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CHH Announces Consultation On Restructuring

Carter Holt Harvey Kinleith Announces Consultation On Restructuring

Carter Holt Harvey today announced plans to begin consultation to reorganise and reduce the workforce in its Kinleith pulp and paper business. It will also begin to negotiate a new collective employment contract.

“These steps are part of a plan to build Kinleith’s future as a world class pulp and paper operation,” Carter Holt Harvey Chief Executive Officer Chris Liddell said.

“As an industry we have a clear choice for the future: process the growing ‘wall of wood’ in New Zealand or process it closer to its customers in China and other high growth markets. I want the answer to be New Zealand.

“Kinleith is a critical part of our industry’s future. It is the NZ forestry industry’s biggest production facility, earning approximately $500 million of overseas revenue per annum. To put that in context, that is 14% of New Zealand’s wood and wood products exports, or more than twice what we earned as a country from wine exports last year.

“However, Kinleith has not paid its way in recent years. Our average return on funds invested at Kinleith over the last five years has been just five percent. That is not enough to justify reinvestment and creates concerns about not only growth, but also long-term sustainability,” said Mr Liddell.

Kinleith Chief Executive Brice Landman stated that recent global developments have highlighted the need to reorganise Kinleith as soon as possible.

“The pulp and paper markets have reached the bottom of their business cycle and we are facing fresh competitive challenges from new technology mills in developing countries. We have been fortunate that a lower New Zealand dollar has kept our mill in the black but relying on the exchange rate is not a viable long-term strategy.”

Kinleith’s staff and combined site unions were advised of the proposals this morning. The company will now begin a twin-track process of consulting on the proposed new structure, and negotiating with site unions on a new contract.

The proposed structure would see 369 people directly employed at Kinleith, with another 190 positions created by a maintenance contractor. Currently the mill employs 772 people.

Mr Liddell emphasised the company’s commitment to providing support through the process of change. “We will support our people, their families and the local community during this period of consultation and the future implementation of a new structure. We have put in place a range of programmes to assist - both at Kinleith and in Tokoroa.

“Kinleith is too important to New Zealand and the forestry industry to neglect. If we don’t act now, the mill’s long-term sustainability comes into doubt. Conversely if we can create a world class mill, then in the future we will be able to grow its size and strength.”

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