Jobs lost as high dollar hits exporters

Jack Links is losing out to cheaper beef jerky from Brazil.

The high New Zealand dollar has claimed the jobs of 177 workers after three exporters said they could no longer compete against cheaper overseas competitors.

Companies in Auckland and Christchurch yesterday announced layoffs as the high dollar made them unable to foot it on international markets.

Beef jerky maker Jack Links New Zealand is to cut 102 jobs - two-thirds of the workforce - at its South Auckland plant.

Workers at a tannery in Christchurch with about 400 staff have also been told to expect bad news this week.

Jack Links' problems came after it lost its biggest customer to Brazil.

United States meat snacks giant Link Snacks International was buying three 12m containerloads or $1 million of bulk beef jerky from the Mangere factory a week - about 85 per cent of Links' turnover.

But the US firm said the strength of the kiwi dollar against the US currency had made it cheaper to buy its jerky from Brazil, forcing Links to close its bulk manufacturing division.

"This is a very sad day for our company and employees who have been very loyal and hard working," said Links New Zealand chief executive John Corner.

"Our business, for the past three years, has been 85 per cent manufacturing bulk jerky to send to the US, which is blended with American and South American jerky."

When he opened the Mangere factory four years ago, the New Zealand dollar was at 40c to the US dollar.

"Now it is sitting at 70c and has been for some time, which makes it impossible for us to compete with manufacturers in South America."

Fifty staff would remain in the growing retail meat snack division selling beef jerky, steak bars, beef nuggets and beef sticks throughout Australasia, Asia and the Middle East.

Engineering, Printing and Manufacturing Union national secretary Andrew Little said the redundancies were likely to see a lot of people back in the dole queues after the company had made a huge effort to get them off it.

With the impact of 500 redundancies from Wiri wheel business Ion Automotive due to start trickling through in the next few months, "South Auckland is going to really start to notice a bit of extra labour in the market".

Workers at one of Christchurch's biggest employers, GL Bowron, are expecting bad news at meetings in the next few days. Staff at the Japanese-owned sheepskin product exporter have been told 55 layoffs will be announced.

It also blamed the dollar.

Christchurch furniture company Renaissance Furniture is closing with 20 people being made redundant. It too blamed the dollar.

Canterbury Employers Chamber of Commerce chief executive Peter Townsend said the chamber had been "watching this coming down the track".

Bowron, like many exporters, had been hit by the strong dollar.

"The thing that's surprised me is that some of these manufacturers have held on for as long as they have."

Mr Townsend predicted more layoffs in the manufacturing and export sectors.

"I think this is a portent of things to come."

Manufacturers were being hit twice by the strong dollar.

Not only were they unable to make a profit with their exports because the exchange rate eliminated margins, but they were also competing in the domestic market against cheap imports driven by the strong dollar.

"My prediction would be that we're in for a pretty rough spin in the productive sectors of our economy over the next six months."

Employers and Manufacturers Association (Northern) manager of advocacy Bruce Goldsworthy said it was a credit to both companies they had held on for as long as they had.

"Anybody that's exporting from a New Zealand base with high New Zealand content has done extremely well so far to be still in the marketplace.

"I don't think anybody expected the New Zealand dollar to stay as high as it has for as long as it has, so the cycle has been longer than what we've been used to traditionally."

Economists and currency market players generally expect slower growth and increasing foreign debt to weigh on the kiwi this year and some forecast it to be below 60USc by December.

Deutsche Bank chief economist Darren Gibbs said that if it looked as if the kiwi was going to fall, most manufacturers would retain staff because of labour shortages.

- Additional reporting NZPA