Redundancy fears from call to sell

Press, 25 May 1984, Page 1

Redundancy fears from call to sell

Greymouth reporter

Aorangi Forest Industries. Ltd. the troubled West Coast plywood manufacturer, has declined directions to negotiate for take-overs, believing that this would mean the removal of the plant from the West Coast and the loss of 130 jobs. The company had asked the Government for money to buy logs and glue. It has had cashflow problems, and its suppliers want cash on deliverv.

It takes up to three months from peeling the logs to receiving payment for plywood sold on the New Zealand market and longer for export returns. This has reduced the company’s ability to meet ordinary accounts.

Aorangi wanted a longterm loan of $1.5 million, with $500,000 immediately to resume full production.’

The Government’s offer of $30,000 for two weeks wages to allow offers for the firm to be considered has been called unrealistic by the company’s chairman, a' prominent West Coast farmer and a National Party member, Mr Athol McGeady.

The member of Parliament for the West Coast, Mr T. K. Burke, said yesterday, "I can guarantee that the last shots have not been fired in this battle."

The offer by the Government was not disappointing, but “contemptible,” he said.

“Last week everyone, including myself, thought that the Government was helping through the Development Finance Corporation, but it now appears that the Government wants to dispose of Aorangi to another major company.”

The Government was offering to pay a fortnight’s wages when what was wanted was an injection of finance to resume full production, he said.

Mr Brian Stanley-Jack-son, Aorangi’s managing director, said yesterday that the Minister of Regional Development, Mr Birch, had indicated to him a week ago that two big plywood manufacturers were interested in a financial holding in Aorangi. One firm’s offer, however, believed to be that of Henderson and Pollard, Ltd, would have resulted in Aorangi having a maximum working life of about five years. Another competitor had offered about $400,000 and when told that the shareholders would get nothing had said it was “too bad."

The company’s financial structure is unusual in that 52.5 per cent of the capital is provided through a staff trust fund. Another 22.5 per cent is contributed by the Ferguson family of the West Coast, and the remaining 25 per cent by Nelson Pine Forest Holdings, which is owned by Odlins and the T.N.L. Group. It is relieved that the latter grouping is interested in gaining a major share. Yesterday, the company received a small quantity of logs, sufficient for one-day’s peeling. They are now being dried and will be eventually turned into plywood. That was the company's first peeling in eight days.

The secretary of Aorangi. Mr Stephen Hall, told “The Press" yesterday that the staff had been employed on maintenance work, such as greasing machinery, painting, gardening, and pruning in the company’s plantation.

Staff had received their weekly wages as usual yesterday. The afternoon shift had stopped and all employees were now working day shift. The factory would return to three shifts, over 24 hours, when finance was available, said Mr Hall.

Discussing the company’s costs. Mr Hall said that items such as glue had to be ordered in advance at a cost of $15,000 while logs had to be bought and transported to the factory. Mr Stanley-Jackson said last week that the company had good forward orders for plywood but because of the difficulties could not provide supplies. Aorangi supplies 30 per cent of the New Zealand market, and 7 per cent of the export trade. It has built up markets in Australia, which is experiencing a building boom, Malaysia, and as far away as France. “We built up all our outlets and markets from scratch,” said Mr Hall.

A new angle to the seriousness of the possible loss of 130 jobs in the district came from the West Coast Hospital Board yesterday. The board has been told to cut back its expenditure under the new populationbased funding scheme of the health department and its chief executive, Mr P. E. Kerridge, yesterday said that his board would be most concerned if the plant closed and population dropped. “Taking the number of employees at Aorangi, and their dependants, their loss to the district could result in a cut of at least $150,000 (in funding),” he said.