keep raising interest rates to cool the economy and that would take the heat out of the currency, rather than underpin it as most believe.

"The Government really can't afford... to continue this sort of pump priming before the election. I think it has to cool the economy and the Reserve Bank is doing exactly that because the dollar is hurting certain parts of the export industry and I think some of the harm will be irreparable," he said today.

The New Zealand dollar has risen over 31 per cent in the past two years against the US dollar while it has remained over 92c against the Australian dollar.

TGL told the workers last Thursday that it may have to close as the rising New Zealand dollar was putting its viability "seriously into question".

Yesterday company general manager Alan Tanner confirmed the workers' worst fears that the plant, which is believed to have been operating for more than 35 years, would shut.

One of the workers spoken to by Whangaraei newspaper The Northern Advocate said staff were subdued after the announcement.

"We all thought over the weekend that it would close down so it was no great surprise, but it's still hit everybody pretty hard," the worker, who did not want to be named, said.

"It's very sad for everybody and there's a lot of people left wondering about what is going to happen in the future."

The worker said much of the equipment used at the sawmill was "fairly antiquated" and more modern machinery might have saved the plant.

Northland MP John Carter said the closure was a big concern for a town the size of Kaitaia and the high kiwi dollar was having a major impact on companies that exported most of their products.

The closure was expected to take a couple of million dollars out of the Kaitaia economy every year.

Far North Mayor Yvonne Sharp had earlier said the potential closure was a worry as there were less employment opportunities in her region than other areas.

Northland Forestry Development Group chairman Derek Colebrook had said the mill's situation was "a blip on what's going on, really, in Northland" and other companies were bullish about the industry's future.

He had hoped the workers would be able to find work, either at Juken Nissho in Kaitaia or at Whangarei companies.

- NZPA