'High cost of NZ manufacture' hurt tyre company

Bridgestone has lost money in the past two years, despite revenues rising to $217 million last year.

Bridgestone said on Friday that it would close its Christchurch tyre factory by Christmas, sacking 275 people in a move that has devastated workers, their union says.

Companies Office files show Bridgestone, a tyre maker, retailer and wholesaler, lost $7.1 million in the 2008 calendar year in New Zealand.

The Bridgestone NZ loss in the previous year was $3.8m. The firm made a $1.2m profit in 2006.

In announcing the closure of the Christchurch plant and one in Adelaide, Australia, Bridgestone's owners in Japan blamed intensifying cost competition globally. In Adelaide, 600 jobs will go.

Bridgestone is Japan's biggest maker of tyres and in the half year to June made a loss of 38.3 billion, hit by the economic downturn in Japan, the United States and Europe.

"Despite continued efforts to improve cost competitiveness at both plants, international competitive forces have been making tyre manufacturing in Australia and New Zealand increasingly difficult to the point where the operations in both countries are no longer viable," the company said.

Bridgestone's distribution, customer service and retail networks in New Zealand, which employ more than 1500 people, are unaffected.

The head office is in Auckland and it also owns Tony's Tyre Service.

Bridgestone New Zealand direct owner is in Australia, but the ultimate parent is Bridgestone Corporation of Japan. While its New Zealand annual revenues rose more than $20m to $217m in the latest year, the annual report shows the cost of goods sold rose about $25m, to $148m.

In the latest year, employee benefits were $33.3m, $3m higher than the previous year.

Aside from normal costs, such as rent, freight and power, Bridgestone reported an unexplained $22.4m in "other expenses", up from $17.7m the previous year.

The "other expenses" knocked the company from what would otherwise have been a profit into a $10 million pre-tax loss, before a $3m tax benefit.

The value of the shareholders' equity in the company at the end of last year was about $110m, with assets of about $173m and liabilities of $62m.

Bridgestone Rubberworkers union secretary Kerry Pearce said the company had said it would pay full redundancy and holiday entitlements to the workers.

They had a redundancy agreement of seven weeks' pay for the first year of employment and two weeks for each following year, uncapped.

"There's a lot of history on this site, with some members having worked here 45 years and some being the second and third generation of their families to have worked here, so it is a very sad day for all of us," he said.

Bridgestone was the last tyre manufacturer in Australia and New Zealand.

The firm said tyre production in both countries had been running at a loss for several years and had been under review for some time.

Bridgestone's tyres would be imported from Japan, southeast Asia, Europe and the US.

- with NZPA

- © Fairfax NZ News