222 staff culled at Spring Creek mine
State coal firm Solid Energy has announced sweeping staff cuts today including the axing of some executive jobs and 222 staff and 130 contractors at Spring Creek on the West Coast.
The radical revamp would shrink its staff numbers by 25 per cent to 1360 from 1800 at the beginning of the year.
Solid Energy said it would be halving the executive leadership team as well as halving the numbers of staff in corporate, support services and development.
The Spring Creek Mine would be mothballed, that is placed "into care and maintenance".
At the Huntly East mine in the Waikato 65 jobs would be axed.
John Key says the staffing cut doesn't mean the country's economy is failing.
He says the announcement today is a very difficult situation for the miners and the West Coast and he doubts the decision was made lightly.
The 222 staff and 130 contractors that have lost their jobs at Spring Creek are not the first of their kind.
"There's always been industries going through rough periods or technological change,'' he said.
Kiwi Rail and Solid Energy are two companies struggling but for different reasons.
"In the case of Solid Energy it's a victim of falling commodity prices,'' Mr Key said.
"You wouldn't want to read in to the fact that those two companies going through tough times means the rest of the economy is failing.
"It's certainly not…it's growing at one of the fastest clips in the OECD,'' he said.
Government has looked very closely at the issues and it comes down to the "losses Spring Creek is incurring and whether it's viable, Mr Key said.
"The issue in relation to Spring Creek isn't a capital injection issue. Solid Energy to the best of my advice doesn't require a capital injection.
"The issue isn't that we're not on their side, the issue is that international coal prices aren't on their side.''
Mr Key says the float of Solid Energy is not likely to take place in the forseeable future simply because the company is going through a process of restructuring. However he says it has not been ruled out of the programme.
The company said the restructure was responding to a severe downturn in global coal prices which would resulting in $200 million less in coal sales this financial year.
Solid Energy chairman Mark Ford said the company had entered into a further period of consultation with corporate, support services and development staff to cut their number by half from 313 to 150.
Most of those jobs were in Christchurch.
The job cuts proposed reflected the company's smaller mining operations, less coal development work, a halving of the executive leadership team, and the setting up of a standalone technical services group and fewer corporate roles.
"We appreciate that this on-going uncertainty is very difficult for people but the management team has to give staff the opportunity to comment on the further changes that we are now proposing," Ford said.
The company expected to confirm its new plans to corporate, support services and coal development staff early next month. Ford said the company had completed its review of Spring Creek underground coal mine and could not afford to keep it going. It had not been profitable for some time and had lost more than $100m.
The company would begin consultation with staff at the mine who would remain on full pay during this time.
If the company confirmed the proposal staff numbers at the mine would fall from about 254 to 32.
Up to another 130 contractors jobs would be affected.
Solid Energy would help staff find new jobs and was in discussions with the Stronger Christchurch Infrastructure Rebuild team (SCIRT) and with mining companies in Australia on that front.
"We absolutely understand the potential impact of this proposal on the local community and the wider district," Ford said.
"We will do all we can to identify future employment opportunities for affected staff and we have already had some very promising discussions which we hope to confirm in the near future."