New Zealand upmarket whitegoods manufacturer, Fisher & Paykel Appliances, shares jumped almost 12 per cent on Thursday after the company announced plans to lose 1070 workers and shift production to Italy, Thailand and Mexico.
In addition to closing its Brisbane plant which gave it the biggest saving of $NZ28.6 million ($24 million) a year, the company will shut factories in New Zealand and California during the next 18 months.
The moves were forecast to save $NZ50 million a year, after a matching one-time cost, Fisher & Paykel Appliances said.
The dual-listed shares jumped 22¢ or 11.7 per cent to $2.10 on the ASX.
The closures are the latest by Fisher & Paykel Appliances, which last year shifted its electronics and laundry units from Auckland to Thailand, citing the rising NZ dollar, increasing competition and higher steel and plastics costs. A trade accord signed between NZ and China this month will cut tariffs on Chinese-made whitegoods by 2013, increasing competition.
“There have been widespread market concerns that they are facing a tougher and tougher environment on all those fronts,” said Paul Richardson from BT Funds Management in Auckland. He said a “radical” approach was needed.
Fisher & Paykel managing director John Bongard said “exchange rates, interest rates, FTA agreements and relative labour costs” made it difficult for an NZ manufacturer.
Rising steel, copper and plastic prices, combined with an expected slowdown of demand, would make the current year “tough” for Fisher & Paykel Appliances, a report said.
The company may report net income of $NZ70 million in the year ended March 2009, down 15 per cent from previous forecast.
Fisher & Paykel Appliances said it was investing $US41 million ($A44 million) buying and converting a Whirlpool plant in Mexico, where labour rates are about a sixth of those in New Zealand and transport is cheaper than the US.