Navico plant faces shutdown

Northcote staff numbers have already been slashed, from the 240 who were there last May to today's 70. Photo / Paul Estcourt

Manufacturing staff at Norwegian-owned Navico in New Zealand are facing a grim future with the threat of the closure of their plant and mass redundancies.

John Scott, Navico Asia-Pacific's chief operating officer, and Stuart MacPherson, Navico's North Shore operations manager, yesterday said closure was being discussed.

The business was once part of Navman, one of New Zealand's most successful start-ups which grew to the point where Northcote seemed destined to become the Norway of the South Pacific.

But the recession, the success of Navico's Mexican manufacturing operations, a downturn in boat sales and high labour costs here have all taken their toll and MacPherson said all the staff faced losing their jobs at a month's notice.

"At this stage it's only a proposal that it will close. We've had a meeting with staff and told them manufacturing could end here at the end of 2009," MacPherson said, blaming the recession and New Zealand's distance from markets.

The marine manufacturing operation's business has dwindled dramatically and Northcote staff numbers have been slashed, from the 240 who were there last May to today's 70.

"We've made the staff aware that Navico has this proposal and if that goes ahead, we will enter into consultation with the staff," MacPherson said, stressing that the workforce was highly skilled and diligent and the move was no reflection on them.

Northcote was simply too far from Navico's major market in the United States, he said, and equipment took weeks to get to the US from the Shore.

Mexico had considerable advantages, including its proximity to the US and lower labour costs, he said.

Mexican-based Jorge Palacio, Navico's executive vice-president supply chain management, had visited New Zealand in July and said that the European-based business was examining various options.

"He decides the strategy for manufacturing at Navico," MacPherson said.

Alternatives to closing Northcote are being examined including the possibility of manufacturing other products there, he said.

"We're open to all proposals."

But if the Oslo-headquartered Navico's plans went ahead, the plant would be shut by January and staff will be paid redundancy, he said.

Workers are members of New Zealand's largest private sector union, the Engineering, Printing and Manufacturing Union. A union spokesman said nothing had been presented on the move yet but the closure talks came about after discussions between Mexico and Northcote.

Numbers at the factory in Kawana St have been drastically cut.

Last July, Navico laid off about 40. In December, Scott said a further 30 staff were being laid off from the workforce which would stand afterwards at 90. Since then, a further 20 have gone.

Navico's Albany-based research and development and engineering business was staying untouched. Scott, speaking from the US yesterday, said Navico was proposing to stop all manufacturing here in December.

"The exact timing will depend on the feedback and market demand we get over the next four to six weeks. We have explored many options with other companies - joint ventures, government, local council and related hi-tech export agencies. There really is not anything on the table that makes sense financially or strategically as we do have further capacity in Mexico if required.

"The proposal affects 60 to 70 people with a further 15 to 20 of the professional team (sourcing, finance & IT) moving to Albany. The proposal does not affect Albany which has the sales and marketing and R&D functions.

"This is not totally about Mexico versus NZ or low cost versus medium cost labour locations, it's more a result of the market.

"With the volume drop and no foreseeable step change in volumes next year, the fixed costs to keep the facility are just too high. The trend of the New Zealand dollar definitely contributed," he said.

NAVIGATING UP AND DOWN

1986: Navman founded by Peter Maire in his Auckland garage.
2004: He sells to US marine/leisure giant Brunswick for $108 million.
2006: Brunswick puts its New Technologies division, including Navman, up for sale.
2007: Navman broken up by its US owners to be sold off in pieces.
2007: Norwegian company Navico buys marine electronics operations.
2008: Plans to make NZ world hub of international research and development.
2009: Northcote factory might shut by January 2010 but Albany to continue.