Fletcher to close its Christchurch insulation plant, 29 jobs lost

Thursday 16th October 2014

Fletcher Building, New Zealand's largest listed company, will close its Christchurch insulation factory, as it consolidates its Tasman Insulations operations in a "highly competitive market".

The proposal would see 29 Christchurch factory workers lose their jobs manufacturing the construction company's Pink Batts insulation, while its Auckland factory will become a round the clock operation, the Auckland-based company said in a statement. Current Christchurch-based customer service, sales and warehousing roles will be unaffected, with two new jobs created, while nine further positions at the Auckland plant will be offered.

The move comes after the National-led government announced in its May budget that it would cut tariffs and anti-dumping duties on building products to zero, in a bid to introduce more competition into the sector. The government is trying to reduce the cost of housing, which is being underpinned by lack of supply in earthquake-damaged Christchurch, and the country's most populous city, Auckland. Last year the government launched a targeted insulation programme, subsidising installation for low income at-risk households.

"The consolidation is in the best interest of our people and our customers," said Tim Richards, chief executive of building products. "We are operating in a highly competitive market impacted by an increase in volume of imported product and a general reduction in demand for insulation following changes to EECA's home insulation programme in 2013."

Earlier in the year, Knauf, the German building materials company, failed to get Fletcher Building’s use of the “Batts” trade mark for building insulation thrown out on the grounds that it is a common name in general public use. Fletcher is facing increasing competition from Knauf and Australian suppliers. Knauf has about $1.9 billion in annual insulation sales worldwide compared to Fletcher’s $1.3 billion of total building product sales, which includes plasterboard, aluminium doors and windows, and roofing. In February, Fletcher said the local insulation market remained competitive as price declines offset volume gains.

The company would offer redundancies, but said it had over 200 vacancies within the business, of which more than 50 which were in Christchurch.

Shares of Fletcher fell 1.4 percent to $8.57 and have gained 2.1 percent since the start of the year.

BusinessDesk.co.nz

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