Job cuts may spell end for sawmill

Workers at Rainbow Mountain sawmill near Rotorua have been hit with more bad news as Carter Holt Harvey says it is looking to axe up to 150 jobs.

Announcing a third-quarter net profit of $31 million yesterday, CHH said it would shed around 150 staff at the mill, including contractors.

Last month, workers were told that about 80 jobs would go by Christmas from the "greenmill" site, which mills newly cut trees.

But yesterday's announcement signalled that the whole mill is likely to shut down, said Rotorua Mayor Kevin Winters.

"When they made the first announcement ... it was that half of the staff would go by Christmas.

"It makes me really sad because with half their workforce it remains viable, but now they've made another call."

Mr Winters said the decision to get rid of contractors would have a spinoff effect, cutting jobs in the bush and in further wood processing.

"It's one of the four big earners we have in our region. It's people's lives they're disrupting.'

CHH said it was facing a challenging environment, including a high New Zealand dollar, slackening demand and rising costs.

Processing at Rainbow Mountain mill was no longer economical.

"The company is undertaking significant restructuring in its forests, timber and packaging and in information technology and continues to work on additional plans to mitigate the adverse market conditions," the company said.

So far this year CHH has cut 462 jobs from its 10,500 staff, mostly in New Zealand and Australia, including 359 from its wood division.

That may just be a start.

"I'm sure you will notice change in Carter Holt, but I don't think that's evident at this point," chief executive Peter Springford said.

Billionaire Graeme Hart's $3.3 billion takeover offer for CHH has not yet closed, although he already has over 70 per cent ownership.

He has a history of slashing the workforce at his other businesses and analysts expect him to break up CHH, selling or closing many of its businesses to extract value.

When Burns Philp, in which Mr Hart has a 54 per cent stake, took control of Goodman Fielder two years ago, dozens of mills were closed.

Within weeks of his taking control of Meadow Fresh this year, plants were closed and hundreds of staff laid off.

CHH yesterday issued its second profit warning in just over a month, downgrading its annual forecast to $200 million from $250 million.

It said it would continue to cut costs - read jobs - as it attempted to improve what Mr Springford said was a "poor performance".

Capital spending was being cut as spending on new projects was halted or delayed. CHH recently cut its packaging sites in Melbourne from three to two with a loss of 60 jobs.

It is selling its Oxygen Business Solutions unit*, which employs 153 staff. Those jobs are likely to be at risk.

Cuts can also be expected at CHH's medium-density fibreboard (MDF) plants, including in Rangiora, Canterbury, as the firm struggles with profitability due to the currency and rising resin costs.

- NZPA


* Clarification: An earlier version of this story said the unit is loss-making. It makes a profit.