New Plymouth factory jobs axed as production shifts to Vietnam

New Plymouth ABB factory is closing down, with 59 staff losing their jobs.
David Burroughs/FAIRFAX NZ

New Plymouth ABB factory is closing down, with 59 staff losing their jobs.

Almost 60 New Plymouth factory jobs are being axed in favour of importing production from Vietnam.

Staff making electrical transformers at the New Plymouth ABB factory were told on Friday afternoon that it would finish operations on April 28, with 59 employees offered redundancy.

In 2012, the company had 100 employees on its payroll after it hired 25 new staff as part of a $1.5 million extension. 

In a statement, ABB said the decision was based on "challenging market conditions resulting from external factors".

READ MORE: ABB keeps expanding

An employee at the factory directed all questions to the head office in Auckland, which released the statement.

It said the management of ABB was committed to carrying out the process in a fair manner, with respect and consideration for all employees.

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"The 59 affected employees are applicable for redundancy and ABB is engaging the assistance of professional support people who will be regularly on site and providing access to an employee assistance program (EAP) for counselling," it said.

"ABB will also support employees with CV writing, interview skills training and job search training.

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"Efforts will be made to find suitable alternative employment in the wider ABB organisation, where possible."

It said the closure would not have an impact on its New Zealand customers as the oil-filled distribution class transformers, which had been made in New Plymouth, would be sourced from its regional factory setup in Vietnam.

In 2012 the New Plymouth factory underwent a $1.5m extension. 

At the time, ABB factory sales manager Tania Lindsay said the company could employ another 20-odd people in 2013 if it went ahead with plans to add a third shift to its production.

It was also suggested the factory could become a 24-hour operation to keep up with demand.

ABB had secured a new portion of the Australian market which had led to the large expansion, she said.

In the past ABB was producing about 2000 transformers each year but increased this to 4000 a year in 2012.

"We want to move up to be doing 10,000 per year. To do that we would go to a 24-hour operation," she had said.

It is unclear what had changed in the market since then and caused the closure, and whether ABB still had the portion of the Australian market that it did five years ago.

ABB produces small distribution transformers for the New Zealand market, as well as internationally for Australia and the Pacific Islands.

The power and automation technology specialists owned companies in about 100 countries and employed about 145,000 people.

 "Going forward, transformer technology and production remains a core business and priority for ABB," ABB's statement said.

Transformer orders would still be placed through ABB Limited, it said, and it would stock them locally to meet customer needs.

ABB had been at its Paraite Rd site in Bell Block under various names since 1959, former ABB Ltd general manager Deane Hogg said in 2012.

About 30 per cent of ABB's revenue came from Australia, 10 per cent from the Pacific Islands and the rest from New Zealand, he said.

Australia was a growing market for ABB because production costs in New Zealand were much cheaper than in Australia, he said.

"I think oil and gas business over there drives up a lot of the costs," Hogg said.

The new business in Australia had increased ABB's revenue by about 30 per cent, he said.

Last year the ABB Group decided to move some production from Australia to New Zealand, he said.

A spokeswoman for ABB said: "We have been unable to secure sufficient volume from the NZ market on a sustained basis. Additionally, we have faced prolonged market headwinds in some of the markets we export to including Australia, PNG and the Pacific Islands.

"ABB cannot speak on behalf of the employees, but we understand this will be a difficult time for them and we are committed to carrying out the process in a fair manner, and are offering support where possible.

"The union were advised of the decision prior to the announcement."


 - Stuff

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