The timber products company planning to close its operations in the Ruapehu district says it can’t afford to wait for a potential solution to the energy crisis.
Winstone Pulp International (WPI) has begun consultation to shut down indefinitely and make redundant all 230 workers at its Karioi Pulpmill and Tangiwai Sawmill.
Chief executive Mike Ryan said rapidly increasing energy prices were unsustainable.
“We have pulled out all the stops over a sustained period to keep this business up and running in the face of rampantly increasing energy prices.”
Electricity was a major proportion of the company’s costs, rising from 15% to more than 40% currently, Ryan said in a statement.
“The main issue for WPI is the timeline for a potential solution, and whether that solution will bring energy costs in New Zealand down to a level where we can be internationally competitive.”
Efforts to press the issue in the two weeks since the company paused work had resulted in offers from gentailers.
“On the face of it, there were material discounts on where they have pushed prices to right now.
“But the offers still greatly exceeded what manufacturers such as ourselves need to remain internationally competitive.
“At the prices offered, the sites would still be operating at an unsustainable loss.”
On Tuesday, Ryan thanked Ruapehu mayor Weston Kirton for his advocacy.
“Thank you for taking the time to engage with us over recent weeks to discuss the impact New Zealand’s energy crisis is having on its primary industries, and the flow-on impacts that will have in our local community.”
Closing the two mills would be “incredibly tough” on whānau and families, and the Ruapehu community, Ryan said.
WPI workers are being offered voluntary redundancy or have the option to remain on full pay during the consultation period. A final decision will be announced on September 9.
Local iwi Ngāti Rangi is urging the Prime Minister to consider a locally developed solution.
Chairman Whetu Moataane said about 70% of the workers were Māori and many have had an inter-generational relationship with the mill.
“The Government has said that supporting regional productivity, prosperity and resilience is fundamental to their growth programme. We want to see these words turn into action.”
Moataane said while WPI consults with its workforce, other approaches could be considered, including innovation in forest products, biofuel opportunities, improved energy options and research ventures.
“Nobody wants to see the ‘closed for business’ sign hung prematurely at the sawmill gates. We want to work with WPI, central and local Government, whānau, hapū and iwi, to think out of the box – to develop high-value products which will fuel job growth.”
Ruapehu District Council data shows WPI paid about $30 million in wages and salaries in the financial year to the end of June.
It spent $50 million on logs and processed more than 500,000 tonnes of logs at the two mills.
Excluding the cost of logs, the company injected $190 million into the local and national economy through wages and salaries, buying goods and services, and electricity. An additional $11 million was spent on capital investment.
As a comparison, the most recent published data in 2019 for Ruapehu Alpine Lifts – one of Ruapehu district’s biggest employers at the time – showed $13 million spent on wages and salaries for that financial year, $35 million spent on goods and services (including wages and salaries), and $18 million in capital spend.
On Tuesday, Kirton said he was deeply concerned for the local community devastated by the closures.
“This has come as a bombshell. So many subsidiary businesses are associated with the mill - real estate, trucking, small businesses - we’re going to lose all that.”
LDR is local body journalism co-funded by RNZ and NZ On Air
“Police cannot rule out the possibility of further arrests and charges.”