F&P Appliances trims Auckland workers to 35-hr week to save jobs

The company will be one of the first to join the government's nine-day working fortnight scheme, gaining a state subsidy to help make up the difference to a 40-hour week.

"This situation has come about by the recent decline of global demand, combined with entering our traditional off-peak manufacturing winter season," chief executive John Bongard said. The arrangements mean "we are able to retain the current staffing levels and avoid immediate redundancies."

About 60 jobs at the Auckland refrigeration assembly plant will be saved as a result of the arrangements, Bongard said. Under the arrangement, which was negotiated with the Engineering, Printing and Manufacturing Union, the company and the government will make equal contributions to an additional 3.5 hours a week of pay.

The remaining 1.5 hours, bringing the total to 40, may be taken as paid leave, F&P Appliance said. Workers will also receive 3.5 hours a fortnight of in-house training to up their skills.

Shares of the company rose 7.7% to 42 cents on the NZX and have tumbled 73% this year. Earlier this month, the company gained waivers from its banks and agreed to a short-term $80 million loan facility as demand waned and the weaker kiwi dollar inflated the value of overseas debt.

The agreements buy F&P Appliances more time to negotiate with its banking syndicate to refinance all of the group's bank debt, with the aim of completing the new arrangements by the end of April. Total debt is expected to reach about $570 million by March 31.

Profit margins at the manufacturer have contracted amid a global downturn, including a housing slump in the US that's sapped demand for high-end appliances. At the same time, competition for sales has increased, spurring price cuts.

By Jonathan Underhill

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