CHH announces major job cuts at Kinleith

By Phil Boeyen, ShareChat Business News Editor

Thursday 28th March 2002

Carter Holt Harvey (NZSE: CAH) is planning to more than halve the number of people directly employed at its Kinleith pulp and paper business as it seeks to secure the mill's future.

Currently 772 people are employed at the mill but CHH says a proposed restructuring will reduce that to 369 employees. A maintenance contractor will create another 190 positions.

The company also plans to begin to negotiate a new collective employment contract for staff.

CEO Chris Liddell says the steps are part of a plan to build Kinleith's future as a world class pulp and paper operation.

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

Mr Liddell says Kinleith is a critical part of the industry's future with overseas earnings of $500 million a year representing 14% of New Zealand's wood and wood products exports.

However he says the business has not paid its way in recent years, returning an average of 5% on funds invested over the past five years.

"That is not enough to justify reinvestment and creates concerns about not only growth, but also long-term sustainability."

Kinleith boss Brice Landman says recent global developments have highlighted the need to reorganise the mill 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 NZ dollar has kept our mill in the black but relying on the exchange rate is not a viable long-term strategy."

Last year Kinleith produced 277,000 tonnes of paper and 241,500 tonnes of pulp, 70% of which was exported, mainly to Australia and the Asia Pacific region.

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