Putting money where it counts

The news of layoffs being likely at Axiam Metals sends a shiver down this town's collective spine.

The company and unions are talking over the redundancies at the Kelvin St site which could see 16 people lose their jobs, according to the Manufacturing and Construction Workers Union.

Axiam Metals is part of a wider company that has been in Wanganui in various forms since the early 1900s.

It has developed into an international export company specialising in the manufacture of metal and plastic components. Clients includes Air New Zealand, Boots, DeLaval, Ford, Pratt & Whitney and Singapore Technologies, which demonstrates not only a global grip but a diversity of customers.

Company principal John Oskam said while it was too early to be exact about the job losses, local and overseas demand for product had been slow and would not improve soon. He said business was fluid and adaption was mandatory.

With the news of other manufacturing layoffs in other parts of New Zealand, it may well be time to reconsider how New Zealand supports companies such as Axiam.

Compare and contrast with what is happening with negotiations over the Tiwai Aluminium Smelter.

Its majority owner, Rio Tinto, is again twisting New Zealanders' collective arm over the price it pays to keep the smelter going and more than 750 jobs intact.

Meridian Energy chief executive Mark Binns said after nine months of negotiations with Rio Tinto there "remains a major gap between us on number of issues".

There will be one issue and that is price. The mining giant that already gets electricity practically at cost wants a better deal on one of New Zealand's most precious resources.

On other issues, the Government has repeatedly said there is no money in the kitty these days for any spending over budget. It has the fiscal straitjacket on and there is absolutely no wriggle room. But apparently when it comes to the smelter and Rio Tinto, it says jump and we ask how high.

But perhaps it is time to think the unthinkable and consider closing the Tiwai smelter for the long-term good of New Zealand. What are the figures if we do call Rio Tinto's bluff? Is it worth taking an initial hit to guarantee more and cheaper power for a greater good?

The smelter uses about 15 per cent of New Zealand's electricity output. If it closes wholesale power prices are likely to fall.

The timing is interesting, given the float of Mighty River Power on the horizon and the flow-on effect on electricity prices of any change, and that has been generally acknowledged. And why not - it makes good business sense to put the squeeze on New Zealand's nether regions at this critical point of sale for the Government.

It may well be that the smelter deal, which has served both parties well, has run its course. It is certainly time for New Zealand to sit down at this economic juncture and weigh up the real benefits - and disadvantages - of this partnership.

Perhaps it's time we put more money into companies such as Axiam and less into Rio Tinto. The people of Southland will disagree of course. But should we be assisting just one company - and the power price to Tiwai Point is a subsidy - or many?

We should be looking closely at our manufacturing base before we lose more good jobs, good products and good people.