DesignLine liquidation costs jobs

MARTA STEEMAN
Last updated 05:00 01/06/2011

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The demise of New Zealand's largest bus manufacturer, Canterbury's DesignLine International, may threaten hundreds of jobs.

Yesterday, the Rolleston manufacturer, said to have debts of about $10 million, was placed in liquidation by the High Court after two creditors and supporting creditors sought to have it wound up.

About 60 staff were made redundant yesterday.

The cash-strapped manufacturer had about 110 staff in February, but cut 30 administrative staff to lower costs in the past three months.

Other staff have left, aware of the financial pressure on the company. A supplier, who did not want to be named, said his company might have to lay off staff because nearly a third of its business was with DesignLine.

DesignLine International once made more than 90 per cent of New Zealand's buses and, at its peak, employed about 190 people.

Many of the buses have been exported and can be seen on the streets of Melbourne and Adelaide, New York and Tokyo, as well as New Zealand's main cities.

More than a year ago, when DesignLine admitted it was struggling to pay a "bow wave of overdues", founder John Turton said there were probably 200 supplier employees depending on the DesignLine business, let alone its then 150 staff.

DesignLine United States manager Jack Schroeder, who is running the Rolleston operation, would not comment to The Press yesterday.

DesignLine has been battling creditors, seeking to wind up the company since February. A group of about six banded together and included ENI Engineering and window maker Lysaght who brought the liquidation applications yesterday and were supported by PricewaterhouseCoopers and others. It was revealed in court ENI was owed $870,000 and Lysaght $975,000.

DesignLine's financial stress appears to have started more than two years ago after its expensive shift to Rolleston by its new owners, the Glosson family, of North Carolina, who had also embarked on an expansion in Charlotte, North Carolina, where they set up a large plant to manufacture the hybrid electric bus, but last year ran out of cash. The Glossons are headed by retired US Lieutenant General Buster Glosson, who flew combat missions during the Vietnam War.

The family bought the company in late 2006 from Turton, of Ashburton, who retained a small stake and headed the research and development.

One staff member The Press spoke to outside DesignLine's Rolleston plant yesterday who did not want to be named said he had worked for the company for 11 years and it was "pretty devastating".

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"We knew it wasn't that good, but no-one actually told us. It hasn't been good for a long time," he said.

Staff had been due to receive their next pay cheque tomorrow but were not sure if they would be paid now. The company had never not paid its staff, he said.

Another DesignLine worker said he and others knew "months ago" they would probably lose their jobs. "It hasn't been run properly for a while now so we were not surprised to lose our jobs. We all knew it was going to happen," he said.

Staff had been told not to expect any redundancy payouts, he said.

Turton was reluctant to comment on its collapse yesterday. He said he had not been working at the factory since Christmas.

Justice Venning said in summing up DesignLine was clearly insolvent. While it could pay its current debts it could not pay its past obligations.

Jackie Frampton, of White Fox and Jones, representing creditors ENI and Lysaght, told the court DesignLine appeared to be trading while insolvent and probably had been for some time.

Yesterday morning on its behalf counsel pleaded for a final two-week adjournment to give the company time to negotiate a sale to a "Malaysian interest" but the court decided the company had had enough time to meet obligations.

Hans van Schreven, of Clark Boyce, told the court that 500 jobs were at stake and that DesignLine was trying to sell the enterprise as a going concern. The Malaysian interest was prepared to fly to New Zealand if an adjournment was granted to continue the sale negotiations.

Yesterday afternoon several companies were retrieving gear from the Rolleston plant.

DESIGNLINE

Started late 1985 by John Turton, of Ashburton. First manufactured diesel buses. In the late 1990s its electric buses and hybrid electric buses were the drawcard. September 2006 bought by US investors Buster Glosson and son Brad. The attraction was the "green" hybrid-electric bus technology. October 2007 DesignLine buses reap praise from the The New York Times. In 2008 the Glossons set up a large plant in Charlotte, North Carolina. In 2009 they shift the Ashburton operation to a bigger site at Rolleston. March 2010, DesignLine admits it is struggling with a "bow wave" of debts to suppliers. December 2010, the American parent secures US$11m (NZ$13.3m) from new investors to restart Charlotte plant. March 2011 liquidation sought by ENI Engineering and Lysaght. May 31 High Court appoints Official Assignee as liquidator.

- The Press

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