Fisher & Paykel Appliances says the Government must take its share of the blame as the whiteware maker prepares to shift its electronics factory from Auckland to Thailand at the cost of 96 jobs. F&P said yesterday production of electronic circuit boards used in its fridges, washing machines, driers and ovens would be relocated to Rayong - the same Thai location to which F&P moved the production of washing machines and clothes driers from Auckland in April at the cost of 350 jobs.
F&P managing director John Bongard said the "overvalued" Kiwi dollar and New Zealand's interest rates, which are the second highest among the 30 Organisation for Economic Cooperation and Development (OECD) countries, were again factors in the decision.
However, the usually apolitical F&P also blames government policies. "We've got a trade policy that's just not helpful at all to manufacturers like us," Mr Bongard said. The Government was "running around consummating free trade deals" with Thailand, China and India that would ultimately give duty free access to "extremely" low labour cost countries. Free trade deals with the likes of Canada, the United States, the European Union and Japan, which had similar cost bases to New Zealand, would be more beneficial.
"I'd stack our people in New Zealand up against any of those guys any day of the week. But when it comes to giving duty free access to China, India and Thailand we really are behind the eight ball. If that's in the national interest then so be it but it certainly is not in our interest."
F&P expects shifting its electronics factory to Thailand will save about $6 million a year before tax, mostly through cutting its wage bill. Further savings are expected from buying electronic components from Thai vendors. The move will, however, come at a one-off pretax cost of $5 million. The relocation will be completed by December 2008.
Mr Bongard said F&P would work with staff, the Engineering, Printing & Manufacturing Union (EPMU) and other employers to try to find alternative jobs for the 96 workers.
EPMU national secretary Andrew Little said there was a "very serious and desperate" situation in manufacturing. It would have flow-on effects for the economy and society for years if something was not done to stem the flow of factory closures. "The Government needs to understand that the incentives from other countries to entice New Zealand manufacturers are significant, and we need to do more as a country to encourage investment in high-end manufacturing. "A quarter of a million Kiwi workers and their families are relying on it."
F&P's Thai operations will pay no tax for eight years.
