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Allied Farmers said it was closing its Wanganui sawmill subsidiary Allied Pine today with the loss of 56 jobs.
It blamed the high exchange rate and log prices for the closure.
Chairman John Loughlin said "it was a sad day but the sawmill had made losses over the last four years and these had worsened in the last four months".
The 56 staff on site will be paid the redundancy payments according to their collective agreement. All creditors would be paid in full.
He said the closure would "have a positive impact on future profitability of at least $1.5 million per annum" on Allied Farmers but there would be an unquantified effect on its 2007 result.
The company is already assessing a possible sale of the mill assets.
In the six months to December, Allied Pine lost $863,000 and in February forecast a full year loss of $1.6m.
Allied Farmers bought timber miller NDG Pine in 2004 for an undisclosed price, renaming it Allied Pine.
The Wanganui timber mill fell into receivership in June, 2003, laying off more than 70 staff and then blaming the Iraq war for a massive downturn in world markets, especially the United States.
- NZPA
