More than 200 people could lose their jobs as part of a proposal to shut down Whakatāne Mill.
Consultation has begun after the 210 staff were presented with the proposal to close the business last night, says general manager Juha Verajankorva.
“That has come as a big surprise to most of the employees, big day, sad day, big news,“ Verajankorva said.
The mill, which has produced paper and packaging products, latterly mostly for export, for more than 80 years, but had lost its biggest customer, parent company SIG Combibloc.
Under the proposal all staff at the mill would be made redundant, the plant decommissioned, and the site remediated.
“Whakatāne Mill is an old historical company, the history goes back to 1939,” Verajankorva said.
“The mill has become slightly inefficient when compared to our competitors and we have been impacted by high energy prices and fluctuating chemical pulp prices,” he said.
“Cost-wise we can not compete with our European or Asian rivals.“
Verajankorva said the business had exhausted all options in trying to remain viable over a number of years including seeking new ownership.
Despite the mill struggling to produce liquid paper board for SIG at a competitive cost, they still accounted for approximately 80 per cent of the mill’s output.
SIG’s recent decision to source liquid paper board from existing third-party suppliers means the mill’s operation was no longer viable.
"Every stone has been turned, we have been cost cutting here and there, everything has been done but you can only do so much," Verajankorva said.
"With 140,000 tonnes capacity, opportunities are limited."
“We continue to explore all options with our advisors Deloitte, including seeking a buyer for the business, but we are in a position where we must put this proposal to staff, as we are reaching a point where there may be no other option,” Verajankorva said.
“The volumes we produce are modest by global standards, and our costs-per-unit can no longer compete with bigger plants overseas.”
Verajankorva was focussed on working with staff through the consultation process in the coming weeks.
"The staff are devastated obviously, they are surprised, and sad," he said.
"Many of our employees are second-generation or even third-generation employees so the impact will be big."
“This is a hard proposal to put forward, given how much a part of the Bay of Plenty community this company has become. Should closure proceed, we will do everything we can to support our people and all our stakeholders."
Consultation will run until March 11 at which time the final decision will be made.
The mill would close at the end of June should the decision be made to shut the business down.
"Most of the people would leave the mill at the end of June," Verajankorva said.
“We will try to everything we can to mitigate the situation, we will help our employees, we will organise counselling, and out-placement service, we definitely want to do our part and help everybody.”