Click Clack likely to close Christchurch plant

Statement from Click Clack Limited

Click Clack likely to close Christchurch manufacturing plant

Palmerston North (Wednesday April 4 2007) - Click Clack Limited is proposing to close its Christchurch manufacturing plant at the end of June, the company’s Group Chief Executive John Heng confirmed today.

Heng said it is planned to move the production of the high quality polycarbonate goods made at the Click Clack Christchurch plant, including the popular Strahl beverageware, to the company’s Levin manufacturing operation, while the production of some of the industrial lines made in Levin would go off-shore.

If the closure proceeds some 70 jobs would be impacted, although approximately 20 workers would be offered the opportunity to transfer to Levin.

Click Clack is headquartered in Palmerston North where its design facilities and distribution centre are located. The company exports some 85% of its production to more than 60 countries world-wide.

Heng said Click Clack had struggled long and hard to combat the effects of the continuing high value of the New Zealand dollar over the past three or more years.

“A year ago in January, when we moved supplier contracts worth more than $3 million off-shore, we warned that we couldn’t go on forever with a New Zealand dollar that’s so ridiculously over-valued,” he said.

“We’ve done everything in our power to remain a proud New Zealand designer and manufacturer – and to provide rewarding jobs for New Zealanders. We’ve made many changes to the way we do business and cut our costs to the bone with the result that we are a lean, finely honed operation. Moving the supplier contracts offshore last year meant we were able to safeguard the jobs of our Christchurch workers at that time.

“Across the New Zealand group we have already stripped out almost 80 jobs through attrition over a period of time. Despite our best efforts the Christchurch operation is becoming less profitable by the day due to the continual rise of the New Zealand currency. We are keenly aware of the impact that closing the plant will have on our hard-working, loyal employees and we feel for them and their families.”

Heng is consulting with staff and union representatives on the company’s plans and confirmed that he and the company would assist employees to obtain new jobs.

“There would be jobs at Levin for approximately 20 of our Christchurch technicians and die-setters if they are able to re-locate. Click Clack staff are highly trained and skilled in many aspects of manufacture and, with the tight labour market, we are confident there would be opportunities for them with other employers in Christchurch. We would work with a range of organisations, including unions and Work and Income New Zealand, to assist our affected workers.”

Heng said Click Clack could not rule out moving further manufacturing offshore if the New Zealand dollar and interest rates remained at high levels.

“We will continue to resist moving manufacturing for as long as we can so that we can continue to say, as we do on all of our goods, ‘Proudly Made in New Zealand’ and to provide employment for Kiwis.”

He said at present 96% of Click Clack’s production was manufactured in New Zealand and that with the proposed closure of the Christchurch plant and moving some of the Levin production offshore, this figure would decrease to approximately 80%.

Heng said that although Click Clack’s output had grown consistently over the last 10 years, the current state of the economy has had a hugely adverse impact on profit.

“We’ve actually gone backwards in the last few years because of the exchange rate. We make and sell more product than we did four years ago and earn less. Our exports are currently worth about $NZ30 million compared to $NZ40 million four years ago when the exchange rate (USD) was 55 cents versus the 70-plus cents it is today.”

He said production output had grown month on month, year on year, because of Click Clack’s ability to design highly sought-after products, which fit well into competitive markets.

“A continual appreciation in the value of the Kiwi dollar can do monumental damage to an exporter’s margins. If this coincides with a downward demand fluctuation – and there’s every evidence as the global economy slows that this could readily occur – an exporter could suffer a mortal blow.”

Click Clack designs and manufactures a range of high quality storage containers, polycarbonate beverageware and brushware. New Zealand made Click Clack goods are exported to 60 countries around the globe and are distributed through wholly owned subsidiaries in its major markets of Australia, the United States and the United Kingdom.

Comment from the Manufacturing and Construction Workers Union

The Manufacturing and Construction Workers Union’s Wellington Regional Secretary, George Larkins, said that over the past four years the union and Click Clack employees had worked closely with the company to try to overcome the impact of the escalating dollar.

“We’ve all worked together on numerous productivity initiatives and the membership is very mindful of the pressure on Click Clack in the current manufacturing environment within New Zealand, in particular with respect to the high exchange rate of the dollar.”

He said that the Government and the Reserve Bank appeared to be disregarding New Zealand workers in not addressing issues in the economy that have and will continue to result in job losses.

“We believe that Click Clack, unlike many other employers that have taken the easy option by moving all manufacturing offshore, is genuine in its commitment to provide jobs for Kiwi workers. However, as stated in January last year, the company can’t go on forever without something giving. Unfortunately for workers in Christchurch it looks like their jobs will be lost. Click Clack’s plan is to continue at its Levin site where it is expected there will be another 15-20 jobs added.”

Larkins added: “It is sad for Christchurch workers to know that their plant will almost certainly close, especially for those with many years of loyal service, and to realise that the Government that many of them voted for appears to continue to ignore the loss of jobs within manufacturing. The impact on workers and their families in such situations can be quite devastating.”

He confirmed that the collective employment agreement contained a generous redundancy payment schedule which would help to ease the burden while those members seek new employment.

ENDS

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