Mataura mill no longer viable says Carter Holt

By PAULA OLIVER

Stiff international competition has forced the closure of Carter Holt Harvey's century-old Mataura paper mill in Southland, and left 155 workers out of a job.

Announcing the mothballing of the mill yesterday, chief executive Chris Liddell said increasing losses over the past four years amounted to several million dollars. Though he would not name a figure, industry sources suggest the losses could be as high as $5 million in one year.

Mr Liddell said the small mill could not sustain a hefty increase in the price of pulp, or the tougher international competition for commodity-grade papers, such as photocopying paper.

"It's no secret that the Mataura mill has been under pressure, but in the end the mothballing is unavoidable," he said. "It is the worst decision I have had to face up to in my time as chief executive."

Industry sources said the mill was not economically viable, and the losses had been climbing every year.

The loss of the mill is another blow to the Gore district, which three weeks ago saw the closure of a Flemings cereal processor factory.

The mill closure is another outcome of Carter's two-year-old Genesis programme, which has slashed costs and produced a sharp turnaround in profits.

Kent Blumberg, chief executive of Carter Holt's pulp and paper division, indicated further cost cuts were necessary in the company to make it a stronger competitor, but he said further closures were not yet planned.

The company also runs board mills in Whakatane and Penrose, as well as the giant Kinleith pulp and paper mill.

Dave Simpson, General Manager of the New Zealand Business Supplies group, said Mataura had attempted to raise its prices twice, but in the end it was forced to match the market because people were not buying.

Carter Holt had attempted to give the Mataura mill a lifeline in 1998, when it invested $4 million to broaden its product range.

But the moves did not work, and now Carter Holt estimates it will cost $20 million, in the form of redundancy and superannuation payments to its staff, to mothball the mill.

"The mill will remain idle until such time as market conditions significantly improve to allow it to resume operations," Mr Liddell said.

"The price of pulp and world commodity prices would have to change markedly before we would consider reopening the mill."

The national sales and marketing manager for Spicers Paper, Les Atkinson, said New Zealand was simply too small to sustain the large-capacity machines needed to make money.