Huhtamaki has announced it is to close a flexible packaging plant in New Zealand over concerns around its operational efficiency and competition in the national market.
The facility at New Lynn, near Auckland, is scheduled to close at the end of July 2012 with the loss of 135 jobs.
“The decision is not related to any external weakness in the market,” a Huhtamaki spokeswoman told FoodProductionDaily.com. “It is a combination of operational issues at the plant and competition issues in New Zealand.”
The shut-down will cost the firm around €8m as a one-off charge, likely to be booked in the third quarter 2011.
The company said it intends to transfer manufacturing capacity from the North Island site to its other flexible plants Asia, from where it will be able to serve its customers in the Oceania region. It has one facility in India, two in Thailand and one in Vietnam.
Closing the loss-making plant in New Zealand and switching volumes in Asia will boost operational profits in its flexible packaging operations by an estimated €5m a year, said Huhtamaki.
“We believe we can have a profitable flexible packaging business in the Oceania market but we will not be able to do that from the current manufacturing site in New Zealand,” the spokeswoman added. “We have stared discussions with our customers about supply, which could come from Europe but will most likely be from our Asia plants.”
The company said it will retain its sales offices in Auckland, and Melbourne, Australia. It also currently has three manufacturing units in the Auckland area .
The closure of the New Lynn unit will not affect its foodservice operations in Henderson or the Moulded Fibre operations in Otahuhu. Following the New Lynn move,the company will employ some 320 people in New Zealand.