No. 4 newsprint machine planned for Tasman

Press, 23 October 1980, Page 18

No. 4 newsprint machine planned for Tasman

PA Wellington A fourth newsprint machine at Kawerau is planned by the new Fletcher Challenge Group, its chairman (Nir R. R. Trotter) said yesterday. Addressing a combined meeting of union delegates and management at Kawerau. Mr Trotter said that the boards of Challenge. Fletcher, and Tasman had approved in principle Tasman proceeding with the installation of "the fourth newsprint machine at Kawerau. which would be on stream by 1985. This project was expected to cost more than $2OO million, which would make it the largest single capital investment ever undertaken by a wholly New Zealandowned company with no Government shareholding. It would produce 180,000 tonnes of newsprint and net

foreign exchange earning of S7O million a year in 1980 dollars. Mr Trotter said that a major factor in the merger decision was the need to achieve coordinated strength in the forestry and wood products area in order to participate more effectively in the opportunities and growth that would occur in future years. "Fletchers and Challenge at present own 85 per cent of Tasman and Fletchers also have very’ substantia! other forestry and wood interests. All three companies have aspirations to extend their involvement in these areas. By fully merging all wood interests the best use of the wood can be assured and greater financial strength is achieved to provide for future capital expenditure,” he said, Mr Trotter said that the major constraint on the New Zealand economy was the shortage of foreign exchange earnings and the consequent balance of payments problems. Since the oil crisis and the deterioration in our terms of trade, New Zealand had been constrained by an Inability to pay for the impcat requirement of domestic growth. The merged group proposed to participate in new projects which were exportoriented, internationally competitive, and which otherwise might be undertaken by overseas companies. “In general, such industries are New Zealand re-source-based and capital intensive. It is important that there are some New Zealand companies with the international credibility to organise the necessary finance and carry the substantial risks involved in starting

any large new project,” he said. . _ "The importance of these major projects in creating employment opportunities should not be underestimated. A fourth paper machine at Kawerau for example will directly employ SOO men in construction' over three years and when in operation, 350 additional * permanent staff. • “However, the real’ll employment impact for New -ty Zealand as a whole will br.y through the foreign ex--I change earned allowing ex—pansion of the economy.;.!,. This will create around 4 10.000 new jobs, mainly in-. ; - small business or service in- N dustries.” ■ Mr Trotter said that themerged company would.,: maintain and strengthen its, traditional activities which .. will continue to be organised. as strong and independent.,:' groups, largely along exist,- 1* ing lines. The groups would in the following broad fields: * stock and station trading and manufacturing. construction, finance and ' computers, wood products., a and forestry, steel and building materials, and ahimin-. ium. Mr Trotter said that thd.,2 proposal would increase.-, employment ana did not involve any re.duction in domestic com- , . petition. J.