THE PRESS THURSDAY, SEPTEMBER 30, 1982. Plans for Patea

Press, 30 September 1982, Page 16

THE PRESS THURSDAY, SEPTEMBER 30, 1982. Plans for Patea

The Government’s caution in appraising schemes to resurrect the Patea freezing works remains' justified. Taxpayers have spent $25,000 already on feasibility studies since the works closed last month. These have not provided sufficient information to allow unconditional acceptance of any of the proposals to revive the works. Two schemes are under consideration. Both would require an injection of taxpayers’ money to get them off the ground. As would be expected of any prudent lender of money, the Government must be reasonably confident of the continuing success of either proposal before it advances funds.

One scheme, promoted by Taranaki farmers, is to have a beef chain only at Patea. The Government’s contribution to this plan would be limited to a loan of about $2 million. The other scheme, sponsored by the Meat Workers’ Union and Maritime Pacific Merchants, Ltd, is for a full freezing works to be run as a cooperative. This would need $lO million to get it off the ground. Between $3 million and $4 million of this would come from the workers; they would, in essence, be staking their redundancy pay from the former works. The Government is being asked to advance $6 million.

If either scheme were adopted and folded after two or three faltering years, the Government would have thrown good money after bad and Patea could be worse off than it is now. A newly formed cooperative might not be able to entertain redundancy payments.. Another rescue

scheme would be hard to find. Part of the problem that forced the works to close in the first place was the abysmal work record. In three months at the beginning of this year, before the decision to close the works was announced, the plant had 205 stoppages and lost 35,388 man-days in production. The loss in wages for the workers’ was' $2.25 million. This form of disruption and lost production should not occur in a workers’ cooperative, and profitability should improve accordingly. Nevertheless, other problems beset the works and these have not been solved. Among them were diminishing supplies of stock. The works had an overcapacity because of the number of meat plants in the area. The need to upgrade the Patea plant was also critical. The antiquated buildings and plant still need upgrading. If a full freezing works is to be reopened, this renovation will require between $2 million and $3.5 million over a period 6f ; years in addition, to the initial investment. This additional capital does not appear to be forthcoming, and the lack of it is the main reason for the Government’s hesitation.

No-one is prepared to put equity capital at risk in the works, presumably because the risk seems too high. In view of the business community’s scepticism of the works’ future, the Government must be wary of committing taxpayers’ money until plans for Patea do more than merely solve an unemployment problem. Solving the unemployment problem is a worthy end in itself; postponing an adjustment would not create much confidence in Patea.