Skope considers shedding staff as high dollar bites

Christchurch manufacturer Skope Industries has signalled job losses are in the offing because of the currency squeeze and government policy settings.

Chairman Robert Stewart said this week that management had been reviewing staff numbers since December but had not yet made a decision.

"For some months we've been looking at the thing. Nothing like this is done lightly. You do this with a lot of thought and analysis."

Skope makes commercial refrigeration products and heaters, and is a big exporter to Australia. But it has been under pressure for months because of the strength of the Kiwi dollar against the Aussie.

"The cross rate is extremely high and it has been high for months and months," Mr Stewart said. "In the end you run out of exchange rate cover and you run out of profitability."

The Kiwi dollar has been trading against the Australian at around A92.5 cents, not far short of peaks of just over A93c hit in August last year.

Mr Stewart said his management believed there was not a lot of hope the Kiwi dollar would lose ground.

He has long argued for more favourable tax rules on depreciation and research and development to help manufacturers. But his pleas have fallen on deaf ears in Wellington.

Skope had been working to increase its productivity -- the company had invested $3 million in new equipment late last year -- but only so much could be done without extra help.

"It doesn't matter how productive you are, bridging that gap in a tight labour market with rising interest rates is a big jump."

While Australian companies paid more and were increasing productivity, the government there gave them a "whole bunch" of incentives to do it, Mr Stewart said.

An equivalent competitor in Australia would have much kinder depreciation rules but would also get tax help on money spent on R&D.

"Our government doesn't accept the fact they should be in the same ball park. They tell us we should be more productive -- I'd like them show us how we can do it."

Skope is owned by Mr Stewart's family and is the second largest privately owned manufacturer in Christchurch, behind the Tait Electronics empire founded by Sir Angus Tait.

"There are a lot of companies that are doing well -- most are heavily involved in importing," Mr Stewart said.

"The evidence is that people who make things in Canterbury aren't doing well. Skope is one of those companies hurting badly."

- NZPA